Judicial failure
V. VENKATESAN
Twenty-five years after the disaster, the principle of absolute liability, the cornerstone of
litigation, faces the risk of being diluted.
A MAN ARRIVES for a memorial service for the 1984 gas disaster victims on the 25th
anniversary of the world's worst industrial accident, near the old Union Carbide factory
in Bhopal on December 3.
THE 25th anniversary of the Bhopal gas disaster has justifiably attracted considerable
attention not only to the plight of the survivors but to the failure to secure justice for
them. How prepared the country is to meet disasters of a similar scale and force their
perpetrators to compensate the victims adequately is an equally important issue to
consider during the anniversary.
For long, the Indian judiciarys attitude towards mass disasters was governed by the rule
laid down in the English case Rylands vs Fletcher (1866). According to this rule, there are
certain industrial activities which, though lawful, are so fraught with the possibility of
harm to others that the law has to treat them as allowable only on the term of insuring the
public against injury. The rule is also called the principle of strict liability.
The facts in that case were that the defendant, who owned a mill, constructed a reservoir
to supply water to the mill. This reservoir was constructed over old coal mines, and the
mill owner had no reason to suspect that these old diggings led to an operating colliery.
The water in the reservoir ran down the old shafts and flooded the colliery. The mill
owner was made liable for the damages resulting from the flooding.
There are many activities that are so hazardous that they may constitute a danger to the
person or property of another. The principle of strict liability states that the undertakers of
these activities have to compensate for the damage caused by them irrespective of any
fault on their part. Permission to conduct such activity is in effect made conditional on its
absorbing the cost of the accidents it causes as an appropriate item of its overheads. Over
the years, this principle got severely diluted in England, and several exceptions to the rule
were recognised by English courts. Such exceptions included natural disasters, the act of
a third party (sabotage), the plaintiffs own fault or consent, and the natural use of land by
the defendant or a statutory authority.
Traditionally, the principle of strict liability allowed for the growth of hazardous
industries while ensuring that such enterprises would bear the burden of the damage they
caused when a hazardous substance escaped. The Supreme Court of India got the first
opportunity to review this rule in 1985, soon after the Bhopal tragedy. This was the
Shriram gas leak case, which was decided by the Supreme Court in December 1986. In
this case, the petitioner M.C. Mehta, an environment lawyer, sought the courts directions
to close and relocate the caustic chlorine and sulphuric acid plants of the company
Shriram, which were located in a thickly populated part of Delhi. Shortly after Mehta
filed the petition, on December 4, 1985, oleum leaked from Shrirams sulphuric acid
plant, causing widespread panic in the surrounding community. The ongoing Bhopal
litigation influenced the courts decision in this case considerably.
In the wake of the Bhopal gas leak disaster, Union Carbide Corporation (UCC), the
parent company of Union Carbide India Limited (UCIL), which ran the pesticide unit,
presented a sabotage theory to shield itself from the claims of the victims. UCC alleged
that a disgruntled employee working in the factory had triggered the escape of the gas.
Such a theory afforded a defence under the rule of strict liability.
The Supreme Court rejected the rule of strict liability, and in its place applied its new
doctrine of absolute liability. According to this, where an enterprise is engaged in a
hazardous or inherently dangerous activity and an accident in such an operation results in
the escape of a toxic gas, the enterprise is strictly and absolutely liable to compensate all
those who are affected by the accident, and such liability is not subject to any of the
exceptions under the rule of strict liability.
The Madhya Pradesh High Court first applied the absolute liability theory to support its
award of interim compensation to the victims, on April 4, 1988. The High Courts view
was that after the no-exception standard of Shriram, UCCs liability was
unquestionable. However, this judgment was never implemented in view of the final
settlement reached under the auspices of the Supreme Court in 1989.
In 1992, however, the Supreme Court, while hearing a petition from UCC to review the
final settlement, recognised the corporations right to raise and urge defences, thus
questioning the validity of its own without exception absolute liability principle. This
ruling of the Bhopal Review Bench was a setback to the courts enunciation of the
absolute liability principle in the Shriram case.
Similarly, the Bill says no application for grant of compensation will be entertained
unless it is made within five years of the occurrence of the alleged cause of action. Both
these deadlines are extendable by 60 days if the tribunal condones the delay. It is pointed
out that this is no relief at all as in many cases, the environmental impact of disasters is
felt long after the occurrence of the disaster. The drafting of the Bill without any
consultation with the stakeholders has disappointed environmental activists.
While the executives concern for absolute liability standards is dubious, the judiciary
appears to be wavering on its decade-long commitment to the principle. The quest of the
survivors of the gas tragedy for just compensation and the Supreme Courts reluctance to
grant it in line with its past commitments form a sad chapter in the history of disaster
litigation in India.
On July 19, 2004, the Supreme Court directed the Welfare Commissioner of Bhopal to
disburse the unspent amount of Rs.1,503 crore in the Settlement Fund on a pro-rata basis
to all the (5,70,000-odd) victims who had been awarded compensation for death and
injury. The court also allowed the petitioners, the Bhopal Gas Peedith Mahila Udyog
Sanghathan (BGPMUS) and the Bhopal Gas Peedith Sangharsh Sahayog Samiti
(BGPSSS), the option of filing an application for augmentation of the compensation
amount in proportion to the magnitude of the disaster (which turned out to be five times
greater than what was assessed at the time of the settlement). But the court dismissed on
May 4, 2007, an application they filed seeking enhancement of the compensation by a
factor of five, stating that the task of determination of facts was that of the Welfare
Commissioner, Bhopal. Both the Welfare Commissioner and the Madhya Pradesh High
Court later rejected their plea on flimsy technical grounds.
The petitioners before the Supreme Court had argued that only slightly over half of the
$470 million of the Settlement Fund (Rs.713 crore at the then prevailing exchange rate)
had been utilised to settle five times more claims than those estimated in 1989. The
Supreme Court, on May 4, 1989, directed that 84 per cent of the amount be disbursed as
compensation in 3,000 cases of death and 1,02,000 cases under four different categories
of injuries, ranging from simple ones to those of utmost severity, and 16 per cent be set
aside to compensate those who had lost property and livestock. Thus, out of the Rs.713
crore, Rs.113 crore was set aside for those who had lost property and livestock and for
specialised medical treatment and Rs.600 crore was to be disbursed among the assumed
number of 1,05,000 gas victims as compensation at an average of Rs.57,143 a victim at
the 1989 value of the rupee.
However, as per the report of the Office of the Welfare Commissioner, as on December
31, 2008, not less than 5,74,367 gas victims were actually awarded compensation, which
works out to an average of Rs.12,410 a victim at the 1989 value of the rupee. In the order
dated May 4, 1989, the Supreme Court had assured the victim groups that if the total
number of dead and injured turned out to be more than the number on which the
settlement was based, the settlement was liable to be reopened. The Supreme Court did
not expect the number of claimants to rise by five times and had asked the Centre rather
than UCC to meet the shortfall in the compensation amount, if any. However, the genetic
damage caused by the disaster meant that the children of the victims and their
descendants also medically suffered the impact of the tragedy in one way or the other and
would add to the number of claimants substantially. The gas victims were also denied
interest for the period of undue delay in the adjudication and award of compensation a
process that stretched from 1992 to 2004.
These developments in the Bhopal compensation saga have led observers to question
whether the executive and the judiciary are indeed keen to follow, as they seemingly
claim, the absolute liability principle in letter and spirit.