In the famous Mandal case (Indra Sawhney v. Union of India 1992), the scope and extent of Article 16(4), which provides for reservation of jobs in favour of backward classes, has been examined thoroughly by the Supreme Court.

Though the Court has rejected the additional reservation of 10% for poorer sections of higher castes, it upheld the constitutional validity of 27% reservation for the OBCs with certain conditions, viz,
• The advanced sections among the OBCs (the creamy layer) should be excluded from the list of beneficiaries of reservation.
• No reservation in promotions; reservation should be confined to initial appointments only. Any existing reservation in promotions can continue for five years only (i.e., upto 1997).
• The total reserved quota should not exceed 50% except in some extraordinary situations. This rule should be applied every year.
• The ‘carry forward rule’ in case of unfilled (backlog) vacancies is valid. But it should not violate 50% rule.
• A permanent statutory body should be established to examine complaints of over-inclusion and under-inclusion in the list of OBCs.

Source: Wikipedia