KOCHI: The Kerala High Court has held that the salary income of private-sector employees cannot be excluded while calculating gross annual income for determining Non-Creamy Layer (NCL) status.
"Where parents have both high income and substantial wealth well above the prescribed limits, their children cannot be certified as belonging to the Non-Creamy Layer. Even if the Government has not notified posts in the private sector equivalent to Government posts, private-sector employees are still subject to the income and wealth test and are not automatically treated as Non-Creamy Layer," the court observed.
The ruling came while dismissing two petitions filed by students in Ernakulam who claimed they were entitled to be declared as belonging to the Non-Creamy Layer category for the purpose of claiming reservation in admissions to professional degree courses and for the issuance of Non-Creamy Layer certificates.
The petitioners had submitted applications for the Kerala Engineering, Architecture and Medical Entrance Examination (KEAM) 2026. They contended that their applications for Non-Creamy Layer status were rejected on the ground that their "income exceeds the limits of Non-Creamy Layer."
They argued that they were entitled to reservation benefits because their family's income from sources other than salary was below the current cut-off limit of Rs 8 lakh.
The court pointed out that the father of one petitioner, employed as a Senior Vice President in a private company, earned an annual salary of more than Rs. 1.1 crore and owned assets including two apartments worth over Rs. 1 crore and luxury cars. Excluding his salary income would still enable his daughter to claim Non-Creamy Layer status.
Likewise, the father of the second petitioner, employed in the United Kingdom as a Lead Solutions Architect with a multinational bank and drawing a substantial salary, could also claim Non-Creamy Layer status if salary income were excluded. The court held that such an interpretation would defeat the very objective of the Creamy Layer concept.
It added that wealth and assets must also be taken into account to determine whether a family exceeds the prescribed limits. Accordingly, the court held that since the parents of both petitioners possessed income as well as wealth far exceeding the prescribed limits, their children could not be classified under the Non-Creamy Layer category.
The State Government informed the court that one petitioner's application for a Non-Creamy Layer certificate was rejected after it was found that her father had an annual salary of Rs. 1,12,65,328 and owned several assets, including two apartments and two luxury cars.
The Government argued that while salary income and agricultural income cannot be clubbed together, this does not mean salary income should be excluded altogether, as they are separate heads of income to be considered independently.
If either salary income or income from other sources exceeds the prescribed limit, the individual would fall under the Creamy Layer category.
The Government further pointed out that the petitioner's father owned flats in Hyderabad and Kochi, five cents of land at Thripunithura, and two cars—an Audi and a Honda City—and therefore clearly fell within the Creamy Layer category. It also argued that employment in a private company does not exempt a person from the Creamy Layer test.
Otherwise, high-income earners in the private sector would wrongly avail themselves of reservation benefits, defeating the constitutional objective of excluding the Creamy Layer from such benefits.