Arbitral Tribunal Can’t Insist Production Of Document Classified As ‘Top Secret’ By Government Of India: Delhi HC
The Delhi High Court held that an arbitral tribunal cannot direct parties to produce any such document which is stated to be protected and classified as “Top Secret” by the Government of India and directly relates to the defence of India under the Official Secrets Act, 1923.
The Bench of Justice Manoj Jain held, “Needless to say, there are certain aspects which are better left to the wisdom of Union of India. If any information is stated to be protected and classified as “Top Secret” by Government of India and directly relates to defence of India, the due importance to such crucial fact ought to be given. Therefore, learned Arbitral Tribunal, in my humble opinion, should not have insisted for production of any such document in a sealed cover either, as at any subsequent stage also, it is, virtually, beyond its purview to open such sealed cover and to ponder over whether these were rightly labelled as “classified” or not. Even if these were to be opened and evaluated, it could not have been “declassified” in the proceedings of this kind. To venture into any such exercise and to scrutinize and evaluate any such thing does not seem permissible.”
Senior Advocate KK Venugopal and ASG Aishwarya Bhati appeared for the Petitioner, and Senior Advocates Rajiv Nayar and B B Gupta appeared for the Respondent.
The main issue for the Court’s consideration was whether a document which has been classified as “top secret” and protected under the Official Secrets Act, 1923, can be directed to be produced during arbitral proceedings.
The brief facts leading to the question of law in issue were that a contract was executed between M/S Navayuga-Van Oord JV-Respondent, the claimant in arbitral proceedings, and the Director General, Project VARSHA-Petitioner, the employer in the arbitral proceedings. It was for the construction of the outer harbour for project VARSHA. Several disputes and differences arose between the parties in relation to the above-said contract, which resulted in the issuance of “notice of termination” by the Petitioner. Eventually, arbitration was invoked by the Petitioner.
During the pendency of such arbitration proceedings, an application was filed by the Respondent seeking inspection and discovery/production of documents. It was contended that such documents were germane to the issues raised before the Arbitral Tribunal and were under the possession, control and custody of the Petitioner.
The prime objection raised by the Petitioner was concerning the National Security and the applicability of the Official Secrets Act, 1923, to the documents sought. According to the petitioner, the project has been classified as “top secret” and, therefore, the statutory provision contained under the Official Secrets Act, 1923, could not have been overlooked and keeping in mind the sensitive nature of the documents in question, which has the evident potential of seriously jeopardizing the security of the country if shared with anyone during arbitral proceedings, the request of the claimant was totally unwarranted and was liable to be rejected.
The Court apprised the fact that the Competent Authority, i.e. Rear Admiral, in its communication, had unequivocally observed that Project Varsha is a classified project of the Indian Navy having national importance and the documents related to said project, as sought by the contractor through discovery, are highly classified in nature and disclosure of such documents is considered prejudicial to the public interest, the affairs of the state as also the national security and, therefore, it was mentioned in the aforesaid communication that the above-said fact may be brought to the kind knowledge of the Arbitral Tribunal that the permission in this regard has been withheld.
“Undoubtedly, there has to be a level-playing field in any such proceedings and both the sides should get fair opportunity to present its case and also to refute the case of other but at the same time, the aspect related to National Security is paramount in nature and cannot be crucified.”, the Court remarked.
The Court also said that it is their duty to strike the right kind of balance while considering disputes related to any commercial obligation, wherein the issue of National Security also crops up. Keeping in mind the nature of the dispute between the parties, where the prime issue solely seems to be the manner in which the timeline was stipulated and when the claimant must have entered into the contract voluntarily after comprehending all the terms and its own ability to meet the deadline offered, the insistence for production of “classified documents” seems unfounded and fanciful, it added.
Accordingly, the Court allowed the petition and the Petitioner was relieved from its obligation to produce the documents before the Arbitral Tribunal.
Cause Title: Director General, Project Varsha, Ministry of Defence (Navy), Union of India v. M/s Navayuga-Van OORD JV (Neutral Citation: 2024: DHC:738)
Appearances:
Petitioner: Senior Advocate KK Venugopal, ASG Aishwarya Bhati, Advocates Kapil Arora, Palak Nagar, Pravar Veer Mishra, Walid Nazir Latoo, Aryaman Vaccher and Siddharth Kohli.
Respondent: Senior Advocates Rajiv Nayar and B B Gupta, Advocates Saurav Agarwal, Astha Mehta, Saurabh Seth, Shantanu Agarawal, Chandreyee Maitra, Allaka M., Manas Arora and Manan Mehra.