New Delhi: The government Monday suffered a debilitating blow to its policy of caste-based reservation in education institutions as the Supreme Court (SC) threw out its plea for revival of the 27 percent quota law for other backward classes (OBC) in centrally-funded higher educational institutions.

In a brief one-line order, a bench of Justices Arajit Pasayat and L.S. Panta dismissed the government plea, saying: "We are not inclined to vary our March 29 order" - which suspended the law for caste-based quotas in educational institutions like the Indian Institutes of Management (IIMs).

The court made it clear to the government that its earlier March 29 order suspending the quota provisions for the OBC students was "final" for the present academic session beginning 2007.

Faced with a strident demand from Solicitor General G.E. Vahanvati for referring the issue to a Constitution bench, the court said it would examine the issue at a later date.

Even as the government, flummoxed by the apex court order launched a hectic legal consultation to devise ways and means to carry forward its caste-based quota in educational institutions, the terse order left it with little option except awaiting the final hearing of the issue by the court later in August.

The law ministry sources ruled out both the options of approaching the court yet again on the same issue or promulgating an ordinance as the parliament is already in session.

The bench passed its order after elaborate arguments by Solicitor General G.E. Vahanvati, who fervently pleaded to vacate the stay on the quota law, the Central Educational Institutions (Reservation in Admissions) Act, 2006.

Amid the arguments by Vahanwati, the bench made stinging observations against the government. "You (are supposed to) frame the rule and then play the game. But here you are playing the game first and then framing the rule."

"You want to give partial effect to the Mandal case judgement by implementing 27 per cent quota for OBCs but not giving effect to exclusion of creamy layer," the bench observed, exposing the government's argument that the nine-judge bench order of the apex court in the Indira Sawhney case on implementation of Mandal Commission recommendations was binding both on the government and the apex court.

When Vahanvati cited the apex court's verdicts in the Indra Sawhney and Nagaraj case, which had upheld the constitutional validity of the reservation benefits, the bench countered it saying that court verdicts cannot be quoted selectively and out of context to suit one's convenience.

The bench pointed out to the government's counsel that in the two cases, the constitution Bench had excluded the creamy layer from the benefits.

"In those judgements, the creamy layer had been excluded but you don't want to do it," the bench remarked.

Vhanavati, however, took the plea that the concept of creamy layer was laid by the constitution bench for state jobs and promotion benefits and not with regard to educational matters.

But the court remained unimpressed with the argument and said if the government really wanted to extend the benefits to the underprivileged section, then the economically backward should get the preference.

"You are treating the unequals and equals on the same footing," the bench said while maintaining that reservation was more necessary for the economically backward than the socially backward."

During the one-and-a-half-hour-long arguments, the bench repeatedly questioned the government's alacrity in providing 27 percent caste-based quota in educational institutions.

"You had waited for 57 years. Why can't you wait for one more year," Justice Pasayat snapped at Vahanvati, who tried to reason that the implementation would in no way affect the interest of the general category candidates.

To a question from the bench whether the application was not a review, Vahanvati said, "Since it is only an interim order, we are asking for vacating the stay. We are not asking for review, as it is not a final order. The principle of review is not applicable to an interim order."

The bench responded to Vahanvati's submission saying that its March 29 order was a final order as far as this year was concerned.

The solicitor general, in turn, sought to argue that under the Supreme Court's rules and procedures, the two-judge bench could only pass interim order on an interlocutory and miscellaneous petitions but no substantive order could be passed by it as the authority was vested with the constitution bench alone.

He urged the bench to refer the matter to a matter to a Constitution Bench.

Meanwhile, the pan-IIM Alumni Association filed a writ petition challenging the directions issued by the Centre to the six IIMs to put on hold the admissions till the apex court decided on the quota issue.

It said the directions issued on April 5 and 19 would amount to interference with the admission process of the IIMs and sought a direction to quash these directions. When petitioner's counsel wanted early hearing on the petition, the bench said, "It will come in the normal course." (IANS)