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2024 Supreme(Online)(DEL) 17289
HIGH COURT OF DELHI
Manoj Jain, J
DIRECTOR GENERAL PROJECT VARSHA MINISTRY OF DEFENCE (NAVY) UNION OF INDIA NEW DELHI – Appellant
Versus
M/S NAVAYUGA-VAN OORD JV – Respondent
CM(M)-3185/2024
National security concerns under the Official Secrets Act can prevent the disclosure of classified documents in arbitration proceedings.
Headnote:
Official Secrets - National Security - Official Secrets Act, 1923 - The court ruled that documents classified as 'top secret' under the Official Secrets Act cannot be compelled for production in arbitration proceedings due to national security concerns.
Fact of the Case:
A contract for construction was executed between the claimant and the employer, leading to disputes and arbitration. The claimant sought production of documents deemed 'top secret' under the Official Secrets Act, which the employer opposed citing national security.
Finding of the Court:
The court found that the documents were classified and their disclosure could jeopardize national security. It emphasized the narrow scope of judicial intervention in arbitration matters and upheld the employer's right to withhold the documents.
Issues: Whether documents classified as 'top secret' under the Official Secrets Act can be compelled for production in arbitration proceedings.
Ratio Decidendi: The court held that national security concerns outweigh contractual obligations, and classified documents cannot be produced in arbitration, reinforcing the importance of the Official Secrets Act.
Final Decision: The petition was allowed, relieving the employer from producing the classified documents.
JUDGMENT
1. The situation is somewhat unusual.
2. It needs to be weighed up whether a document which has been classified as „top secret‟ and protected under Official Secrets Act, 1923 can be directed to be produced during arbitral proceedings.
3. This Court is cognizant of the fact that the scope of judicial interference under Article 227 of the Constitution of India is very narrow and restricted. And, when it comes to any matter pending adjudication before Arbitral Tribunal, it gets more squeezed.
4. The court should normally not interject unless, there is palpable element of „exceptional rarity‟ or „exceptional circumstance‟ or „extreme perversity‟ or if there is hint of any „bad faith‟. Reference be made to and IDFC First Bank Limited v. Hitachi MGRM Net Limited 2023 SCC OnLine Del 4052.
5. According to petitioner herein, the situation in the case is also similar and, therefore, it is prayed that order dated 24.04.2024 be set aside.
6. A contract was executed between M/S Navayuga-Van Oord JV (claimant/respondent herein) and the Director General, Project VARSHA (employer/petitioner herein) on 19.12.2017. It was for construction of „outer harbour for project VARSHA‟.
7. Several disputes and differences arose between the parties in relation to the above said contract which resulted in issuance of „notice of termination‟ by the employer on 06.07.2022.
8. Eventually, arbitration was invoked by the claimant.
9. During the pendency of such arbitration proceedings, an application was filed by the claimant seeking inspection and discovery/production of documents. It was contended therein that such documents were germane to the issues raised before the learned Arbitral Tribunal and were under possession, control and custody of the employer. The request was further truncated to the inspection of following documents only :-
| S. Nos. | Description of document(s) |
| 5. | Documents and correspondence exchanged between the Respondent and Halcrow – Respondent‟s Engineer under the subject Contract, including its predecessor or successor, relating to determination of the timeline for completion of the Project. |
| 6(c). | Detailed Design Report prepared by the Designer – Halcrow (including its predecessor or successor). |
| 6(d). | Numerical Modelling Reports, in particular but not limited to, wave modelling (offshore to nearshore translation, wave penetration studies), wave modelling on daily conditions (for workability assessments), hydrodynamic modelling (water levels, currents, discharges), morphological modelling reports, and siltation studies. |
| 9. | Studies/Report(s) submitted by IIT Madras or any of its professors to the Respondent and/or Halcrow (including its predecessor or successor) relating to/concerning the design of Outer Harbour of Project Varsha and consideration of the time for completion of the Project.‟ |
10. It appears that the purpose of inspection and production of said documents was to ascertain the feasibility and attainability of the timeline which had been given to the claimant to complete the above contractual obligation.
11. According to claimant, such timeline had been determined on the basis of inputs received by the employer from its engineer i.e. M/s Halcrow Consulting India Pvt. Ltd., further ratified by IIT Madras and, therefore, keeping in mind the nature and scope of the disputes raised before the learned Tribunal, there was no valid reason for the employer to have withheld such documents. It was also claimed that there was no aspect related to involvement of any confidentiality either.
12. Such application was opposed by the petitioner herein.
13. The prime most objection raised by the petitioner was concerning National Security and the applicability of Official Secrets Act, 1923 to the documents sought for. It was also averred that these documents, prior in time, were irrelevant as even otherwise the timeline, stipulated in the contract, had been willingly accepted by the claimant.
14. According to petitioner, the project has been classified as „top sec
