UNION CARBIDE CORPORATION V UNION OF INDIA, AIR 1992 SC 248 (BHOPAL GAS DISASTER CASE)

UNION CARBIDE CORPORATION V UNION OF INDIA, AIR 1992 SC 248

(BHOPAL GAS DISASTER CASE)

 

FACTS

In the year 1934, American Industrial giant Union carbide incorporated with the Union of India to form Union Carbide India Limited (UCIL), in which Union Carbide was a majority shareholder holding a stake of 51%. The main objective of the company was to manufacture chemicals, batteries, pesticides and other industrial products. A new plant of UCIL was incorporated in a densely populated area of Bhopal, Madhya Pradesh in the year 1970. On the night of 2nd December 1984, the havoc of gas leak spread unleashed upon the people of Bhopal. Methyl iso-cynate escaped the parameters of the factory killing 2600 people instantly and leaving thousands of them injured. Later reports disclosed the count of people who died reached 20,000 and around 60,000 people suffered irrecoverable physical damage.

The zone wherein the plant was situated was for light industrial and commercial utility, not for dangerous industry. The plant was initially approved only to formulate pesticides in relatively small quantities. The government was apprehensive in implementing strict liability despite the principle being in existence since the Stockholm Conference came into existence.

The Union of India immediately enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (the Bhopal Act) for speedy trial of this case and to prevent the accused from escaping liability. The Union of India tried to litigate the case before the foreign courts but the foreign courts dismissed their petition citing a jurisdictional conflict.

The District Court awarded a sum of 350 million as interim compensation to the victims of the accident which was reduced by the High Court to 250 million. The dissatisfaction amongst the families of the victim led the Supreme Court to increase the amount of compensation to 470 million.

The applicants were still dissatisfied and filed a petition for increasing the compensation amount along with continuing the criminal charges levelled against Union Carbide.

ISSUES

The validity of the settlement order given by the High Court of Madhya Pradesh was challenged in the case at hand on the grounds:

1. Whether the settlement amount was justifiable or not?
2. Is dropping of criminal proceedings against the Union Carbide justified?

JUDGEMENT

The majority opinion was given by Justice Venkatachaliah, K.N. Singh and N.D. Ojha JJ. While Ahmadi J. wrote the minority opinion.

Majority Opinion:

Quashing of Criminal Proceedings: The majority opinion directed that the quashing of criminal proceedings against Union Carbide was not justified and held that the criminal proceedings must be initiated.

Compensation adequate or not?: The majority bench held that the said compensation is adequate, reasonable and fair and in case any deficiency arises in money for rehabilitation, such money shall be tendered by the Union & State Government. On this point, Ahmadi J. dissented with the majority.

Therefore, the Supreme Court held that the dropping of criminal proceedings is not justified and thus it quashed the earlier order and directed that criminal proceedings shall be initiated as soon as possible. The Supreme Court also held that the amount compensated is adequate, reasonable and fair; in case any deficiency arises in the rehabilitation of the victim, the government will take care of that. The Union Carbide Corporation was ordered to indemnify 470 million dollars to the Union of India to settle all claims payable on or before March 31, 1989.

Ratio:

1. The Court explained how it calculated the value of compensation: It considered the elements of the no. of persons treated at the hospital, an essential indicator, and depended on the High Court’s order upon the allegations and claims in the amended pleadings of the Union of India. It estimated total fatal cases to 3000 and the average remuneration as Rs 1  lakh to Rs 3 lakh which would be approx 70 crores.
2. The Apex Court observed the need to evolve a national policy to protect national interests from such ultra-hazardous pursuits of economic gains and expected help of jurists, economists, environmentalists, sociologists, and futurologists to identify areas of common concern and establish criteria that may receive judicial recognition and legal sanction.

COMMENTARY

Compensation to the victims of Bhopal gas leak disaster raised a dilemma in Indian law of torts, which had its origin in English common law and sustained its existence through various statutes generating semblance of tort actions. There was paucity of litigation in the field of torts owing to a combination of factors including delays, exorbitant court fee, complicated procedure of recording evidence, lack of public awareness, the technical approach of the bench and the bar, and absence of specialisation among lawyers.

To issue directions under EPA and various provisions under Air and Water Acts is a coercive power as a direction can extend even to closure of an industry.