Junior Resident Doctor’s Stipend Constitutes Income for Exclusion from EWS Quota

The Delhi High Court in Dr. Bahubali N. Shetti v. All India Institute of Medical Sciences & Anr., W.P.(C) No.1339/2026 delivered an important ruling on the meaning of income under the Economically Weaker Sections reservation policy. The Court held that the remuneration received by a Junior Resident doctor at AIIMS, even though described as a stipend, is income like a salary and must be considered while determining eligibility under the EWS category. The judgment clarifies that economic assessment for a reservation cannot depend upon the label attached to a payment and must instead examine the real character of the receipt.

Background of the Case

AIIMS issued a prospectus inviting applications for the post of Senior Resident. Out of sixteen seats in Ophthalmology, one was earmarked for the EWS category. The petitioner applied under this quota and was selected. Respondent No.2, though placed higher in the overall merit list, could not obtain a seat in the unreserved category and therefore questioned the validity of the petitioner’s EWS claim.

Through an application under the Right to Information Act, it was revealed that the petitioner had received approximately ₹13,59,032 from AIIMS during the financial year 2023-24. The institution had deducted tax at source and issued Form 16, treating the amount as salary. On this basis, Respondent No.2 contended that the petitioner’s family income exceeded the ceiling of ₹8 lakh prescribed under the EWS policy and that the certificate obtained by him was invalid.

The matter first reached the Central Administrative Tribunal. The Tribunal held that the remuneration paid to a Junior Resident was income from employment and not a scholarship. It directed the termination of the petitioner’s appointment and ordered that the seat be offered to the next eligible candidate. The Delhi High Court was approached in writ jurisdiction against this order.

Issue

• Whether remuneration paid to a Junior Resident doctor, termed as stipend, should be treated as “income” for computing the ₹8 lakh ceiling under the EWS quota?

Arguments

The petitioner argued:

• Junior Residency is part of postgraduate medical education.
• Payments are educational stipends akin to scholarships.
• Under Section 10(16) of the Income Tax Act, scholarships are exempt.
• Hence, such a stipend cannot be counted as income.

AIIMS and Respondent No.2 contended:

• JR doctors perform regular clinical duties.
• Payments are subjected to TDS and reflected as salary.
• The EWS policy considers gross annual income from all sources.
• Exemption under the tax law does not govern the reservation policy.

Statutory Framework: Understanding EWS Income

1. DoPT Office Memorandum, 31.01.2019

The EWS scheme mandates:

• Family income must be below ₹8 lakh.
• Income includes all sources: salary, business, profession, etc.

2. Clarification dated 19.09.2022

The DoPT clarified that:

“Gross annual income shall be aligned with income taken into account under the Income Tax Act.”

Thus, the policy looks at actual earning capacity, not labels like stipend or scholarship.

Analysis by the Court

Nature of Junior Residency

The Court examined the structure of Junior Residency at AIIMS. The institution filed an affidavit explaining that Junior Residents are appointed through a competitive process for a fixed tenure, receive monthly remuneration under the applicable pay commission, along with allowances, and are required to perform regular clinical duties, including patient care and night shifts.

The engagement also includes service conditions, such as a penalty for mid-course resignation and forfeiture of salary for the month of resignation. These features, according to the Court, indicated a relationship of employment rather than a mere academic arrangement.

Treatment of Payment

The documentary record showed that the petitioner was paid a fixed amount every month, tax was deducted at source, and Form 16 described the payment as gross salary. The Court observed that such contemporaneous treatment by the employer was a strong indicator of the true character of the receipt. A scholarship is ordinarily intended to meet educational expenses without any obligation to render services.

In contrast, the Junior Resident was remunerated for performing duties in the hospital, and the payment was directly linked to such work. Therefore, calling it a stipend could not alter its essential nature.

Relevance of Income Tax Exemption

The petitioner relied upon Section 10(16) of the Income Tax Act and certain decisions where stipends were treated as scholarships for tax purposes. The Court held that those precedents were concerned with liability to tax and not with the determination of economic status under a reservation policy.

Even if a particular receipt is exempt from tax, it still represents income available to the person and cannot be ignored while assessing whether they belong to the economically weaker section. The objectives of the two statutes are different, and the exemption provision cannot be imported into the EWS framework.

Authority of the Tribunal

Another contention was that the Tehsildar had cancelled the EWS certificate, but the cancellation was stayed in appeal, and therefore the Tribunal could not question the certificate. The Court rejected this argument and held that the Tribunal was examining service eligibility and was competent to assess whether the candidate satisfied the income criteria. The interim stay on the administrative order did not prevent such scrutiny.

Findings

The High Court concluded that the petitioner’s gross annual income clearly exceeded the prescribed limit of eight lakh rupees. The payment received as Junior Resident was income arising out of engagement with AIIMS and not a scholarship meant solely for education. Consequently, the petitioner was not eligible to be considered under the EWS category, and the directions issued by the Tribunal for cancellation of appointment were justified.

Conclusion

The Delhi High Court has reaffirmed that the purpose of the EWS reservation is to identify persons who are truly economically weak. Where a candidate earns more than the prescribed ceiling through regular monthly remuneration, he cannot claim the benefit merely because the payment is termed a stipend. The substance of the transaction, the presence of an obligation to render services, and the treatment under tax law collectively determine the character of the receipt.

By upholding the Tribunal’s order, the Court has ensured that the reservation policy operates on a realistic assessment of income and that public employment is not accessed through technical classifications. The ruling will guide institutions across the country in evaluating EWS claims of medical residents and other trainees receiving similar payments.

Important Link

Law Library: Notes and Study Material for LLB, LLM, Judiciary, and Entrance Exams