Courts Should Not Permit Litigants To Submit Information, Documents In Sealed Cover: Bombay HC

It is most delighting to note that none other than the Bombay High Court itself which is one of the oldest and so also one of the most reputed High Courts in India has in a learned, laudable, landmark and latest judgment titled Sonali Tandle v. Ranka Lifestyle Ventures & Ors. and connected matters in Writ Petition (L) No. 39511 of 2022 that was pronounced as recently as September 7, 2023 in the exercise of its ordinary original civil jurisdiction minced just no words to strongly deprecate the practice of courts accepting documents submitted by litigants in sealed cover. It must be noted that a Division Bench of Hon’ble Mr Justice GS Patel and Hon’ble Mr Justice Kamal Khata have minced just no words to state in no uncertain terms that courts should not permit the same since it violates the principles of fair justice and transparency in judicial process and prejudices the opposite side in the case. The Division Bench also maintained that a party can never decide for itself what to disclose or not to disclose especially when the court directs parties to disclose information on affidavit.

Most laudably, the Division Bench held that, "No litigant can disadvantage the opponent by squirreling some information into the court record ‘in sealed cover’. No party is entitled can rely on such ‘sealed cover material’ to the prejudice of the other side, and no court should permit it. To do so flies in the face of every concept of fair justice and openness and transparency in the decision-making process. It is time to bury this thoroughly pernicious practice." No denying it!

We must note that the Division Bench was hearing a writ petition that had been filed by one Sonali Tandel who had challenged an order of the Chief Executive Officer of the Maharashtra Housing and Area Development Authority (MHADA) in relation to allotment of a flat. She had claimed to have been severally prejudiced by being denied the transit rent and not just this but also being denied the flat to which she was entitled. The developer was called upon by the court by the earlier co-ordinate Bench led by Hon’ble Mr Justice GS Kulkarni to file a disclosure affidavit setting out a list of unsold flats and financial statements in a sealed cover.

It must be noted that this act of accepting the documents in a sealed cover without comments was however clearly disapproved by the Bench led by Hon’ble Mr Justice GS Patel which has to be lauded unconditionally and who clarified that it would not permit the same. The Bench also clearly held that, "The simplest general principle is that anything that the Court can see, the opposing party must be allowed to see." Very rightly so!

To put things in perspective, the Bench envisages in para 5 that, "The challenge in the order, as is evident from the prayers, is to an order passed by the Chief Officer on 13th October 2022. According to the Petitioner, this order by MHADA was contrary to an order passed by the Division Bench of this Court on 26th September 2022."

Most significantly and so also most forthrightly, the Division Bench mandates in para 17 propounding clearly that, "Pausing briefly for a moment, we note that the previous Division Bench accepted without comment the tendering of some documents in sealed cover by the 1st Respondent. This Court has previously thoroughly deprecated this practice. (Order dated 18th September 2020 in LD-VC-Comm Arbitration Petition No 30 of 2020 and other matters, Rajeev Kumar (HUF) & Anr v Anugrah Stock & Brokers Pvt Ltd.) So has the Supreme Court, most recently in Madhyamam Broadcasting Ltd v Union of India & Ors. 2023 SCC OnLine SC 366. We specifically disapprove of this and do not permit it. It undermines the legitimacy of the adjudication process in any system based on an adversarial proceeding. The simplest general principle is that anything that the Court can see, the opposing party must be allowed to see. Any exceptions must be narrowly tailored, whether under the Evidence Act or some other governing law. Nothing in this matter invites a single one of the exceptions in the Evidence Act regarding privilege, i.e., immunity from disclosure. In other jurisdictions, most particularly in the UK limited disclosures or non-disclosures are permitted. But such ‘Closed Material Proceedings’ are now governed by statute and always subject to judicial oversight. They are mostly in cases of national security, immigration, etc. It is never for a party to decide for itself what it will or will not disclose — most especially when there is an order of the Court ordering and compelling disclosure on affidavit. Where there are private disputes between two parties and a Court has ordered a party to make a disclosure on Affidavit of some material, there is simply no question of that party putting in anything ‘in sealed cover’. As a matter of law, that is non-compliance with a judicial order. In a given case, it will invite action in contempt. If immunity from disclosure is sought, that is an application that must be made to a court and must receive a judicial order. No litigant can disadvantage the opponent by squirrelling some information into the court record ‘in sealed cover’. No party is entitled can rely on such ‘sealed cover material’ to the prejudice of the other side, and no court should permit it. To do so flies in the face of every concept of fair justice and openness and transparency in the decision-making process. It is time to bury this thoroughly pernicious practice."

Bluntly put, the Division Bench notes in para 18 that, "We refuse to accept these sealed covers. The information in those sealed covers will be placed on Affidavit and that is to be done by Monday, 11th September 2023. We are not concerned with any questions or apprehensions of prejudice."

Do note, the Division Bench notes in para 25 that, "The area of Flat No. B-1803 is actually said to be 506 sq ft and that of Flat No. B-1502 is 409 sq ft."

Quite significantly, the Division Bench points out in para 27 that, "Mr Bhargude has taken instructions, and these are that the Petitioner will accept the proposal, but it must on a without prejudice basis. That is of course correct. There is no doubt that Flat No. B-1502 is being offered to the Petitioner only for the present, but this, importantly, has to be seen in the context of the matter in which the Affidavit is filed. It is filed in the contempt proceeding and in response to the show cause notice. In that sense, it is an effort by the 1st Respondent to express regret and to show some level of penitence: in locus poenitentiae. Whether we will accept this as a sufficient ground to dispose of the contempt notice is a matter for the final disposal of the show cause notice. But at the same time, we believe that this Petitioner has suffered enough and there is no reason to prolong her suffering by saying that she should wait even further for some flat allotment. Having said that, we recognize that the Petitioner has an argument to be made about the area to which she is entitled. That is a matter for a later date. To the extent of the larger area, therefore, rather than try and secure some additional pocket of built-up space right now, we accept the suggestion from Mr Naidu that an additional larger flat will be kept vacant and under receivership to the credit of these proceedings."

Be it noted, the Division Bench notes in para 32 that, "As regards the unsold free sale flats in the building, we will have to release these for two separate reasons. The first is that the immediate interest of the Petitioner is now completely secured. We do not see how a Receiver could continue for all other flats because that is not the extent of the Petitioner’s claim and could never have been. The Receiver will therefore stand relieved of all flats except Flat No. B-1803 and of all PAP tenements as well."

It is worth noting that the Division Bench notes in para 33 that, "We permit the 1st Respondent to deal with the PAP tenements in accordance with law and with the unsold free sale flats in the ordinary and usual course of business, but the 1st Respondent must, for the purposes of the show cause notice, maintain records and will file an Affidavit by the next date giving full particulars of which flats have been sold, the names of the purchasers, the areas of those flats, the dates of the Agreements. We do not want any further controversy in regard to these matters. That further Affidavit must also contain a detailed listing in a tabulated fashion of how all other tenants have been re-accommodated in the redeveloped building, i.e., the original areas under their occupation, the numbers of the newly developed flats, when they were put into possession and the actual area in sq ft in carpet area and built up area of those apartments/tenements. This is necessary because of the essential argument canvassed by Mr Bhargude that the Petitioner is not being treated on parity with other tenants."

Further, the Division Bench specifies in para 34 that, "As regards the resident Executive Engineer of the MHADA to whom a notice was issued, time to file that Affidavit is extended until 26th September 2023."

In addition, the Division Bench then also discloses in para 35 directing that, "We will hear the Writ Petition finally and the two show cause notices themselves on 12th October 2023 at 2.30 pm."

Finally, the Division Bench concludes by holding in para 36 that, "List the matter on 12th October 2023 at 2.30 pm."

In sum, the Bombay High Court has batted most strongly for transparency and has strongly discouraged the most pernicious tendency of litigants submitting information, documents in a sealed cover. Most rightly so! No denying it!