On 26th September 2018, the Supreme Court delivered its verdict in the Reservation in Promotion case. A five-judge Bench of the Supreme Court unanimously held that the judgment delivered in Nagaraj in 2006, relating to reservations in promotions for SC/ST persons, does not need reconsideration by a larger seven-judge Bench. The Bench also struck the demonstration of further backwardness criterion from Nagaraj.
While on the one hand the Court struck down the further backwardness criterion, it on the other hand introduced the principle of creamy layer exclusion. It held that creamy layer exclusion extends to SC/STs and, hence the State cannot grant reservations in promotion to SC/ST individuals who belong to the creamy layer of their community.
Justice Rohinton Nariman authored the unanimous judgment.
Various States along with the Centre challenged the Court's 2006 Nagaraj judgment. The petitioners' maintained that Nagaraj had made it unjustly difficult to grant reservations in promotion. In particular, they had argued that the Court ought to review the three controlling conditions in Nagaraj:
Prior to granting reservations in promotion to a Scheduled Caste or Scheduled Tribe in public employment, the State must demonstrate the following:
Firstly, the judgment held that the Supreme Court's 2006 Nagaraj judgment does not need reconsideration by a 7-judge Bench.
Nevertheless, the judgment modified Nagaraj with regards to 'further backwardness'. In Nagaraj, the Supreme Court had held that if the State chose to grant reservations in promotion, the State must collect quantifiable data to demonstrate the current backwardness of the SC/ST been granting reservations in promotion. On further backwardness, the judgment held that the further backwardness condition is contrary to the nine-judge Bench decision in Indra Sawhney. Justice Nariman held that Indra Sawhney does not allow for the collection of quantifiable data as a pre-requisite for granting reservations in promotions.
However, while the judgment modified the further backwardness criterion, it also added that the principle of creamy layer exclusion applies to SC/STs. Previously creamy layer exclusion only applied to Other Backward Classes (OBCs) in matters of reservation.
The Court held that creamy layer exclusion is a principle of equality. It held that failing to apply the exclusion of creamy layer principle would violate right to equality in two ways. Firstly, it held that doing so treats equals differently, namely the general classes and the forward among Backward Classes (SC/ST). Second, it held that doing so treat unequals the same, namely backward classes and the forward among backward classes. Thus, the Court held that the exclusion of creamy layer principle is essential to safeguard the right to equality.
Nariman J. observed "the whole object of reservation is to see that backward classes of citizens move forward so that they march hand in hand with other citizens of India on an equal basis. This will not be possible if only the creamy layer within that class bag all the coveted jobs in the public sector and perpetuate themselves, leaving the rest of the class as backward as they always were."
Justice Nariman clarified that in applying the creamy layer principle to Scheduled Castes and Scheduled Tribes, the Court does not in any manner tinker with the Presidential list under Article 341 and 342 of the Constitution. Justice Nariman wrote, the Castes and groups mentioned under Presidential Order is not altered, but those persons of the group who have come out of untouchability or backwardness by virtue of belonging to creamy layer are excluded from the benefit of reservation in promotion.
The Court read creamy layer exclusion as an ingrained principle of Equality in determining contours of reservation policy. Justice Nariman specifically overruled the observation by Former Chief Justice K.G. Balakrishanan in Ashok Thakur, where he held that the creamy layer principle is merely a principle of identification and not a principle of equality.
The Bench clarified that the second condition of states giving quantifiable data with respect to inadequate representation still stands and that inadequacy of representation has to be in relation to specific cadre and not in proportion to SC/ST population in the State.