The court was hearing a plea filed by Lt Gen Ravi Dastane alleging favouritism in the selection of Lt Gen Suhag as the next Army chief.
Earlier, the Centre had justified the appointment and had submitted that the alleged lapses which were made as grounds to impose disciplinary ban on the Lt. Gen Suhag by then Army Chief Gen V K Singh between April and May 2012 were "premeditated", "vague" and "illegal".
Gen Singh, who is a now Minister of State in the NDA government, had placed Lt Gen Suhag under a disciplinary and vigilance (DV) ban.
The ban was imposed for alleged "failure of command and control" in an operation carried out by an intelligence unit working directly under him when he was Dimapur-based 3 Corps commander.
In its last days in office, the UPA-II government had named Lt Gen Suhag as the Army Chief to succeed incumbent Gen Bikram Singh when he retires on July 31.
The Ministry of Defence, in a recent affidavit filed in the apex court registry, has said, "The alleged lapses observed by the then COAS, as reflected in show cause notice, were premeditated and issued in utter disregard to the legal provisions governing the court of inquiry, principles of natural justice....the lapses were vague, based on presumptions and legally and factually not maintainable."