V. VENKATESAN IN THE FRONTLINE DATED 19TH NOVEMBER
Twenty-five years after the disaster, the principle of absolute liability, the cornerstone of litigation, faces the risk of being diluted.
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 judiciary’s 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 plaintiff’s 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 court’s 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 Shriram’s sulphuric acid plant, causing widespread panic in the surrounding community. The ongoing Bhopal litigation influenced the court’s 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 Court’s view was that after the no-exception standard of Shriram, UCC’s 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 corporation’s 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 court’s enunciation of the absolute liability principle in the Shriram case.
Fortunately, the court, in 1996, accepted the validity of the absolute liability principle in the Bichhri case. In this case, units located in an industrial complex in Bichhri, Rajasthan, devastated the environment by discharging untreated toxic chemicals and sludge. The court found that all the regulatory agencies, including the Central government, had failed to force the polluter to pay. The court disagreed with the finding of the Bhopal Review Bench that the absolute liability principle laid down in the Shriram case was obiter dictum. It held that it was bound by the principle. In another case, involving pollution caused by the discharge of untreated effluent by industries in Tamil Nadu (Vellore Citizens Welfare Forum vs Union of India, 1996), the Supreme Court applied the principle of absolute liability to even non-toxic pollution cases.
The court explained that the polluter pays principle required the polluter not only to compensate the victims of the pollution but also to pay remedial costs to restore the damaged ecology. It also held that once the activity carried on was hazardous, or inherently dangerous, the person carrying on such activity was liable to make good the loss caused to any other person by his activity, irrespective of the fact whether he/she took reasonable care while carrying on his/her activity. The principle stems from the logic that the enterprise alone – and not the person affected – has the resource to discover and guard against hazards or dangers. The person affected cannot do so because of the practical difficulty in establishing that reasonable care was absent or that the damage to him was foreseeable by the enterprise.
In January 1991, Parliament enacted the Public Liability Insurance Act (PLIA), giving statutory recognition to no-fault liability. Under this Act, victims of a hazardous industrial accident are entitled to compensation at prescribed levels, without providing any proof of negligence. The maximum compensation under the Act, however, is limited to a measly Rs.25,000 although the right of a victim to claim larger damages under any other law is expressly reserved. To ensure prompt payment of compensation to victims, the Act requires all hazardous enterprises to obtain sufficient insurance cover and provides for an independent machinery administered by the District Collector for the filing for and adjudication of claims. The rules framed under the PLIA limit the liability of an insurer to Rs.5 crore for every accident.
With only a few cases reported under the Act, it has not been found to be of any help to ensure timely payment of adequate compensation to the victims of accidents involving hazardous industries. Poor enforcement of the Act by the authorities has meant that its laudable objectives are out of sync with reality.
The National Environment Tribunal Act (NETA), 1995, extended the application of absolute liability without limitation to all cases where death or injury to a person (other than a workman) or damage to any property or the environment resulted from an accident involving a hazardous substance. The “owner”, who is defined as a person who owns or has control over the handling of any hazardous substance at the time of the accident, is liable to compensate the victims on a no-fault basis. Application for compensation may be made to the tribunal established under the Act. The Act is not in force as the government has not yet notified it, allegedly under pressure from business houses dealing with hazardous substances.
The law was enacted in pursuance of decisions taken at the United Nations Conference on Environment and Development (in which India participated) held in Rio de Janeiro in June 1992. The statement of objectives of the Bill stated that it was considered expedient to implement the decisions of the aforesaid conference so far as they related to the protection of the environment and the payment of compensation for damage to persons, property and the environment while handling hazardous substances. The enactment of NETA – and its subsequent non-notification – is seen as representing symbolic compliance with the decisions taken at the international conference, just in order to hoodwink the international community, rather than any genuine interest in the protection of the environment.
NON-NOTIFICATION OF NETA
Meanwhile, in order to skirt uncomfortable questions regarding the non-notification of NETA, the government has come out with another Bill, the National Green Tribunal Bill, 2009, to replace the 1995 Act. In terms of relief to victims of environmental disasters, the new Bill, according to the environmental lawyer Ritwig Dutta, is worse than the 1995 Act. It limits the locus standi of the complainant before the tribunal, making it impossible for human rights organisations to intervene on behalf of the victims. Activists are also aggrieved over the Bill’s time limit for entertaining applications. It stipulates that no application for the adjudication of a dispute shall be entertained six months after the occurrence of the alleged cause of action.
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 executive’s 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 Court’s 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.
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