Former Gurkha Lieutenant Navinkumar Gauchan, 40, of Colchester, Essex, claims that the "up or out" army policy, to discharge servicemen who did not progress, was racially discriminating because it only applied to Nepalese troops.

The Army denies the allegations and the Ministry of Defence is contesting the case at an employment tribunal hearing in Bury St Edmunds, Suffolk.

On Wednesday the hearing was told the former Lieutenant behaved "selfishly" because he was unable to come to terms with his failure to gain promotion.

Cousin benefited

Colonel Russell Beattie, who was Mr Gauchan's commanding officer, told the tribunal he "totally denied" that his actions were in any way racist or discriminatory.

"Whilst never doubting his commitment and personal ambition I had come to the reluctant conclusion that he was a very marginal candidate for further promotion," said Col Beattie.

"A particular irony of the case is that the officer who could be seen to have benefited from Lt Gauchan's departure was none other than his cousin, Lt Khimprasad Gauchan.

"It is difficult to see how this would have happened if (his) assertion of racial and or tribal discrimination had any substance to it," he said.