Non-Communication Of ACR Entries Affecting Promotion Chances Violates Rights Even If Entries Are 'Very Good': Supreme Court

"The nomenclature of an entry is not relevant but its effect is determinative whether the entry is adverse or not. It was observed that a ‘good’ entry would be of no satisfaction to an incumbent if such entry makes him ineligible for promotion or has an adverse effect on his chances." Supreme Court, in a significant ruling dated May 26, 2026, held that the non-communication of entries in an Annual Confidential Report (ACR) that result in a denial of promotion has civil consequences and violates the employee's rights, even if the entries are not strictly "adverse."

A bench of Justice J.K. Maheshwari and Justice Atul S. Chandurkar observed that the "nomenclature of an entry is not relevant" but rather its "effect is determinative" of whether it should have been communicated.

Dr. Indira Saranath, a senior officer in the Indian Railway Medical Service (IRMS), challenged her non-promotion to the post of Chief Medical Director in the Higher Administrative Grade (HAG). Despite her seniority, she was deprived of the promotion while a junior officer was appointed, primarily because she failed to meet the "VG+" (Very Good Plus) benchmark. Her challenge was previously dismissed by the Central Administrative Tribunal and the Delhi High Court, leading to the present appeal.

The primary question before the court was whether the Railways were bound by DoPT circulars regarding benchmarking or could frame their own "VG+" criteria. The court was also called upon to determine if the non-communication of ACR entries that fell below the benchmark entitled the appellant to relief, and whether an adverse inference should be drawn against the Railways for weeding out her service records during the pendency of the litigation.

Railways Empowered To Frame Independent Service Rules

The Court first addressed the appellant's contention that the Selection Committee (SC) applied a wrong benchmark. The appellant argued that the DoPT had prescribed a "Very Good" benchmark, whereas the Railways applied a more stringent "VG+" criteria. The bench referred to the precedent in Prabhat Ranjan Singh vs. R.K. Kushwaha, noting that under the Allocation of Business Rules, 1961, the Railways are specifically excluded from the ambit of the DoPT in fixing service conditions.

The Court observed that the Ministry of Railways has the power to lay down conditions of service for its employees independently. Since the Railways had issued a specific circular on June 3, 2002, prescribing the "VG+" benchmark for promotion to HAG, that criteria would govern the appellant's case. Consequently, the Court held that the SC did not apply an incorrect benchmark.

Non-Communication Of ACRs Results In Civil Consequences

The heart of the dispute lay in the fact that the appellant was never communicated her "Very Good" ratings. Under the "VG+" benchmark, an officer required at least two "Outstanding" and three "Very Good" reports over five years. The appellant, having received only "Very Good" ratings, was rendered ineligible. The Court emphasized that even if an entry is labeled "Very Good," it becomes adverse in effect if it acts as a barrier to further promotion.

The bench relied on the landmark decisions in Dev Dutt vs. Union of India and Sukhdev Singh vs. Union of India, which clarified that every entry in an ACR must be communicated to the employee. The Court noted that non-communication prevents an officer from seeking redressal or representation, which constitutes a violation of fairness in service matters.

Effect Of Entry Determinative Of Its Nature

The Court noted that prior to the Dev Dutt ruling, authorities often only communicated "Average" or "Below Average" entries. However, the bench clarified that the ratio of Dev Dutt is declaratory and applies to periods prior to the judgment. In the present case, the appellant had been demanding her ACRs since 2005, asserting they were improperly assessed, but the Railways failed to supply them.

"The nomenclature of an entry is not relevant but its effect is determinative whether the entry is adverse or not."

Adverse Inference Drawn For Destruction Of Service Records

A critical factor in the Court's decision was the "inadvertent" weeding out of the appellant’s service records by the Railway Board in 2013. The Court expressed strong disapproval, noting that the records were destroyed while judicial proceedings were actively pending. The Railways admitted in an affidavit that records should be retained until the conclusion of judicial processes.

The bench held that the destruction of records deprived the Court of the opportunity to perish the appellant's actual performance data. Given the "inadvertent" destruction and the fact that the SC had awarded points in fractions (19.5) without any enabling provision in the promotion policy, the Court drew an adverse inference against the respondents.

Court Corrects Mathematical Error In Assessment

The Court pointed out that the promotion policy awarded four points for "Very Good" performance. Since the appellant had "Very Good" entries for all five relevant years, she should have been awarded 20 points. The Selection Committee’s award of 19.5 points was found to be without basis, as the 1996 policy did not provide for awarding points in fractions.

"The performance of the appellant was assessed by the SC without indicating the basis for awarding 19.5 points to her... twenty points for five years ought to have been awarded."

The Supreme Court concluded that the appellant was not treated fairly and was prejudiced by the non-supply of ACRs and the destruction of her records. While the Court declined to grant arrears of salary on the principle of "no work no pay," it held her entitled to notional promotion. The Court set aside the High Court and Tribunal orders, directing the Railways to re-fix her pension in the HAG grade and pay all admissible arrears within two months.

Date of Decision: 26 May 2026