2022 (10) TMI 1230 - SC - Indian Laws

Denial of Permanent Commission (PC) in the Indian Navy - disclosure of sensitive information - whether the Armed Forces Tribunal (AFT) could have adjudicated on the validity of the selection proceedings when relevant material was disclosed only to the AFT in a sealed cover? - HELD THAT - This court observed that the right to disclosure is not absolute. Portions that involve information on third-parties or confidential information on the securities market may be withheld by SEBI. The court directed that the Board is duty bound to disclose parts of the investigative report that concern the specific allegations that have been levelled in the show cause notice. However, the court also observed that it does not entitle a person to whom the notice is issued to receive unrelated sensitive information. The court held that it must first be prima facie established by SEBI that the disclosure of the information would affect third party rights. Once a prima facie case of sensitivity is established, the onus would then shift to the appellant to prove that the information is necessary to defend his case appropriately. 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. 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 - 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. 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. 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 - the AFT should be directed to reconsider the entire matter afresh - appeal allowed.

Summary

Issues Involved:
1. Validity of the selection proceedings for Permanent Commission (PC) in the Indian Navy.
2. Disclosure of relevant material to the Armed Forces Tribunal (AFT) in a sealed cover.
3. Computation of vacancies for the grant of PC.
4. Fairness of the selection process for PC.
5. Allegations of gender discrimination in the selection process.
6. Impact of the sealed cover procedure on natural justice.

Detailed Analysis:

Validity of the Selection Proceedings for Permanent Commission (PC) in the Indian Navy
The principal issue was 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 Supreme Court noted that the AFT dismissed applications challenging the denial of PC based on material provided in sealed covers, which was not disclosed to the appellants.

Disclosure of Relevant Material to the Armed Forces Tribunal (AFT) in a Sealed Cover
The Supreme Court emphasized that all material relied upon in judicial proceedings must be disclosed to the affected parties. It was observed that the sealed cover procedure used by the AFT resulted in substantial prejudice to the appellants. The court held that the non-disclosure of material to the appellants and its submission in a sealed cover to the AFT violated principles of natural justice, causing significant prejudice to the officers whose careers were directly affected.

Computation of Vacancies for the Grant of PC
The court examined whether the Naval Authorities had correctly computed the vacancies against which the claims of the SSC Officers would be considered for the grant of PC. The AFT's judgment relied on data submitted in sealed covers, which prevented the appellants from challenging the computation of vacancies. The Supreme Court found that this lack of transparency in the vacancy determination process was problematic.

Fairness of the Selection Process for PC
The fairness of the selection process was questioned, particularly the criteria and parameters used, which were not disclosed to the appellants. The Supreme Court noted that the AFT had relied on sealed cover material to conclude that there were no malafides or gender bias in the selection process. However, since the material was not disclosed to the appellants, they could not effectively challenge the findings.

Allegations of Gender Discrimination in the Selection Process
The appellants argued that the selection process was discriminatory. The Supreme Court noted that while the AFT found no gender bias, the appellants were not provided access to the material used to make this determination, thus preventing them from contesting the findings.

Impact of the Sealed Cover Procedure on Natural Justice
The Supreme Court highlighted the dangers of the sealed cover procedure, stating that it creates an opaque and unfair adjudication process. The court emphasized that the practice of sealed covers should be an exception rather than the norm, as it undermines transparency and accountability in the judicial process.

Conclusion:
The Supreme Court allowed the appeals, set aside the impugned judgment of the AFT, and remanded the cases for fresh adjudication. The court directed that all relevant material be disclosed to the appellants, ensuring a fair opportunity to challenge the findings. The AFT was instructed to dispose of the cases expeditiously, with interim protections for the officers continuing until the final decision.