Section 123(4)(c) in The Naval Ceremonial, Conditions Of Service And Miscellaneous Regulations, 1964
(c)Specialisation Course(i)An officer who fails to qualify in the final examination of the Specialisation Course shall be put back a term at the conclusion of which he shall be re-examined. The officer shall also be penalised by the loss of up to a maximum of 3 months' time towards seniority as Lieutenant.(ii)An officer failing twice in the final examination of the Specialisation Course shall be liable to be discharged from the Service.