CASE BRIEF: UNION CARBIDE CORPN. V. UNION OF INDIA, 1991 (4) SCC 584

INTRODUCTION

Union Carbide Corpn v. Union of India is also known as the Bhopal gas leak case. This case has reiterated the principle of absolute liability and strict liability. The concept of absolute liability was first developed in the case of MC Mehta v. Union of India (Oleum leak case). Earlier, only the principle of strict liability existed, which had few exceptions, but later on, the principle of absolute liability developed, and the exceptions were removed. 

There have been many judgments after this case and before this one, too. The present case is a review petition for the original Bhopal Gas leak case. The previous norm gave rise to the rule of absolute liability, which is improper to apply in the context of Indian law because it was developed as a result of rapid industrial growth and agricultural land use, among other factors. As is common knowledge, India is a growing nation with a developing economy, and the strict liability concept is a very ancient one. In contrast to the current situation, which sees rapid industrial expansion in the nation, the previous norm was developed when there was little to no room for industrial development.

The Public Liability Insurance Act of 1991 was introduced in response to the catastrophic Oleum Gas Leak case, primarily to provide rapid redress to victims of accidents involving the handling of hazardous materials. The intention of this act was to establish a public liability insurance fund that would ultimately be utilized to pay damages to the victims. According to this legislation, a hazardous substance is any material that has a risk of harming people, other living things, plants, microorganisms, property, or the environment due to its composition or other characteristics. 

FACTS OF THE CASE

On the evening of December 2, 1984, a deadly gas leak occurred from the MIC storage tank at the Union Carbide (I) Ltd. (UCIL) factory in Bhopal. As a result, tens of thousands of Bhopal residents suffered bodily harm and four thousand lives were lost. In accordance with the statutory authorization in that regard under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, the Union of India filed an action as parens patriae before the District Court of Bhopal, requesting 3.3 billion dollars in compensation against the business. The Union of India and the Union Carbide Corporation (UCC owning 50.99 percent shareholdings of UCIL) reached a settlement with judicial assistance when an interlocutory dispute about the interim compensation came up for hearing. 

As part of this settlement, the UCC agreed to fully compensate the Union of India for all claims made by gas leak victims against the UCC, giving them a total of US$470 million. In this regard, the Union of India also consented to drop some of the charges that had been brought against UCC and UCIL officials. On May 4, 1989, the Court gave its justification for the orders. The current review petitions are filed under Article 137, and the writ petitions are filed under Article 32 of the Indian Constitution.

ISSUES RAISED

1. Whether the Court has jurisdiction to deal with the present petition?
2. Whether the settlement given in Bhopal Tragedy Case constitutionally valid and sufficient?

ARGUMENTS FROM BOTH SIDES

Argument on behalf of the petitioner

1. First, the appellants contested the court’s jurisdiction; these were appeals based on the interlocutory injunction that provided the victims with temporary compensation. Article 139A of the Constitution exhausts the Court’s authority to dismiss or transfer a lawsuit or action to itself. The transfer that was implied in the suits’ final resolution was that the unlawful suits were not on the court’s docket and could not be resolved by recording a settlement. Therefore, the settlement lacks jurisdiction.
2. The appellants contended that the strict liability doctrine established in Rylands v. Fletcher (1868) had been limited by the M.C. Mehta decision (1986), and the recently introduced doctrine of absolute liability should not have any retroactive repercussions. 
3. It was contended that the lawsuit in which the interlocutory injunction was obtained did not include the criminal proceedings. Consequently, the Court lacked the authority to remove those criminal proceedings from its own jurisdiction and to quash them. 
4. There was doubt about the shareholders’ culpability. The appellant claims that in a business limited by shares, the liability of the shareholders must be ascertained, and whether the legal notion of penetrating the corporate veil renders UCC accountable unconscionable.

Arguments on behalf of the Respondent

1. According to the respondents, the appellant was obligated to provide gas victims with interim compensation under the “substantive law of torts” because, in the context of the aforementioned law, the terms “other authority” in Article 372(1) of the Indian Constitution included a competent civil court, in this case, the District Court of Bhopal, which has jurisdiction under Section 9 of the Civil Procedure Code. Because of this, it was clear from the Bhopal lawsuit that the company involved in the high-risk activity—UCIL or UCC—was liable for damages under the principles of absolute liability. 
2. Even though the M.C. Mehta case was decided after the Bhopal gas tragedy, the judgment’s absolute culpability premise might still be applied. 
3. The corporate veil had to be lifted as the UCC owned the bulk of the shares, and the UCIL lacked the resources to adequately recompense the victims.

JUDGMENT

The authority under Article 139-A shall be held to not exhaust the power of withdrawal and transfer of cases to the Supreme Court to the degree that the Court deems necessary to carry out the noble intent of Articles 136 and 142(1). If the requirements outlined in Article 139-A are met, the parties may petition the Supreme Court to transfer their case. The purpose of Article 139-A was not to reduce the broad authority granted by Articles 136 and 142, nor does it function in that manner. 

The wording of Article 136 is as broad as feasible. By granting special leave against any type of judgment or order made by a Court or Tribunal in any cause or matter, it gives the Supreme Court plenary jurisdiction over the matter of entertaining and hearing appeals. The power can be used in spite of any restrictions imposed by the Constitution’s or other laws’ specific appeal provisions. Article 136 confers powers that are considered unique or residuary, meaning they can be used outside the normal legislative framework when the interests of justice need the Supreme Court to intervene. The purpose of the constitutional plenitude of the powers of the apex Court is to ensure due and proper administration of justice is intended to be co-extensive in each case with the needs of justice of a given case and to meet any exigency.

According to the majority view, criminal charges against Union Carbide should be brought forward because their quashing was not warranted. Regarding the question of whether or not this compensation is sufficient, the majority bench ruled that it is reasonable, fair, and sufficient. Should there be a shortfall in funds for rehabilitation, the Union and State governments will provide the necessary funds. Ahmadi J. disagreed with the majority on this point. Consequently, the Supreme Court ruled that the earlier judgment was annulled and that criminal procedures should be started as soon as possible, holding that the dropping of criminal proceedings is not warranted.

CONCLUSION

The world’s biggest industrial accident is still regarded as the Bhopal gas leak case. Its aftermath served as a cautionary tale about the risks industrialization poses to people, the environment, and the economy. This is the point at which the idea of sustainable development becomes crucial. Even the case’s verdict was heavily criticized since, given that there were other victims in addition to the company’s affected employees, neither the government’s contribution nor the term imposed on it was entirely adequate. Every year, there are an increasing number of illnesses, fatalities, premature newborns with cancer or other malformations, and people who are totally disabled.

The Bhopal gas accident case has both instructive and detrimental lessons to be learned. On the one hand, the legislature passed and modified all the relevant legislation to stop such incidents like this one, even though the Supreme Court should not have dismissed the criminal charges against the state and the UCIL. Despite being a signatory and participant in the Stockholm conference, India’s legislature did not pass any legislation pertaining to environmental protection, despite the existence of policies and international norms in this area. Even while the rules passed in the wake of the Bhopal Gas tragedy were unable to stop other tragedies like the oleum gas leak, they did establish culpability for the offenders, which was a vital step in the right direction. 

The legislature came under heavy fire for asking foreign courts to decide the issue. It demonstrated the incapacity and lack of trust in Indian courts. In addition, the victims received insufficient compensation. Later, the courts made up for this by awarding compensation using Union and state funds, which was unfair and irrational given that public funds cannot be taken for personal wrongs.