Supreme Court Draws Adverse Inference Against Railways For ‘Inadvertently’ Destroying Employee’s ACRs During Pending Litigation

Supreme Court, in a significant judgment dated May 26, 2026, held that the destruction of an employee's service records by the State during the pendency of judicial proceedings warrants the drawing of an adverse inference against the employer.

A bench of Justice J. K. Maheshwari and Justice Atul S. Chandurkar observed that such "inadvertent" weeding out of Annual Confidential Reports (ACRs) prejudices the employee’s right to fair consideration for promotion and redressal of grievances.

The appellant, Dr. Indira Saranath, a senior officer in the Indian Railway Medical Service (IRMS), had approached the Apex Court after the Central Administrative Tribunal and the Delhi High Court dismissed her challenge against being denied promotion to the post of Chief Medical Director (Higher Administrative Grade). The appellant contended that her junior was promoted while she was deprived of the same based on uncommunicated ACR entries and an arbitrary scoring system.

The primary legal questions before the court were whether the Railway Board could justify the destruction of service records during active litigation and whether the non-communication of ACR entries, even if they were 'Very Good', resulted in actionable prejudice. The Court was also called upon to determine if the award of fractional marks in a promotion assessment was legally sustainable.

Railways Empowered To Frame Own Service Rules Independent Of DoPT

The Court first addressed the contention that the Selection Committee applied a wrong benchmark of 'Very Good+' (VG+) instead of the 'Very Good' benchmark prescribed by the Department of Personnel and Training (DoPT) in 2002. Relying on the precedent in Prabhat Ranjan Singh v. R.K. Kushwaha, the bench clarified that the Ministry of Railways has the power to lay down independent conditions of service for its employees.

The bench noted that under the Allocation of Business Rules, 1961, the Railways are specifically excluded from the ambit of business allocated to the DoPT regarding the fixing of service conditions. Consequently, a circular issued by the DoPT has no force over Railway employees unless the Railways specifically accepts or makes it applicable to its own establishment.

Non-Communication Of ACR Entries Results In Prejudicial Civil Consequences

While the respondents argued that only 'Average' or 'Below Average' entries were required to be communicated prior to 2008, the Court rejected this narrow interpretation. It held that the law laid down in Dev Dutt v. Union of India and Sukhdev Singh v. Union of India merely clarified the existing legal position that every entry in an ACR must be communicated to the officer within a reasonable time.

The Court observed that even a ‘good’ or 'very good' entry could have an adverse effect if it makes the incumbent ineligible for promotion to a higher grade where the benchmark is higher. The bench noted that the appellant had been demanding copies of her confidential reports as early as 2005, yet they were never supplied, thereby depriving her of the opportunity to seek redressal.

Adverse Inference Warranted For Weeding Out Records During Litigation

The most critical observation of the Court pertained to the "inadvertent" destruction of the appellant's ACRs by the Railway Board in 2013, despite the pendency of the present appeal which was filed in 2009. The bench remarked that the State is under an obligation to retain service records until the conclusion of any related judicial process.

"The record indicates that during pendency of the present appeal, a request was made on behalf of the appellant to produce her ACRs. According to the respondents, her relevant records had been weeded out inadvertently. It is on this factual premise that the appellant urges the Court to draw an adverse inference."

Unexplained Award Of Fractional Points In Selection Process

The Court further found the Selection Committee's assessment of the appellant to be flawed as she was awarded 19.5 points without any enabling provision in the promotion policy. The 1996 policy directed the award of whole points—five for 'Outstanding' and four for 'Very Good' performance—with no mention of fractional scores or "part confidential reports."

Since the appellant’s grading for all five relevant years was 'Very Good', the Court held she ought to have been awarded 20 points. The bench noted that the respondents failed to provide a legal basis for the fractional score, further justifying the drawing of an adverse inference against the transparency of the promotion exercise.

Notional Promotion Granted For Pensionary Benefits

The Apex Court concluded that the appellant was not treated fairly and her candidature was prejudiced by the cumulative effect of non-supply of ACRs, the destruction of service records, and the arbitrary award of points. However, as the appellant had retired in 2008, the Court declined to grant arrears of salary on the principle of 'no work no pay' but focused on retiral justice.

The Court set aside the judgments of the Tribunal and the High Court, holding the appellant entitled to notional promotion in the HAG grade (₹22,400-24,500). It directed the respondents to re-fix her pension and pay the resulting arrears within two months, ensuring she receives the benefits of the higher grade she was unfairly denied.

Date of Decision: 26 May 2026