Case Study: MC Mehta VS union of India (1987)


The petitioner MC Mehta, an Advocate, Supreme Court filed a public interest litigation petition in the Supreme Court under Article 32 of the Constitution.

Facts of the case:- On the midnight of 2/3-12-1984, there was a leakage of poisonous gas (methyl isocyanate) from Union Carbide Corporation India Limited, located at Bhopal, Madhya Pradesh, which is a subsidiary of Union Carbide Corporation, U.S.A. This disaster was described as “World’s worst industrial disaster” as it claimed the lives of 2260 people and caused serious injuries with a variety of complications to about 6 lakhs of people. The Government of India proclaimed an ordinance entitled “The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 and filed on behalf of the victims, a suit in U.S. District Court, New York. Similarly, several petitions were filed by the victims and the legal representatives of the deceased. The U.S. Dist. Court (through Judge John F. Keenan) dismissed all the petitions on the ground “forum non-conveniens” i.e. the suits can be more conveniently tried in India, and also directed U.C.C. to pay five million dollars to the victims as immediate relief. The Union of India preferred an appeal before the United States of Appeals for the Second Circuit and the same was dismissed.

Then, the Union of India filed a suit (Union Carbide Corporation vs. Union of India, (1991) 4 SCC 584) in the Dist. Court of Bhopal (Madhya Pradesh, India), claiming 3.3 billion U.S. Dollars i.e. Rs- 3900 Crores as compensation. The District Court (headed by M.W. Deo) ordered U.C.C. to pay interim relief of 270 Million U.S. Dollars i.e. Rs. 350 crores to the victims. The U.C.C. filed a civil revision before the High Court of Madhya Pradesh, which reduced the amount from 350 crores to 250 crores. The U.C.C. was reported to have decided to go on appeal against the interim relief and devising a new strategy of outmaneuvering the Indian Government by a direct settlement with the Gas Victims. Against this move by the U.C.C. at the plea of the Union of India, the District Sessions Court, Bhopal passed an interim order directing U.C.C. not to make any compromise or settlement with any individual until further orders. Later, both the parties preferred appeals before the Supreme Court on a different issue.

Issues Involved:- Several Municipal and International issues are involved in the Bhopal Gas Leak Disaster case.

  1. One of such important issues is the liability of the parent company (U.C.C.) for the torts of its subsidiary company abroad (U.C.I.L.). The U.C.C. has maintained consistently that it is only morally but not legally liable. The parent Company (U.C.C.) evidently was trying to escape from the liability.
  2. The other issue involved is the responsibility of the home state (U.S.A.) for the hazardous activities of U.C.C’s subsidiary abroad (U.C.I.L. in India).
  3. Another issue is with regard to the responsibility of host state (India) in enforcing safety standards for the protection of life and environment and the extent of liability to the victims for their rehabilitation in the event of an accident.

Oleum Gas Leak:- When the matter was pending before the Supreme Court, another gas disaster took place from Shri Ram Foods and Fertilizer Industries (belonging to Delhi Textile Mills Ltd.), Delhi on 4th and 6th December 1985. One advocate died and several others injured. MC Mehta, a leading legal practitioner, Supreme Court filed a “public interest litigation” petition under Art. 32 of the Constitution. The Supreme Court through P.N. Bhagwati, C.J., keeping in mind the one-year-old great gas disaster of Bhopal, evolved a new rule, “Absolute Liability” in preference to 1868 rule of Strict Liability.

Decision:- The Supreme Court (Full Bench) vide its order dated 14-2-89 directed U.C.C. to pay 470 Million U.S. Dollars (equivalent to Rs. 750 crores approximately) towards compensation to the victims as the “full and final settlement” in satisfaction of all the “past, present and future claims and the same was accepted by both the parties (i.e. U.C.C. and Union of India). The entire amount had to be and was paid by March 3 1, 1989. The Court by exercising its extraordinary jurisdiction quashed all proceedings civil, criminal or contempt of Court, etc. against the U.C.C. The Court also stressed the need to evolve a national policy to protect national interests from such ultra-hazardous pursuits of economic gains.

The Rule of Absolute Liability:- The rule of “absolute liability”, which is a more stringent rule of strict liability was laid down by the Supreme Court in MC Mehta and another vs. Shri Ram Foods and Fertilizer Industries and Others, AIR 1987 SC 965 (Popularly known as “Oleum Gas Leak Case”).

Facts of the case:- Shri Ram Foods and Fertilizer Industries is a subsidiary of Delhi Cloth Mills Ltd., located in a thickly populated area of Delhi. On 4-12-1985, there was a leakage of Oleum Gas from the Sulphuric Acid Plant resulting in the death of an advocate in the Tees Hazari court and injuries to several others. On 6-12- 85 also, there was a minor leakage from the same plant. Against a complaint under Section 133 Cr.P.C. the District Magistrate, Delhi directed the Management of the Shri Ram Foods and Fertilizer Industries to close down the unit and to show cause the reasons within seven days to vide order dated 6-12-1985.

The petitioner MC Mehta, an Advocate, Supreme Court filed a public interest litigation petition in the Supreme Court under Article 32 of the Constitution. The petitioner, in his petition, requested the Court to direct the Government to take necessary steps to avoid such leakages from the industries engaged in dangerous and hazardous manufacturing processes. MC Mehta also reminded the Court, the then one-year-old great gas disaster from U.C.I.L., Bhopal and prayed the Court to direct the Management of Shri Ram Foods and Fertilizer Industries and the Government to shift and relocate the plant at a place far away from the city.

Issues and the Principles laid down:- The Supreme Court and the Lt. Governor, Delhi appointed two committees separately inspect the plant and submit the reports on the following issues:

  1. Whether the plant can be allowed to continue or not?
  2. If not, what measures are required to be taken to prevent the leakages, explosions, air and water pollution?
  3. To find out the number of safety devices exists in the plant and others though necessary is not installed in the plant.

The two committees inspected the plant and submitted the reports with the necessary recommendations. The Supreme Court, based on the reports, decided to permit Shri Ram Fertilizers to restore its operation. Although such industries are dangerous, they are very essential for progress and economic development. The Court laid down the following principles:

  1. The management, Shri Ram Foods was required to deposit in the court, Rs. 20 lakhs as security for payment of compensation to the victims. Further, the management was required to furnish a bank guarantee for Rs.15 lakhs, which shall be encashed by the Registrar of the Supreme Court wholly or partly in the event of gas leakage if any in ensuing three years.
  2. Management must comply with the recommendations of the expert committees. An amount of Rs. 30,000/- should be deposited with the court for traveling expenses of the expert committee members.
  3. The Management of Shri Ram Foods and the Managing Director of the Delhi Cloth Mills Ltd. should execute a written undertaking to pay compensation to the victims as a consequence of gas leakage or another event in the future.
  4. A green belt of 1 to 5 K.M. width around such industries should be provided.
  5. The court appreciated the petitioner ( MC Mehta ) for filing a number of public interest litigation petitions and this petition in particular. The court ordered the Shri Ram Foods to pay Rs. 10,000 towards costs.
  6. The court directed the Central Government to set up an Environmental Court consisting of a Judge and two experts (Ecological Sciences Research Experts) as members to assist the judge in deciding the environmental cases. Pursuant upon the recommendation, the Govt. of India passed the National Environment Tribunal Act, 1995 to deal with the cases of environmental pollution.

The Supreme Court through P.N- Bhagwati, C.J. opined that the rule of strict liability evolved in 1868 does not suit to the socio-economic conditions of the 20th century and keeping in mind the then one-year-old Bhopal Gas disaster, evolved the principle of “Absolute Liability”, which reads as follows:

“We are of the view that an enterprise, which is engaged in a hazardous or inherently dangerous industry, which poses a potential threat to the health and safety of the persons working in the factory and residing in the surrounding areas owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone on account of hazardous or inherently dangerous activity in which it is engaged must be conducted with the highest standards of safety and if any harm is done on account of such activity, the enterprise must be absolutely liable to compensate for such harm and it should be no answer to the enterprise to say that it had taken all reasonable care and that the harm occurred without any negligence on its part”. (In simple words, an enterprise engaged in the manufacturing process. which is hazardous and inherently dangerous to the health and safety of the people in the surrounding areas owes an absolute and non-delegable duty towards the community to compensate the victims in the event of harm and cannot invoke/plead any defense, saying that it had taken reasonable care. In other words, whoever undertakes hazardous and inherently dangerous manufacturing process must be in a position to face potentially, any kind/sort of consequences and to meet the liability without pleading any defense under strict liability).

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