The Hon’ble Apex Court in re: S. Ramachandra Raju v. State of Orissa, 1994 Supp (3) SCC 424, has held that the subjective satisfaction must be based on adverse material of the incumbent. It was held as under:
“In Baikuntha Nath Das v. Chief District Medical Officer, (1992) 2 SCC 299, a bench of three Judges of the Hon’ble Apex Court was to consider whether uncommunicated adverse remarks would be conisered to order compulsory retirement. The Court considering the scope of Fundamental Rule 56(j) on the anvil of administrative law, held that the order of compulsory retirement has to be passed on forming the opinion that it is in the public interest to retire a Government Servant compulsorily though the order is passed on the subjective satisfaction of the Government, the Government or the Review Committee shall have to consider the entire record of service before taking a decision in the matter, of course, attaching more importance to record of and performance during the later years. The record so considered would naturally include the entries in the confidential records, character rolls, both favourable and adverse. The order of compulsory retirement is not liable to be quashed on mere showing that while passing it, uncommunicated adverse remarks were taken into consideration. Further, this does not mean that judicial scrutiny is excluded altogether. Though the court would not examine the matter as an appellate court, they may interfere if they are satisfied that the order if mala fide or passed on no evidence or that is arbitrary, in the sense that no reasonable person would form the requisite opinion or the given material, in short, if it is found to be a perverse order, the remedy under Article 226 is an important safeguard, since the remedy is an effective check against arbitrary, mala fide or perverse actions.” Mukhtar Ahmad v. State of U.P., 2018 (3) ESC 1432.