Supreme Court on Sealed Cover Procedure in Armed Forces Tribunal Cases: Cdr Amit Kumar Sharma vs. Union of India (20 October 2022)

Date of the Judgment: 20 October 2022

Citation: Civil Appeal Nos 841- 843 of 2022, Cdr Amit Kumar Sharma etc vs Union of India & Ors etc

Judges: Dr Dhananjaya Y Chandrachud, J and Hima Kohli, J

Can a court rely on documents not disclosed to the parties involved in a case? The Supreme Court of India recently addressed this question in a batch of appeals concerning the denial of Permanent Commission (PC) to Short Service Commission (SSC) officers in the Indian Navy. The core issue was whether the Armed Forces Tribunal (AFT) could adjudicate the validity of selection proceedings when relevant material was disclosed only to the AFT in a sealed cover, denying the officers a chance to respond.

The Supreme Court, in this judgment, emphasized the importance of transparency and the disclosure of all relevant information to ensure fairness and natural justice in judicial proceedings. The judgment highlights the problems with the sealed cover procedure, especially in cases affecting the careers of individuals.

Case Background

The case originated from a 2008 policy by the Ministry of Defence, which made women SSC officers eligible for PC prospectively. In 2020, the Supreme Court, in *Union of India v. Lieutenant Commander Annie Nagaraj*, ruled that all SSC officers in the Education, Law, and Logistics cadres, who were “presently in service,” should be considered for PC. The court also laid down guidelines for the same, including the availability of vacancies, suitability, and inter-se merit. Following this, the Indian Navy considered 306 officers for 88 PC vacancies, granting PC to 80 officers. Many SSC officers, who were not granted PC, then filed petitions, which were dismissed by the Supreme Court, directing them to approach the AFT. The AFT then received the case and the Navy submitted detailed notes on vacancy calculation and selection board proceedings in sealed covers.

The AFT, based on these sealed documents and other records, upheld the Navy’s decision, stating that there were no malafides or gender bias in the selection process. Aggrieved by this, the officers appealed to the Supreme Court, arguing that the sealed cover procedure had prejudiced their case.

Timeline:

Course of Proceedings

Initially, several SSC officers filed writ petitions before the Supreme Court challenging the rejection of their claim for PC. The Supreme Court dismissed these petitions, directing the officers to approach the AFT. The AFT then received the case and the Navy submitted detailed notes on vacancy calculation and selection board proceedings in sealed covers. The AFT, based on these sealed documents and other records, upheld the Navy’s decision, stating that there were no malafides or gender bias in the selection process. Aggrieved by this, the officers appealed to the Supreme Court, arguing that the sealed cover procedure had prejudiced their case.

Legal Framework

The primary legal framework governing the grant of PC to SSC officers is derived from:

• Regulation 203 of Chapter IV of Part III of the Naval Ceremonial, Conditions of Service and Miscellaneous Regulations 1963: This regulation governs the terms and conditions of service of SSC officers, including the grant of PC.
• Policy letter of the Union Government dated 25 February 1999: This policy, read with Regulation 203, forms the basis for considering SSC officers for PC.

The Supreme Court in *Annie Nagaraj (supra)* clarified that the 2008 policy making PC applicable prospectively was not enforceable. The court also stated that all SSC officers “presently in service” should be considered for PC based on:

• Availability of vacancies in the stabilized cadre at the relevant time.
• Determination of suitability.
• Recommendation of the Chief of Naval Staff.
• Empanelment based on inter-se merit evaluated on the Annual Confidential Reports (ACRs) of the officers.

Arguments

Appellants’ Arguments:

• The AFT extensively relied on material submitted by the Naval Authorities in a sealed cover, which was never disclosed to the appellants.
• The highest number of vacancies were not considered, as directed by the Supreme Court in *Annie Nagaraj (supra)*.
• Several batches were clubbed together, skewing the inter-se merit and not considering vacancies batch-wise.
• Consideration for PC was based on ACRs written when officers were not eligible for PC, which was deemed casual, as observed in *Lt. Col. Nitisha v. Union of India*.
• There was no distinction made between officers inducted before and after 2008.
• Data submitted by the Navy showed that vacancies were not properly calculated.
• The adoption of the 60:40 ratio (PC:SSC Officers) based on the AV Singh Committee report was flawed, as other aspects of the report were not implemented.
• The computation of yearly vacancies was arbitrary, based on a 15-year distribution.
• The grievances of individual officers were not adjudicated properly.

Respondents’ Arguments:

• The Naval Authorities correctly computed vacancies, considering the overall cadre structure, policies, future inductions, and the need to maintain a youthful profile.
• Grant of PC is governed by Regulation 203, which requires vacancies to be in the stabilized cadre.
• Temporary and Training Drafting Leave Reserve (TDLR) vacancies were also added to the stabilized cadre.
• Vacancies were worked out with reference to August 2015, September 2016, and March 2020.
• The 60:40 ratio (PC:SSC) was approved by the Government of India based on the AV Singh Committee report.
• Deficiencies in each stream were divided by a 15-year cycle, which is the difference between the life of a PC Officer and SSC Officer in service.
• Vacancies were assigned to each batch based on the above model, providing maximum vacancies as of March 2020.
• Each SSC Officer was given two ‘looks’ for consideration: first with the preceding batch and second with the next fresh batch.
• The ACRs were not erroneous, as the judgment in *Nitisha (supra)* pertained to the Indian Army, where male officers were being granted PC.
• ACRs in the last five years preceding the Board were considered, with a specific column for PC recommendation.
• Officers not recommended for PC in three or more ACRs were disqualified.
• The AFT on perusal of the proceedings of the Selection Board and confidential dossiers found that the Navy had considered the claims of the officers for PC based upon the parameters laid down by this Court in *Annie Nagaraja* (supra).

[TABLE] of Submissions

Innovativeness of the Argument: The appellants’ argument regarding the sealed cover procedure and its impact on transparency and natural justice was particularly innovative, highlighting a systemic issue in the adjudication process.

Issues Framed by the Supreme Court

The Supreme Court addressed the following issues:

1. 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.
2. 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.
3. Whether the Selection Board considered the applications for the grant of PC fairly.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

Cases:

• *Union of India v. Lieutenant Commander Annie Nagaraj* [(2020) 13 SCC 1] – Supreme Court of India: This case provided the primary framework for considering SSC officers for PC. The court relied on this case to highlight the guidelines that were to be followed for grant of PC.
• *Lt. Col. Nitisha v. Union of India* [(2021) SCCOnLine SC 261] – Supreme Court of India: This case was cited by the appellants to argue that ACRs written when officers were not eligible for PC were casual. The court distinguished this case as it pertained to the Indian Army.
• *Commander Priya Khurana v. Union of India* (OA No 143 of 2016) – Armed Forces Tribunal: This case was one of the cases considered by the AFT, and the date of the decision was used for determining vacancies.
• *Khudiram Das v. State of West Bengal* [(1975) 2 SCC 81] – Supreme Court of India: This case was relied upon by the court to highlight the importance of disclosure of material that would influence the decision of the authority.
• *T. Takano v. Securities and Exchange Board of India* (Civil Appeal Nos. 487 -488 of 2022) – Supreme Court of India: This case was relied upon to emphasize the need for disclosure of all relevant information to ensure transparency and accountability.

Legal Provisions:

• Section 31(1) of the Armed Forces Tribunal Act 2007: This section provides for leave to appeal to the Supreme Court.
• Regulation 203 of Chapter IV of Part III of the Naval Ceremonial, Conditions of Service and Miscellaneous Regulations 1963: This regulation governs the terms and conditions of service of SSC officers, including the grant of PC.

[TABLE] of Authorities

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• *Union of India v. Lieutenant Commander Annie Nagaraj* [(2020) 13 SCC 1]* – The Court relied on this judgment as it provided the basis for the consideration of PC to SSC officers.
• *Lt. Col. Nitisha v. Union of India* [(2021) SCCOnLine SC 261]* – The Court distinguished this case, stating that it was not applicable to the Indian Navy.
• *Khudiram Das v. State of West Bengal* [(1975) 2 SCC 81]* – The Court relied on this judgment to emphasize the importance of disclosing all relevant material.
• *T. Takano v. Securities and Exchange Board of India* (Civil Appeal Nos. 487 -488 of 2022)* – The Court relied on this case to highlight the need for transparency and accountability in judicial proceedings.

The Supreme Court held that the sealed cover procedure followed by the AFT caused material prejudice to the appellants. The court emphasized that all relevant material must be disclosed to the parties involved in a judicial proceeding to ensure a fair hearing. The court set aside the judgment of the AFT and remanded the case for fresh adjudication.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following:

• Transparency and Natural Justice: The court emphasized that all relevant material must be disclosed to the parties involved in a judicial proceeding. The sealed cover procedure, by its very nature, violates the principles of natural justice by denying the affected party the opportunity to challenge the evidence and reasoning used against them.
• Prejudice to the Appellants: The court noted that the AFT’s reliance on sealed cover material had caused material prejudice to the appellants, as they were unable to effectively challenge the findings.
• Opaqueness of the Process: The court expressed concern that the sealed cover procedure leads to an opaque process, which undermines the transparency and accountability of the judicial system.
• Impact on Individual Rights: The court recognized that the non-disclosure of information directly affected the careers of the officers involved, making it imperative that they be given a fair opportunity to present their case.

[TABLE] of Sentiment Analysis

Fact:Law Ratio

Logical Reasoning:

The court considered alternative interpretations of the law and the facts, but ultimately rejected them because the sealed cover procedure fundamentally undermined the principles of natural justice and fairness. The court emphasized that the need for transparency and accountability in judicial proceedings outweighed any potential benefits of keeping information confidential from one party.

The court’s decision was based on the principle that all parties in a judicial proceeding have a right to know the material that is being used against them. This right is essential to ensure that they have a fair opportunity to present their case and challenge the findings of the court. The court also noted that the sealed cover procedure creates an imbalance of power, favoring the party that has control over the information and undermining the fairness of the process.

The majority opinion was delivered by Dr. Dhananjaya Y Chandrachud, J, with Hima Kohli, J concurring. There were no dissenting opinions in this case.

The court’s decision has significant implications for future cases involving the sealed cover procedure. It sets a precedent that such procedures should only be used in exceptional circumstances and that the non-disclosure of information must be proportionate to the purpose it seeks to serve. The decision also highlights the importance of transparency and accountability in the judicial system.

The court’s decision does not introduce any new doctrines or legal principles, but rather reinforces existing principles of natural justice and the need for transparency in judicial proceedings. The court’s analysis of the sealed cover procedure and its impact on fairness is a significant contribution to the development of the law in this area.

The Supreme Court quoted the following from the judgment:

“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.”

“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.”

“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.”

Key Takeaways

• The sealed cover procedure should only be used in exceptional circumstances.
• All relevant material must be disclosed to all parties in a judicial proceeding to ensure fairness.
• The non-disclosure of information must be proportionate to the purpose it seeks to serve.
• Transparency and accountability are essential for the proper functioning of the judicial system.
• The right to a fair hearing includes the right to know the material that is being used against you.

The judgment has a significant potential future impact on cases involving the sealed cover procedure, setting a precedent that such procedures should be used sparingly and only when absolutely necessary. It also reinforces the importance of transparency and fairness in the judicial system.

Directions

The Supreme Court gave the following directions:

• The impugned judgment of the AFT was set aside.
• The OAs corresponding to the appeals were restored for fresh adjudication by the AFT.
• Officers protected by interim orders of the Supreme Court were allowed to continue with the benefit of those orders until the AFT’s decision and for a period of eight weeks thereafter.
• The AFT was requested to dispose of the OAs expeditiously, preferably by the end of February 2023.

Development of Law

The ratio decidendi of the case is that the sealed cover procedure, which results in non-disclosure of relevant material to a party in a judicial proceeding, is a violation of natural justice and undermines the transparency and fairness of the judicial system. This judgment reinforces the existing principles of natural justice and the need for transparency in judicial proceedings. There is no change in the previous position of law, but the Court has clarified the limits of the sealed cover procedure.

Conclusion

The Supreme Court’s judgment in *Cdr Amit Kumar Sharma vs. Union of India* is a significant ruling on the use of the sealed cover procedure in judicial proceedings. The court held that the AFT’s reliance on sealed cover material, which was not disclosed to the appellants, caused material prejudice and violated the principles of natural justice. The court emphasized the importance of transparency, accountability, and fairness in the judicial system. The judgment sets aside the AFT’s decision and remands the case for fresh adjudication, with specific directions to protect the officers who were under interim orders.