The Supreme Court has held as sacrosanct a central government order of 1993 that stated salary and agriculture cannot be considered as part of gross income for determining the creamy layer.

Lawyers and experts said Tuesday’s judgment would have significant bearing on a case pending in the apex court related to the consideration of salary income to decide who would fall under the creamy layer.

The creamy layer is a term used to refer to those among the backward classes who are socially, economically and educationally advanced and are not eligible for reservation benefits.

A division bench of Justices L. Nageswar Rao and Anuradha Bose on Tuesday struck down a 2016 Haryana government notification that stated that children of persons having a gross annual income less than Rs 3 lakh shall be the first to receive benefits of reservation in government jobs and education.

Those with family incomes between Rs 3 lakh and Rs 6 lakh will be considered next, according to the Haryana government notification, while those with annual incomes above Rs 6 lakh will come under the creamy layer. This distinction on the basis of income led the Supreme Court to strike down the order.

The state government had passed another order in 2018, including salary and all other incomes in gross annual earnings. Earlier in 1995, the Haryana government had issued a notification following central government criteria laid down in 1993, considering those holding constitutional posts and working as Class A employees as creamy layer.

The Haryana notification of 1995 and the central order of 1993 had laid down that salary income and earnings from agriculture would not be considered while deciding the creamy layer, while stating that those with annual income over Rs 1 lakh would come under the creamy layer.

However, in 2004, the central government’s department of personnel and training (DoPT) issued a clarification that said salary may be included in creamy layer considerations. Madras High Court and Delhi High Court ruled against this.

The DoPT has challenged the Madras High Court judgment in the Supreme Court. The Supreme Court’s ruling upholding the 1993 criteria, while hearing a petition from students, could have a bearing on the pending case.

“The notification dated 17.08.2016 (of the Haryana government) is in flagrant violation of the directions issued by this Court in Indra Sawhney-I and is at variance with the memorandum dated 08.09.1993 issued by the Union of India,” the Supreme Court said.

The court struck down the notification of August 2016 and held that the second notification of the Haryana government, issued in 2018, stood automatically nullified.

Advocate Vikram Hegde said the court had considered the 1993 order of the central government to be sacrosanct.

“The judgment in the Haryana creamy layer case paves the way to resolve many ongoing unnecessary litigations. This judgment clearly states that as per the 1993 order, income alone cannot be the criteria to adjudge creamy layer, if that income does not necessarily bring in social advancement. It’s only the business income which is the criteria to define creamy layer, while incomes from salary and agriculture are excluded for the purposes of creamy layer,” Hegde said.

Advocate Shashank Ratnoo, an expert on OBC reservations, said Tuesday’s judgment further accentuated that the creamy layer concept was to exclude socially advanced persons and it was not based on poverty or income alone.