The facts of the case were as follows. On January 1, 1979, the Government headed by Prime Minister Moraiji Desai appointed the Second Backward Classes Commission under Article 340 of the Constitution under the Chairmanship of Sri B. P. Mandal, (M.P.) to investigate the socially and educationally backward classes within the territory of India and to recommend steps to be taken for their advancement including disability for making provisions for reservation of seats for them in Government jobs.
The Commission submitted its report in December, 1980. It identified 3743 castes as socially and educationally backward classes and recommended for reservation of 27% Government jobs for them. The Janata Party collapsed due to internal differences and the Congress headed by Smt. Indira Gandhi came to power in 1980.
The Congress Government did not implement the Mandal Commission report till 1989. But when the Congress party was defeated at the polls in 1989 and the Janata Dal came to power, it decided to implement the Commission report as it had promised to the electorate. Accordingly, Prime Minister V.P. Singh issued the Office Memorandum on August 13, 1990 reserving 27% seats to backward classes in Government services on the basis of recommendations of Mandal Commission.
Due to implementation of Mandal Commission Report, there was great turmoil and violent anti-reservation agitations rocked the nation. The Supreme Court Bar Association filed a writ before the Supreme Court for staying the Office Memorandum from operation. The Supreme Court granted stay for operation of the office Memo, till final disposal of the case. Unfortunately the Janata Government again collapsed and in 1991, Congress Party again came to power at the Centre.
The Congress Government headed by Sri P.V. Narsimha Rao issued another office Memo, on September 25, 1991 but made changes in the O.M. of August 13, 1990 by introducing
(1) The economic criteria in granting reservation by giving preference to the poorer sections of SEBCS in the 27% quota,
(2) Reserved 10% of vacancies for other socially and educationally backward classes of higher castes. The five judges Bench of the court referred the matter to a special Constitution Bench of nine Judges in view of the importance of the case to finally decide the legal position relating to reservations in several earlier Supreme Court judgments on this issue. Despite several adjournments, the Union Government failed to submit the economic criteria as mentioned in official Memorandum of September, 1991.
The Nine Judge Constitution Bench of the Supreme Court held valid by 6: 3 majority to the decision of the Union Government to reserve 27% Government jobs for backward classes creamy layer among them being eliminated. The reservation is confined to initial appointments and not in promotions and total reservation not to exceed 50%.
The court partially held the two Impugned O.M. dated August 13, 1990 and September 25, 1991, as valid and enforceable but subject to the conditions indicated in the decision that socially advanced persons—creamy layer among O.B.C.s excluded.
However, the court struck down the Congress Government’s O.M. reserving 10% Government jobs for economically backward classes among higher classes. While 50% shall be the rule but it is necessary not to put out of consideration certain extraordinary situations inherent in the great adversity of this country and people.
The majority decision of the Supreme Court on various aspects of reservations provided in Article 16(4) may be summarized as follows:
(1) The majority held that a caste can be and quite often is a social class in India and if it is backward socially, it would be a backward class for the purpose of Article 16(4).
(2) Article 16(4) is not an exception to Article 16(1). It is an instance of classification. Hence, reservation can be made under Article 16(1).
(3) The majority held that the backward class of citizens contemplated in Article 16(4) is not the same as socially and educationally backward classes in Article 15(4).
(4) The majority held that while identifying the backward classes, the socially advanced persons—the creamy layer, among them being excluded, for the purpose of giving benefit of reservation.
(5) The majority held that Article 16(4) permits classification of backward classes into backward and more backward classes, for the purpose of giving more protection to more backward class people.
(6) The majority held that a backward class of citizens can not be identified only and exclusively with reference to economic criteria.
(7) The majority held that the maximum limit of reservation cannot exceed 50%. However, in extraordinary situations it may be relaxed in favor of people living in remote, far-flung areas of the country.
(8) The majority held that reservation can be made by an executive order. If need be made by Parliament or State Legislature.
(9) The majority held that the reservation under Article 16(4) cannot be made in promotions. The reservation is confined to initial appointments.
(10) The court directed the Union Government, State Governments and Union Territories to appoint a permanent statutory body to examine complaints of wrong Inclusion or non-inclusion of groups, classes and sections in the list of other backward classes.
(11) The majority made it clear and directed that all objections to the criteria evolved by the Central Government and State Governments to exclude socially advanced persons creamy layer from other backward classes, shall be filed only before the Supreme Court and not before any High Court or Tribunal.
(12) It was decided by the court that disputes regarding new criteria can be raised only in the Supreme Court. The majority judgment made it clear and directed that all objection to the criteria evolved by the Central and State Governments regarding creamy layer to be excluded from OBC categories and other related matters shall be preferred in the Supreme Court only.
Expert Body Report on Creamy Layer
According to this report, following important findings were concluded, where the benefit of reservation will not be extended:
(1) It says that certain constitutional posts qualify for the rule of exclusions namely, the posts of President, Vice-President, Judges of the Supreme Court and High Courts, Chairman and members of U.P.S.C. and State P.S.C.s, Chief Election Commissioners, Comptroller and Auditor General of India, Governors and Ministers and membership of legislatures.
(2) The rule of exclusion covers Class I Officers of Central and State Government services (direct recruits) Public Undertakings, armed forces and Para-military forces, professional class including trade, business, industry and property owners,
(3) It excludes those having gross annual income of Rs. one lakh and above.
(4) The exclusion would apply whether either wife or husband is a Class I Officer.
(5) If before the death of either of or both spouses occurs, either of the spouses has had the benefit of employment in any international bodies like the United Nations, IMF, World Bank for a period of 5 years, the exclusion rule would continue to apply to their children.
(6) If a lady belonging to S.E.B.C. marries to a Class I Officer, then she would be entitled to get the benefit of reservation.
Group B—Class n (direct recruitment):
(1) If both the spouses are Class II Officers, then the rule of exclusion will apply to their off spring.
(2) Where both spouses are Class II Officers, and one of them dies, then the rule of exclusion would apply to their children.
(3) Where husband is Class I Officer and the wife is Class II Officer, if the husband dies, the rule of exclusion will not apply.
Also when the wife is a Class I Officer and the husband is Class II and the wife dies, the rule of exclusion would not apply, but if the husband dies, the rule of exclusion would apply on the principle that one of the parents, namely, the mother continues to be a Class I Officer.
(4) The above service category criteria also applies to officers holding equivalent or comparable posts In Public Sector Undertakings, banks. Insurance organisations, Universities and also equivalent or comparable posts and positions under private investment.
(5) As regards armed forces including Para-military forces (not persons holding civil posts) the exclusion rule would apply at the level of Colonel and above in the Army and to equivalent post in the Navy and Air Forces and Para-military forces.
If the wife of an armed forces officer is herself in the armed forces, the rule of exclusion would apply, only when she has reached the rank of Colonel, the service rank below Colonel of husband and wife shall not be clubbed together.
Even if the wife of an officer in the armed forces is in civil employment, this will not be a ground for applying the rule of exclusion unless she falls in the service category.
(6) Professional class and those engaged in trade, business and industry, the exclusion will be determined on the basis of income wealth criteria.
(7) For property owners if the person belongs to a family which owns irrigated land and the extent of irrigated land is equal to or more than 65% of the statutory ceiling area, the rule of exclusion would apply. The rule would not apply to persons belonging to families owning only un irrigated land irrespective of the area of such land.
(8) The committee says that persons having gross annual income of Rs. one lakh or above or possessing wealth above the exemption limit as prescribed in the Wealth Tax Act would be excluded from the benefit of reservation.
On March 26, 1993, Parliament passed the Bill setting up a National Commission for Backward classes for considering inclusions in and exclusions from the list of castes notified as backward for the purpose of job-reservation. The Commission is a statutory body and therefore would enable it to comply with the directions given by the Supreme Court in the Mandal Commission case.