Context: The Supreme Court recently ruled that Other Backward Classes (OBC) is only “statutory”, unlike the “constitutional” reservation for Scheduled Castes and Scheduled Tribes.
Key Points

• A three-judge bench of the Supreme Court has pronounced a very significant and far-reaching judgement on the issue of reservation for the Other Backward Classes (OBCs).
• They virtually overturning the apex court’s own ruling in the Indira Sawhney case of 1993 which upheld the decision of the V P Singh government of 1990 granting 27 per cent reservation to the OBC castes as per the Mandal Commission report, as constitutional.

Background

• The judgment came on petitions challenging Section 12(2)(c) of the Maharashtra Zilla Parishads and Panchayat Samitis Act, 1961.
• It mandated that the State should provide 27 per cent reservation to OBCs.
• The plea questioned the Maharashtra State Election Commission notification providing for reservation exceeding 50 per cent in respect of Zilla Parishads and Panchayat Samitis of Washim, Akola, Nagpur and Bhandara districts.

Key highlights of the SC’s rule

• As regards the State legislation providing for reservation of seats in respect to OBCs, it must ensure that in no case the aggregate vertical reservation in respect of SCs/STs/OBCs taken together should exceed 50 per cent of the seats in the concerned local bodies.
• Section 12(2)(c) is an enabling provision and needs to be read down to mean that it may be invoked only upon complying with three conditions before notifying the seats as reserved for OBC category.

The three conditions are

• Setting up of a dedicated Commission to conduct contemporaneous rigorous empirical inquiry into the nature and implications of the backwardness qua local bodies, within the State;
• Specifying the proportion of reservation required to be provisioned local body wise in light of recommendations of the Commission; and
• In any case such reservation shall not exceed aggregate of 50 per cent of the total seats reserved in favour of SCs/STs/OBCs taken together.

OBC reservation: Creamy layer and Non-creamy layer

• 27% of the seats in Government services are reserved for those belonging to the OBC non creamy layer.
• The Government of India has evolved the criteria for exclusion of certain socially advanced persons/sections from the benefits of reservation available to OBCs in civil posts and services under the Government of India and this is called the "Creamy Layer criteria".
•  The term Creamy Layer is used for a particular category of OBC, or those members of the OBC that are wealthier, better educated and overall better off in comparison to other members of the OBC category.
• Families that earn more than a specified sum of money or who have attained a certain status in society (e.g., high-ranking positions in the government) are considered part of the “creamy layer” among the OBC category.
• The OBC creamy layer does not get any benefit and is treated as a part of the General Category.

Criteria for OBC non creamy layer category

• The person should hail from a community listed in the Central Government's list of OBCs.
• The person’s parents have an annual income of Rs 8 lakh and below.

SC judgements in various case regarding OBC reservation
Sattanathan commission, 1971

• Creamy layer candidates of the Other Backward Classes (OBC) should not get any benefits from the central government pointing towards the reservation or quota in the government jobs.

Indra Sawhney judgment, 1992

• Upheld the government’s move, based on the Mandal Commission report, to give 27% reservation to Other Backward Classes.
• But it held that the creamy layer must be excluded from backward classes.

Constitutional Provisions for reservation

• Article 16(4A) was introduced through the Constitution (Seventy-seventh Amendment) Act in 1995 to continue the extension quotas for SCs and STs in promotions.
• Because their representation in States’ services has not reached the required level.
• Article 16(4B) was introduced to carry forward unfilled vacancies in subsequent years and not apply the 50% cap on reservation to these vacancies.
• Article 335 was amended in 2001 to allow relaxations in qualifying marks and lowering of standards in favour of SCs/STs.
• The amendments were challenged in Nagaraj case.

M. Nagaraj case, 2006

• Reservations in appointments, under Article 16(4) of the constitution, do not apply to promotions.
• The judgment in Nagaraj also held that the creamy layer was applicable to SCs and STs in government promotions.

Key Facts

• OBC reservation in government jobs was introduced in 1993, the education quota came into force in 2006.
• In subsequent years, the Supreme Court applied the creamy layer concept not merely to OBCs, but also to SCs and STs.