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While making just no bones about the serious retrograde consequences emanating from use of resorting to sealed cover procedure, the Apex Court in a most learned, laudable, landmark and latest judgment titled Cdr Amit Kumar Sharma vs Union of India in Civil Appeal Nos. 841-843 of 2022 & Ors cited in 2022 LiveLaw (SC) 951 that was pronounced as recently as on October 20, 2022 minced no words to observe that sealed cover procedure sets a ‘dangerous precedent’ as it makes ‘the process of adjudication vague and opaque’. It must be noted that the Bench of Hon’ble Mr Justice Dr DY Chandrachud and Hon’ble Ms Justice Hima Kohli observed unequivocally that this procedure affects the functioning of the justice delivery system and causes a serious violation of natural justice. The Bench also observed that the measure of non-disclosure of sensitive information in exceptional circumstances must be proportionate to the purpose that the non-disclosure seeks to serve and also added that the exceptions should not become the norm. The Apex Court made these pertinent observations while allowing the appeals against the order of the Armed Forces Tribunal (AFT) that had dismissed the applications challenging the denial of Permanent Commission (PC) in the Indian Navy holding that there was no gender bias or mala fides in the grant of Permanent Commission.

At the very outset, this brief, brilliant, bold and balanced judgment authored by Hon’ble Mr Justice Dr Dhananjaya Yashwant Chandrachud for a Bench of Apex Court comprising of himself and Hon’ble Ms Justice Hima Kohli sets the ball in motion by first and foremost putting forth in para 1 that, “Leave to appeal under Section 31(1) of the Armed Forces Tribunal Act 2007 is granted.”

While delay is condoned as stated in para 2, the Bench then stipulates in para 3 that, “This batch of appeals arises from a judgment dated 3 January 2022 of the Principal Bench of the Armed Forces Tribunal (“AFT”). The AFT dismissed the applications challenging the denial of Permanent Commission (“PC”) in the Indian Navy. The principle issue is whether the AFT could have adjudicated on the validity of the selection proceedings when relevant material was disclosed only to the AFT in a sealed cover.”

The Facts

To put things in perspective, the Bench then envisages in para 4 that, “On 26 September 2008, the Ministry of Defence notified that women Short Service Commission (“SSC”) Officers would be eligible for grant of PC prospectively. In Union of India v. Lieutenant Commander Annie Nagaraj (2020) 13 SCC 1, the issue for consideration before this court was whether women who were inducted in various branches of the Indian Navy prior to 2008 were entitled to the grant of PC. By its judgment dated 17 March 2020, this Court observed, inter alia, that (Paragraphs 109.5, 109.6 and 109.7 of the judgment in Annie Nagaraj.):

(i) As a result of the policy decision of the Union Government dated 25 February 1999, the terms and conditions of service of SSC Officers including women with regard to the grant of PC were governed by Regulation 203 of Chapter IV of Part III of the Naval Ceremonial, Conditions of Service and Miscellaneous Regulations 19636 ;

(ii) The stipulation in the policy letter dated 26 September 2008 making it prospective and applicable only to specified branches/cadres of the Indian Navy (Education, Law and Naval Construction) was not enforceable;

(iii) All SSC Officers in the Education, Law and Logistics cadres, who were “presently in service” shall be considered for the grant of PCs;

(iv) The officers were entitled to the grant of PC in view of the policy letter of the Union Government dated 25 February 1999 read with Regulation 203;

(v) SSC women officers in the batch of cases before the High Court and the AFT who are “presently in service” shall be considered for the grant of PC on the basis of the vacancy position as on the date of the judgment of the Delhi High Court and the AFT or as it “presently stands”, whichever is higher;

(vi) The applications of the serving officers for the grant of PC shall be considered on the basis of the norms contained in Regulation 203, namely,

(a) availability of vacancies in the stabilized cadre at the relevant time;

(b) determination of suitability;

(c) recommendation of the Chief of Naval Staff; and

(d) empanelment shall be based on the inter-se merit evaluated on the ACRs of the officers under consideration, subject to the availability of vacancies.”

As we see, the Bench then observes in para 5 that, “There are three points in time, which were taken into consideration by the authorities for the determination of vacancies, namely

(i) August 2015, when the judgment of the High Court in Annie Nagaraj (supra) was pronounced;

(ii) September 2016, when the decision of the AFT in Commander Priya Khurana v. Union of India 7 was pronounced; and

(iii) March 2020, when the decision of this Court in Annie Nagaraj (supra) case was pronounced.”

As it turned out, the Bench then reveals in para 6 that, “Following the above directions, the process for implementing the judgment was carried out. The respondents worked out a total of 88 vacancies. 306 officers were considered for PC against the 88 vacancies after which 80 of them were granted PC. The second respondent (Integrated Headquarters of Ministry of Defence (Navy)) issued a signal order releasing many SSC officers from service on the ground that they had not obtained PC. The Signal order only notes the date of commission, date of release and the Unit of the officer without any reference to the process of selection that was undertaken or the relative merit. Many of the SSC officers, both men and women, who were not granted PC filed writ petitions before this Court challenging the rejection of their claim for PC. In the alternative, they sought directions for the grant of pension.”

It must be noted that the Bench then notes in para 13 that, “On an examination of the Board proceedings, the AFT observed that there were no mala fides in the parameters which were prescribed or the procedure adopted. It was also observed that the officers were not granted PC because of their comparative merit against limited vacancies and, in certain cases, the officers were not found suitable. The relevant observations are extracted below:

“110. Having heard all parties and examined various records, it is well established that the IN has formulated a proper procedure with suitable parameters, and has applied it uniformly to all eligible SSCOs, both men and women, of all affected Branches/Cadres in their consideration for grant of PC. We find no mala fide in the parameters laid down or the procedure adopted. No gender discrimination has been observed in the Selection Board held in Dec 2020 and those held prior to the decision of the Hon’ble Supreme Court in Annie Nagaraj (supra).

[…]

121. The merit position and status of the rest of the applicants are given below. The inputs on recommendations for PC; Peer and War Report entries have all been verified from the CRs. It is seen from the records that the applicants have not been granted PC only because their comparative merit against limited vacancy and in certain cases, not being found suitable as per the laid down criteria.””

Do note, the Bench then also notes in para 14 that, “The decision of the AFT has led to the institution of twelve Civil Appeals before this Court. Twenty-six officers of the Indian Navy are appellants before this Court in the Civil Appeals. Of these twenty six officers, thirteen are still in service pursuant to interim orders. The remaining thirteen officers are out of service since varying dates in 2020, 2021 and 2022. Apart from the twenty six officers who are appellants before this Court in the twelve civil appeals, eight officers have filed IAs for intervention. Seven out of eight officers are protected by interim orders while the tenure of the eighth officer (Commander Navneet Sharma) is to end in the month of December 2022.”

Needless to say, the Bench then states in para 15 that, “Notice was issued in this batch of Civil Appeals on 31 January 2022. The grievance of the appellants is that the sealed cover procedure, which was followed by the AFT, has resulted in substantial prejudice.”

The Analysis

As we see, the Bench then mentions in para 21 that, “The AFT, inter alia, had to determine if (i) the Naval Authorities had correctly computed the vacancies against which the claims of the SSC Officers would be considered for the grant of PC; and (ii) the Selection Board considered the applications for the grant of PC fairly. The judgment of the AFT indicates that in assessing the validity of the exercise undertaken to determine vacancies and the fairness of the selection process, it placed extensive reliance on material drawn from the data emerging from the files which were submitted by the Union Government and the Naval Authorities in a sealed cover. The judgment of AFT sets out in paragraph 92, a summary of the cadre-wise strength and vacancies to be considered for granting PC to the affected SSC officers. In paragraphs 93 and 94, the AFT has set out, in a similar manner, tabulated statements in regard to the utilisation of vacancies. This data did not form the subject matter of deliberations before the AFT. In fact, the counter affidavits in Commander Barsha Agrawal (supra) and Commander AK Sharma (supra) indicate that the data was submitted in the form of a sealed note.”

Furthermore, the Bench then states in para 22 that, “Similarly, the Board proceedings were not disclosed to the appellants. The written submissions before this court and the submissions in Commander AK Sharma (supra) before the AFT indicate that the Board proceedings were not disclosed to the officers and were submitted to the AFT in a sealed cover. The AFT on a perusal of the Board proceedings has observed that the second respondent had adopted proper procedure and suitable parameters that it had uniformly applied. It was also observed on a perusal of the documents that there was no gender bias and that the appellants’ applications for PC were rejected only because they were lower in inter se merit.”

It cannot be glossed over that the Bench then specifies in para 23 stating that, “This Court in Annie Nagaraj (supra) had directed that the applications of the serving officers for PC shall be considered on the basis of norms in Regulation 203 and paragraph 4 of the implementation guidelines. The parameters that were directed to be considered were: (i) availability of vacancies in stabilized cadre at the material time; (ii) determination of suitability; and (iii) recommendation of the Chief of Naval Staff. In terms of paragraph 4 of the implementation guidelines, the empanelment has to be based on inter-se merit evaluated on the ACRs of the officers. The Tribunal in paragraph 105 of the judgment observed that on a perusal of record it was evident that the Indian Navy had considered the SSC officers for PC based on the parameters laid down in Annie Nagaraj (supra). However, the material that has been relied on to arrive at the finding that there was no infirmity in the process has not been disclosed to the appellants. The AFT observed that the weightage to the individual parameters in the selection process for PC is the same as it existed before the judgment of this Court in Annie Nagaraj (supra). Even if the parameters for selection and the weightage of the individual parameters have been in the public domain, there is no material on record to determine if the selection has been made in accordance with the criteria. The AFT has recorded that there are ‘no mala fides’ and ‘no gender bias’ in the selection process. However, there is no material available to the appellants to challenge these findings since the material was disclosed to the AFT in a sealed envelope. The orders granting PC to other officers also did not contain any reasoning on the inter-se merit of the applicants. The AFT on a perusal of the files submitted in a sealed cover recorded the status of the applicants in a tabular format that has been extracted in the earlier part of the judgment. However, the appellants were not privy to such information.”

Most fundamentally, the Bench then minces no words to underscore in para 27 stating that, “The elementary principle of law is that all material which is relied upon by either party in the course of a judicial proceeding must be disclosed. Even if the adjudicating authority does not rely on the material while arriving at a finding, information that is relevant to the dispute, which would with ‘reasonable probability’ influence the decision of the authority must be disclosed. A one-sided submission of material which forms the subject matter of adjudication to the exclusion of the other party causes a serious violation of natural justice. In the present case, this has resulted in grave prejudice to officers whose careers are directly affected as a consequence.”

Most significantly and also most forthrightly, the Bench then minces no words to hold in para 28 that, “The non-disclosure of relevant material to the affected party and its disclosure in a sealed-cover to the adjudicating authority (in this case the AFT) sets a dangerous precedent. The disclosure of relevant material to the adjudicating authority in a sealed cover makes the process of adjudication vague and opaque. The disclosure in a sealed cover perpetuates two problems. Firstly, it denies the aggrieved party their legal right to effectively challenge an order since the adjudication of issues has proceeded on the basis of unshared material provided in a sealed cover. The adjudicating authority while relying on material furnished in the sealed cover arrives at a finding which is then effectively placed beyond the reach of challenge. Secondly, it perpetuates a culture of opaqueness and secrecy. It bestows absolute power in the hands of the adjudicating authority. It also tilts the balance of power in a litigation in favour of a dominant party which has control over information. Most often than not this is the state. A judicial order accompanied by reasons is the hallmark of the justice system. It espouses the rule of law. However, the sealed cover practice places the process by which the decision is arrived beyond scrutiny. The sealed cover procedure affects the functioning of the justice delivery system both at an individual case- to case level and at an institutional level. However, this is not to say that all information must be disclosed in the public. Illustratively, sensitive information affecting the privacy of individuals such as the identity of a sexual harassment victim cannot be disclosed. The measure of nondisclosure of sensitive information in exceptional circumstances must be proportionate to the purpose that the non-disclosure seeks to serve. The exceptions should not, however, become the norm.”

Be it noted, the Bench then unequivocally holds in para 29 that, “During the course of the hearing, it has clearly emerged before this Court that material which was relied upon by the AFT for determining the vacancies which were available and for assessing as to whether they were utilised correctly has not been disclosed to the appellants. Similarly, the Board proceedings that were relied upon by AFT to determine if the selection for PC was fair have not been disclosed to the appellants. We are cognizant of the wide range of sensitive information in the records of board proceedings. The respondents are not required to disclose the deliberations on the selection for PC within the closed Board setting. While the AFT on a perusal of the records concluded that there was no gender bias or mala fides in the grant of PC, it must be borne in mind that the officers do not possess the material to challenge this observation. The respondents while protecting the confidentiality of the proceedings of the Board must disclose the position in merit of the appellants vis-à-vis the parameters and their weightage devised by the respondents.”

Most candidly, the Bench then clearly says in para 30 that, “We permitted counsel to address the Court briefly on the nature of objections which arise on the basis of the data as disclosed. Counsel for the appellants submitted that instead of a remand to AFT, this Court may carry out the exercise. We are not inclined to do so for two reasons. Firstly, a primary fact-finding role is entrusted to the AFT under the Armed Forces Tribunal Act 2007. While exercising its appellate jurisdiction, it would be appropriate if this Court has the benefit of a considered view of the AFT. To decide the issues for the first time in appeal, as a matter of first impression, would not be appropriate. Secondly, the issues which arise before the AFT primarily turn upon the determination of vacancies, the manner of utilising them and the fairness of the selection process. This is an exercise which had to be carried out by the Naval Authorities while implementing the judgment of this Court. The correctness of that determination fell for consideration before the AFT. In arriving at its conclusion upholding the determination, the AFT has not had the benefit of considering the objections of the appellants to the manner in which the exercise was carried out by the authorities. The objections of the appellants noted above would have been set out before the AFT if the material was disclosed to the appellants. The failure to disclose relevant material has caused substantial prejudice to the appellants. This case exposes the danger of following a sealed cover procedure.”

As a corollary, the Bench then holds in para 31 that, “For the above reasons we are of the view that a remand to the AFT would be necessitated. We are conscious of the fact that the AFT carried out a painstaking exercise while disposing of the OAs but there has been a clear breach of the principles of natural justice. We are of the considered opinion that the AFT should be directed to reconsider the entire matter afresh.”

It is worth noting that the Bench then mandates in para 32 that, “We accordingly allow the appeals and set aside the impugned judgment of the AFT. The OAs corresponding to the appeals which are filed before this Court are restored for fresh adjudication by the AFT. During the pendency of these proceedings, as already noted, some of the officers in this batch of appeals including some interveners have continued in service as a result of the protective orders operating in their favour while the tenure of one officer is to end in December 2022. We direct that the officers who are protected by interim orders of this Court shall continue to have the benefit of those orders pending the disposal of the proceedings before the AFT and thereafter for a period of eight weeks from the date of the decision of the AFT should it become necessary for them to assail the judgment before this Court in appeal. The officer whose tenure is to end in December 2022 shall also be entitled to the benefit of the same protection.”

Going ahead, the Bench then states in para 33 that, “We request the AFT to dispose of the OAs which have been restored to the file of the AFT expeditiously and preferably by the end of February 2023.”

Finally, the Bench then concludes by holding in para 34 that, “Pending applications, if any, including applications for impleadment/intervention, stand disposed of.”

All told, the Apex Court has thus minced just no words to lay bare the potentially dangerous consequences of following the sealed cover procedure. It therefore must be discarded as early as possible. The Bench also made it amply clear that the sealed cover system affects functioning of justice delivery system and makes the process of adjudication opaque and vague. So there is no cogent reason as to why it should not be certainly discarded at the earliest!


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