Dr Dhananjaya Y Chandrachud, J

1. Leave to appeal under Section 31(1) of the Armed Forces Tribunal Act 2007 is granted.

2. Delay condoned.

3. This batch of appeals arises from a judgment dated 3 January 2022 of the Principal Bench of the Armed Forces Tribunal 1. The AFT dismissed the applications challenging the denial of Permanent Commission 2 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

4. On 26 September 2008, the Ministry of Defence notified that women Short Service Commission 3 Officers would be eligible for grant of PC prospectively. In Union of India v. Lieutenant Commander Annie Nagaraj 4, 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, that5:

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 stablised cadre at the relevant time;

(b) determination of suitability;

(c) recommendation of the Chief of Naval Staff; and 6 “Regulations” 5

(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.

5. 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.

6. 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. 7OA No 143 of 2016 6

7. By an order dated 24 August 2021, this Court dismissed the writ petitions on the ground that the Court had already laid down the principles for granting PC in Annie Nagaraj (supra) and Lt. Col. Nitisha v. Union of India 8. It was observed that the officers who were denied PC would assail the decision on the basis of individual facts and thus, it would be necessary for them to claim their reliefs before the AFT. The relevant observations are extracted below:

8. The second respondent, in the written submissions before the AFT, filed in Cdr AK Sharma v. Union of India9 submitted that the vacancy calculation is more than an exercise of simple mathematics and that the “minute details of vacancy calculation cannot be put in the open domain for the obvious reasons. Accordingly, this Hon’ble Tribunal will be provided with a detailed note with respect to vacancy calculation in a sealed envelope (as and when sought).” It was also submitted that the fairness of the selection process “would be amply clear from the selection Board Proceedings which would be provided to this Hon’ble Tribunal for perusal in the sealed cover, if need for the same arises.” Similarly, in the counter affidavit filed in Commander Barsha 8 (2021) SCCOnLine SC 261 9 O.A 2167 of 2021 7 Agrawal v. Union of India 10 , it was submitted:

10. In addition to the above, the AFT noted in paragraph 81 that on a perusal of “various records and files submitted by the respondents”, the second respondent had considered the following issues:

11. In paragraph 99 of the judgment, it is observed that the Board conducted its proceedings on 18 December 2020 according to the criteria approved in the Approach paper. Paragraph 37 of the impugned judgment extracts the selection procedure that was adopted by Indian Navy. Paragraph 37 of the judgment is extracted below:

12. On perusing the records disclosed in a sealed cover, the AFT recorded the status of the remaining applicants as follows:

13 Kapoor 5.8.2020 / Low merit Low merit for PC and Education/ GS Permit to not grated Batch- 2007 Released service till pension Service- 14 05.08.2021 20 yrs (Ref being BP/ N case) inadmissible under Para 96(x) and

(xi) of the 11 judgment 15 Joint with Ser Cdr Sapna C Rel Order PC/Pension 7/11 05/09 Not eligible 13 Lanjewar 05.08.2020 / Low merit Low merit for PC and Education/GS Permit to not grated Batch- 2007 Released service till pension Service- 14 05.08.2021 20 yrs (Ref being BP/ N case) inadmissible under Para 96(x) and

(xi) of the judgment 16 Joint with Ser Cdr SS Naik Rel Order PC/Pension 8/11 06/09 Not eligible 13 Education/GS 05.08.2020 / Low merit Low merit for PC and Batch- 2007 Permit to not grated Service-14 Released service till pension 05.08.2021 20 yrs (Ref being BP/ N case) inadmissible under Para 96(x) and

(xi) of the judgment 17 OA 2064/2021 Cdr Annie Released PC 5/8 6/9 Not eligible Nagaraja 31.12.2020 NR for PC in NR for PC in for PC WP 1471/2020 Education/GS Reframe ACR ACR Already (Tfr-Rajkumar) Batch- 1999 Rel guidelines granted Service- 22 stayed- SC of pension order 15.10.2020?

24.08.2020 In service 18 OA 2065/2021 Lt Cdr Barkha Released PC 10/10 9/9 Not eligible Rathore 31.12.2020 Low merit Low merit NR for PC WP Exec/Lgs Reframe NR for PC in for PC in Already 1471/2020(Tfr- Batch- 2003 Rel stayed guidelines ACR ACR granted Rajkumar) Service- 18 In service of pension 15.10.2020?

13. 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:

14. 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.

15. 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 Submissions

16. Mr Huzefa A Ahmadi and Mr C U Singh, senior counsel appearing on behalf of 14 the appellants together with the other counsel - Ms Kamini Jaiswal, Ms Haripriya Padmanabhan and Ms Puja Dhar have submitted that the AFT, in the course of its decision, has extensively relied upon material which was submitted by the Naval Authorities in a sealed cover. It has been urged that this material was never disclosed to the appellants and if the material had been disclosed to them, they would have been in a position to demonstrate that much of the data which has been relied upon is seriously in dispute and is not reflective of the correct position. Mr. R. Balasubramaniam, senior counsel appearing on behalf of the respondent, submitted that it is not as if the respondents voluntarily chose to place the data in a sealed cover and the files which were produced were on the directions of the AFT.

17. During the course of hearing, three principal submissions have been urged by Mr. Huzefa A Ahmadi, senior counsel:

18. While formulating the objections to the findings of the AFT on merits, it has been submitted by the counsel for the appellants that:

(vi) The methodology of dividing the total number of vacancies by 15 is arbitrary;

(vii) The chart which has been set out in paragraph 95 of AFT’s decision shows that as many as 14 batches were considered together; and

(viii) The grievances of individual officers have not been adjudicated. For instance, in the case of Commanders Annie Nagaraj and Amit Sharma, though they were recommended for the grant of PC and would fall within the existing vacancies, they have been denied PC on the ground that they were not recommended.

19. On the other hand, Mr R Balasubramaniam, senior counsel appearing on behalf of the respondents made the following submissions:

(vi) Based on the above, the 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;

(vii) The deficiencies in manning strength cannot be given to any particular 17 batch or a few batches because of the policy of the Navy to have a balanced cadre structure, a youthful profile and a proper induction/retirement pattern in the long run;

(viii) The vacancies assigned to each batch worked out in terms of the above model provided the maximum vacancies as on March 2020, the date of the judgment of this Court;

(ix) Pursuant to the directions given by the AFT, the Navy carried out a fresh exercise and allotted seven more vacancies to the Naval Construction Cadre and seven officers were approved for the grant of PC;

(x) In regard to the clubbing of batches, each SSC Officer was given two ‘looks’ (the first and the second ‘look’) pursuant to consistent practice. The first look is with officers of the preceding batch, who were not granted PC in their first look and the second look is with the available next fresh batch. Hence, each batch was given consideration separately and it would not be correct to postulate that 14 batches of the Logistics Cadre were clubbed together. The distribution of vacancies per batch on the basis of a 15 year cycle is justified;

(xi) The manner of writing ACRs is not erroneous. The judgment in Nitisha (supra) pertained to the Indian Army which is distinguishable since :

20. The second respondent in the written submissions before this Court submitted that (i) it is a norm for the Board proceedings to only be provided to the AFT in a sealed cover; (ii) the AFT on a perusal of the proceedings of the Selection Board as well as confidential dossiers of the individual applicants 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).

The Analysis

21. 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 19 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.

22. 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.

23. 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 20 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.

24. Material prejudice has been caused by the process which has been followed of disclosing the information of vacancies and the board proceedings to the AFT in a sealed cover. In Khudiram Das v. State of West Bengal 11, this Court held that the test for determining if material must be disclosed is whether in all ‘reasonable probability’, the material would influence the decision of the authority. Ruling in the context of preventive detention, a four-Judge Bench of this Court observed:

25. In T. Takano v. Securities and Exchange Board of India 12, a two- Judge Bench of this Court held that the all relevant information must be disclosed. In this case, the issue for consideration before this Court was whether an investigation report under Regulation 9 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations 2003 must be disclosed to the person to whom a notice to show cause is issued. SEBI had not disclosed the investigation report. It was the contention of SEBI that it had not relied on the investigation report to issue the show cause notice. The two Judge Bench observed that disclosure of information to the parties to the adjudication serves three purposes: (i) Reliability: The possession of information by both the parties can aid the courts in determining the truth of the contentions; (ii) Fair Trial: There is a legitimate expectation that parties are provided all the information for them to effectively participate in the proceedings; (iii) Transparency and accountability: It is necessary that the adjudication is not opaque but transparent. Transparency aids in establishing accountability. The observations on disclosure of information and its impact on 12 Civil Appeal Nos. 487-488 of 2022 22 transparency are extracted below:

26. 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 conclusions are extracted below:

27. 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.

28. 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 24 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 non- disclosure 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.

29. 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 25 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.

30. 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. 26

31. 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.

32. 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.

33. 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. 27

34. Pending applications, if any, including applications for impleadment/intervention, stand disposed of.

.…………...…...….......………………........J. [Dr Dhananjaya Y Chandrachud] …..…..…....…........……………….…........J. [Hima Kohli] New Delhi;

October 20, 2022