The Supreme Court has ruled that an employer assessing whether an employee is fit to be retained in service must be guided by the person’s entire service record, not just recent performance. The judgment, delivered on 6 August 2026 by a Bench of Justice Prashant Kumar Mishra and Justice Shree Chandrashekhar, holds that adverse entries made before a promotion do not lose relevance when the question is continued retention or compulsory retirement.
At the centre of the case was the “washed-off theory”, the principle that negative entries in a service record are treated as wiped out once an employee is promoted. The Court clarified that this theory applies only to decisions about further promotion. It does not shield an employee from scrutiny of older adverse material when the authority is deciding whether the person should stay in service.
“…while the ‘washed-off theory’ may operate in matters relating to promotion, it has no application where the competent authority assesses the suitability of an employee for continued retention in service,” the Bench observed, as recorded in the judgment.
The ruling came in Sushil Sharma v. Union of India and Others (2026 LiveLaw (SC) 768). The appellant had joined the Central Industrial Security Force as an Assistant Sub-Inspector in 1982, and was promoted to Sub-Inspector in 1990 and to Inspector in 2003. On turning 50, his case went before an internal screening committee, which found him unfit for retention. That view was affirmed on review, leading to his compulsory retirement under Rule 56(j) of the Fundamental Rules. The Delhi High Court had earlier upheld the order, noting that his efficiency had slackened in the final years under review.
Rejecting his argument that pre-promotion material should have been ignored, the Court relied on its earlier decision in Rajasthan State Road Transport Corporation v. Babu Lal Jangir (2013). It held that assessing suitability for retention requires considering the full record, and that the screening committee was justified in weighing the appellant’s entire service history, including adverse entries preceding his promotions. The appeal was dismissed.
