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The issues which presently arise before this Court are, as follows:

(1) What is the law declared and what are the directions given in Indira Sawhney in regard to "creamy layer" in the context of Articles 14 and 16?

(2) Can the declaration of law in regard to "creamy layer" in the context of Articles 14 and 16 in Indira Sawhney and in other rulings be undone by the Kerala Legislature by a retrospective validating law containing a statutory declaration whose effect is to say that no "creamy layer" exists in the State of Kerala? (3) Are the provisions of sections 3, 4 and 6 of the Kerala State Backward Classes ( Reservation of Appointments or Posts in the Services) Act ( Act No.16/95) violative of Articles 14 and 16 of the Constitution of India? (4) Whether the violation of Article 14(and Article 16) amounts to violation of the basic structure of the Constitution of India?

4 and 5. Our decision on points 2 and 3 will be subject to what we propose to direct under point 5 and 6. Points 2 and 3 are decided accordingly.

Point 4: Article 14:(and Article 16 which is a facet of it) is part of the basic structure of the Constitution of India:

The preamble to the Constitution of India emphasises the principle of equality as basic to our constitution. In Keshavananda Bharati vs. State of Kerala [1973 (4) SCC 225], it was ruled that even constitutional amendments which offended the basic structure of the Constitution would be ultra vires the basic structure. Sikri, CJ. laid stress on the basic features enumerated in the preamble to the Constitution and said that there were other basic features too which could be gathered from the Constitutional scheme (para 506 A of SCC). Equality was one of the basic features referred to in the Preamble to our Constitution. Shelat and Grover, JJ. also referred to the basic rights referred to in the Preamble. They specifically referred to equality (para 520 and 535A of SCC). Hegde & Shelat, JJ. also referred to the Preamble (paras 648, 652). Ray, J. (as he then was) also did so (para 886). Jaganmohan Reddy, J. too referred to the Preamble and the equality doctrine (para 1159). Khanna, J. accepted this position (para 1471). Mathew, J. referred to equality as a basic feature(para 1621). Dwivedi, J.(para 1882, 1883) and Chandrachud, J.(as he then was) (see para 2086) accepted this position. What we mean to say is that Parliament and the legislatures in this Country cannot transgress the basic feature of the Constitution, namely, the principle of equality enshrined in Article 14 of which Article 16(1) is a facet. Whether creamy layer is not excluded or whether forward castes get included in the list of backward classes, the position will be the same, namely, that there will be a breach not only of Article 14 but of the basic structure of the Constitution.

It will be seen that this Court has stated, as long back as in 1992 that it is imperative to exclude the creamy layer in the Backward classes from the benefits of reservation. The Kerala Government has been already found to have deliberately violated the directions of this Court in that judgment and held guilty of contempt of Court. The question of imposing sentence and, if so, on whom was pending when the impugned legislation was passed in 1995 by the State of Kerala. The legislation unfortunately served dual purposes - one to ward off temporarily any sentence being passed in the contempt proceedings and the other for deliberately putting off the exclusion of creamy layer till this Court could deal with the validity of the Act. Now that the provisions of sections 3, 4 and 6 of the Act have been struck down, it is no longer permissible to allow the State of Kerala to continue to violate the mandate of this Court nor can this Court allow the State to help the creamy layer to reap the benefits of its non-exclusion. Is it not necessary to see that the benefits trickle down atleast now to the non-creamy layer of the Backward classes in that State at least from today? We, therefore propose to adopt the principle of prospective overruling and we think it appropriate to put the recommendations in the Report dated 4.8.97 of the High Level Committee presided over by Justice K.J.Joseph (with the addition of the communities and sub-castes mentioned in the affidavit of the Chief Secretary dated 16.1.1998) into immediate operation from today prospectively, as stated below. We apply the principle of prospective overruling, as done in Ashok Kumar Thakur's case, keeping the suo motu contempt case pending. We, therefore, direct as follows: (1) We direct that the exclusion of creamy layer as stated in that Report shall be applicable from today, to all cases where appointment orders have not been issued to the members of the Backward classes and for all future selections in public service as stated in the Report. (The five communities referred to in the affidavit of the Chief Secretary dated 16.1.98 shall also be treated as Backward subject to the guidelines and norms fixed by the Committee). It will be obligatory to implement the Report, as so modified, in the Government Departments of Kerala / Organisations/ Institutions/Public Sector Undertakings/Government owned Companies/Co-operative Societies/Autonomous Bodies , as stated in the Report, wherever the principles of reservation embodied in Article 16(4) or Rules 14 to 17 of Part II of the Kerala State and subordinate Service Rules, 1958 are applicable. It shall be necessary for the candidates belonging to the Backward Classes to file the certificates as envisaged in the Report and satisfy the employer that he or she does not belong to the creamy layer. The income limits and property holdings as mentioned in the Schedule to the said Report will be applicable from today. The exclusion of certain occupations/communities etc. shall however be as specified in the Report. Any violation of this direction will make the appointment or selection made on or after this day, unconstitutional. It is made clear that any infraction of this direction will be treated seriously and this Court will also not hesitate to take further fresh action for contempt of Court, if need be. (2) We are of the view that it will be appropriate to allow the State of Kerala one more chance to conform to the Rule of law. We, therefore, permit the State of Kerala to make such provision as it may deem fit for exclusion of creamy layer among the Backward Classes in the State of Kerala, in accordance with law and in a manner consistent with the Constitution, the basic structure of the Constitution, Articles 14 and 16 and the judgment in Indira Sawhney and in Ashok Kumar Thakur and in accordance with the principles laid down in the judgment now rendered by us.