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Union Carbide Corporation v. Union of India- AIR 1992 SC 248

[Bhopal Gas Tragedy]

Law of Torts
Dr. P .Sri Devi, M.L, Ph.D
Associate professor

Gulipalli Suraj
2015023 & Semester-01

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I would like to put forward my heartfelt appreciation to our respected Law of Torts professor,
Prof. Dr. P. Sri Devi. for giving me a golden opportunity to take up this project regarding Union
Carbide Corporation v. Union of India- AIR 1992 SC 248 [Bhopal Gas Tragedy]. I have
tried my best to collect information about the project in various possible ways to depict clear
picture about the given project topic.

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Table of contents

Index of Authorities


Facts of the case

Issues with the case

Rules Applicable


Analysis and Application



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Index of Authorities

Constitution of India, 1950

Law of Torts
Indian Penal Code, 1860

Bano vs. Union Carbide15
Caparo v. Dickman13
M.C. Mehta v The Union of India (Oleum Gas Leak case of December 1985)14
Perre v Apand" [1999]13
Rylands v. Fletcher.14
Sahu vs Union Carbide.. 15
Texas City Refinery case... 14
Texas City Refinery case [2005] 14
United States v. Carroll Towing Co. 159 F.2d 169 (2d. Cir. 1947)13

Indian Penal Code

Section 304 A..................................................................................................7
Sections 336, 337, and 338 read with Section 35.......................................................7

Constitutional Provisions
Articles, i.e. 48A and 51A...................................................................................8
Public Liability Insurance Act in 1991....................................................................8

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In the early hours of December 3rd 1984 42 tons of deadly Methyl Isocyanides [MIC] and other
toxic gases escaped from UCILs pesticide plant in Bhopal, MP. A government affidavit in 2006
stated the leak caused 5,58,125 injuries including 38,478 temporary / partial and approximately
3900 severely and permanently disabling injuries.
All around the city of Bhopal, people were exposed to this gas and the immediate effects of
inhaling the gas were coughing, vomiting, severe eye irritation (temporary blinding) and a
feeling of suffocation. Over 3000 people died immediately and over 25000 [unofficial estimate]
are debated to have died as a result of the leak due to cancer, kidney and liver failure, etc. over a
period of time.
And till date many carry the burden of being victims of this gas leak in the form of congenital
birth defects. Women were most affected in the long run as the gynaecological problems were
long-lasting and passed on from mother to child for years after.
Bhopal being a landmark tort law case consists of matters relating to tort law such as loss
spreading, risk attitude, moral hazard, transactions costs, and cost minimization or social
efficiency. In this case analysis mainly bringing out the facts of the tragedy and the importance of
Law and Economic Perspective which favours an industry such as the Union Carbide
Corporation (UCC) in the objective and also the Social Justice Perspective which speaks in
favour of the people of Bhopal.
Global activist and social welfare groups like Greenpeace have conducted various events and
protests to ensure that justice is done to the people whose lives have been ruined. Also they have
held various awareness programs to highlight the importance of monitoring chemical plants to
other countries to prevent similar disasters in the future.

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Facts of the case:

1) Immediately after the Bhopal leak the government of India enacted the Bhopal gas leak
Act1985 [Procession of claims] under this act they were the sole representatives of the victims in
any case of compensation against UCIL.
2) It then claimed US $ 3.3 billion from UCC in USA in US courts.
3) Almost immediately the litigation was transferred from the US to the Indian courts on the
basis that UCIL was a separate entity, owned, manages, and operated exclusively by Indian
citizens in India. Investigations by the central bureau of investigations had revealed the UCIL as
well as UCC officials had been responsible for negligence.
4) In an out of court settlement reached in 1989, union carbide agreed to pay US $ 470million,
which was actually just the insurance amount of US $ 350 million + interest. Just 15% of the 3
billion originally claimed .in the lawsuit.
5) By the end of October 2003 compensation was awarded to 554895 for injuries received and
15310 survivors for those that were killed. The average amount to the families of the dead was
US $2200.
6) Throughout 1990 the Indian Supreme Court heard appeals against the settlement from
activist petitions.
7) In Oct 1991 the Supreme Court upheld the $470 million, dismissing any other outstanding
petitions that challenged the original decision.
8) It also requested UCC and its subsidiary voluntarily to fund a hospital, at an estimated
$17million, to specifically treat the victims of the disaster.
9) The US Supreme Court refused to hear an appeal of the decision of the lower federal courts in
October 1993 meaning that victims of the Bhopal gas disaster could not seek damages in a US
10) In 2006, the second circuit court of appeals in New York City upheld the dismissal of the
remaining claims in the case of Bano vs. Union 1 Carbide Corporation. Federal class action
litigation, Sahu vs. Union2 Carbide and others is presently pending in the second circuit court of
appeals in New York.
11) The litigation seeks damages for personal injury, medical monitoring and injunctive relief in
the matter of clean-up of drinking water supplies for residential areas near Bhopal plant. A
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related complaint seeking similar relief for property damage claimants is stayed pending of the
outcome of the Sahu appeal before the federal district court in the southern district of New York

Issues with the case

Whether precautions were taken by the Indian Government in terms of laying down
strict regulations for a factory of such nature?
Whether proper care and maintenance was taken by Union Carbide India Limited under
the law?
Whether the common people have resources to individually file cases against Union
Carbide Corporation in the United States?
whether the United States gave fair trial and was it better to attempt the trial there as it
had a much more developed system for the Law of Torts?
Whether the Indian judicial system was equipped to handle cases of this magnitude?
Whether the damage should be measured on a scale of fair compensation
Whether there should be a universal jurisdiction in the case of Law of Torts, due to

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Rules Applicable
Negligence would be one of the main forms of tort laws applicable in this case along with loss spreading,
risk attitude, moral hazard, transactions costs, and cost minimization or social efficiency
Negligence is a failure to exercise the care that a reasonably rational person would exercise in like
circumstances. Through civil litigation, if an injured person proves that another person acted negligently
to cause their injury, they can recover damages to compensate for their harm. Proving a case for
negligence can potentially entitle the injured plaintiff to compensation for harm to their body, property,
mental well-being or financial status.
The proceedings were initiated under Section 304 A, and Sections 336, 337, and 338 read with Section
35 of the Indian Penal Code 1860. Section 304 A deals with causing death by negligence. Sections 336,
337 and Section 338 deal with the offences of endangering life and personal safety of others. This is read
along with Section 35 which deals with the aspect of common intention.
One of the main issues which the Bhopal Gas tragedy raises is the issue of Absolute liability. This
issue was elaborately discussed in the case of M.C Mehta v Union of India 3.
The principle of absolute liability states that when an enterprise is engaged in hazardous or inherently
dangerous industry and if any harm results in account of such activity then the enterprise is absolutely
liable to compensate for such harm and that 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 such industries, the principle of safe design would be that one does not guard merely against the most
predictable, routine type of accidents. Rather one tries to anticipate the worst that could happen, even if it
is highly unlikely, and not only guard against it, but prepare to contain it and make sure that there is no
way for that even to take place. This is the principle of absolute liability and liability can be fixed even if
there is no negligence on part of the accused.

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In the case of absolute liability, even the defences available under strict liability would not apply. Thus,
even if the accident is some freak incident, liability would still be fixed. In such a case, it would be no
good defines to argue that the direct or the proximate cause of the accident was not the carrying of such
hazardous activity, but it actually is an Act of God or that it is due to some third party intervention. Even
if the Company had taken extreme precautions to ensure that such events do not take place, responsibility
would still be fixed on them. This principle of absolute liability in India evolved primarily because of the
awakening that the Bhopal Gas Disaster and the Oleum Gas Leak case gave.
The Bhopal gas tragedy in 1984 triggered the passage of comprehensive environment legislation in 1986
and Public Liability Insurance Act in 1991.
Indian Parliament inserted two Articles, i.e. 48A and 51A in the Constitution of India in 1976, Article
48A of the Constitution rightly directs that the State shall endeavour to protect and improve the
environment and safeguard forests and wildlife of the country. Similarly, clause (g) of Article 51A
imposes a duty on every citizen of India, to protect and improve the natural environment including
forests, lakes, rivers, and wildlife and to have compassion for living creatures.
The cumulative effect of Articles 48A and 51A (g) seems to be that the State as well as the citizens
both are now under constitutional obligation to conserve, perceive, protect and improve the
environment6. Every generation owes a duty to all succeeding generations to develop and conserve the
natural resources of the nation in the best possible way

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The following Order/Judgment of the Court was passed:

Considering the proceedings in the Courts of the United States of America, the offers and counter-offers
made between the parties during the various proceedings and in particular the enormity of human
suffering occasioned by the Bhopal Gas disaster and the pressing urgency to provide immediate relief to
victims of the disaster, the court ordered the following:(1) The Union Carbide Corporation shall pay a sum of U.S. Dollars 470 to the Union of India in full
settlement of all claims, rights and liabilities related to and arising out of the Bhopal Gas disaster.
(2) The sum shall be paid by the Union Carbide Corporation to the Union of India on or before 31
March, 1989.
(3)All civil proceedings related to and arising out of the Bhopal Gas disaster shall hereby stand
transferred to this Court and shall stand concluded in terms of the settlement, and all criminal proceedings
related to and arising out of the disaster shall stand quashed wherever these may be pending.
A memorandum of settlement shall be filed before the court of the following order:1. Pursuant to the order passed on 14 February 1989 the payment of the sum of U.S. $ 470 Million
directed by the Court to be paid on or before 31 March, 1989 will be made in the manner following:
(a) A sum of U.S. $ 425 Million shall be paid on or before 23 March, 1989 by Union Carbide Corporation
to the Union of India, less U.S. $ 5 Million already paid by the Union Carbide Corporation pursuant to the
order dated 7 June, 1985 of Judge Keenan in the court proceedings taken in the United States of America.
(b) Union Carbide India Ltd. will pay on or before 23 March, 1989 to the Union of India the rupee
equivalent of U.S. $ 45 Million at the exchange rate prevailing at the date of payment.
(c) The aforesaid payments shall be made to the Union of India as claimant and for the benefit of all
victims of the Bhopal Gas Disaster under the Bhopal Gas Leak Disaster (Registration and Processing of
Claims), Scheme, 1985.
2. upon full payment of the sum
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(a) The Union of India and the State of Madhya Pradesh shall take all steps which may in future become
necessary in order to implement and give effect to this order.
3. Upon full payment in accordance with the Court's directions:
(a) The undertaking given by Union Carbide Corporation shall stand discharged, and all order passed in
revision therefrom shall also stand discharged.
(b) Any action for contempt initiated against counsel shall be treated as dropped.
4. The amounts payable to the Union of India under these orders of the Court shall be deposited to the
credit of the Registrar of this Court in a Bank under directions to be taken from the Court.

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Analysis and Application

The case against Union Carbide India Limited for the gas leak caused in the city of
Bhopal is a major tort case. The main issues involved are loss spreading, risk attitude, moral
hazard, transactions costs, and cost minimization or social efficiency. Due to the huge loss of life
that took place in Bhopal this case becomes a case in tort law that can be analysed through
various perspectives. Considering the large amount of damages payable by UCIL this incident
can also be looked at through the perspective of law and economics to examine the formation
and the impact of tort law and the tort damages. It focuses mainly on deterrence, paying little
attention to justice, fairness, or distribution.

This view is a way to assess the costs and benefits that UCC was looking as an outcome
of setting up a plant in India - Union Carbide India Ltd (UCIL) - a subsidiary of the Union
Carbide Corporation (UCC). It is necessary to determine who bears the burden of the injury and
if this injury caused by UCC are compensable to what extent. Two important forms of tort law
which can be used to analyse are Positivistic Economics and the Normative Economics. Positive
economics describes how legal rules influence behaviour whereas normative economics
prescribes change that will increase of legal rules and institutions.
One reason for injustice to the people is that tort law is undeveloped in India. There has
been little development and tort is little used and has remained largely outside the consciousness
of Indian lawyers and public. There has been little connection between tort law and disasters in
India. What typically happens in disasters is that the government announces that it is making ex
gratia payments of a specified amount to the victims. The attributions of responsibility would be
done by Governmental investigations, commission of inquiry or a criminal prosecution.
Similarly, in Bhopal's case there has been insufficient inquiry and due to the inadequate
compensation mechanisms the people were deprived of compensation for their damages. In
comparison to the American system, claiming damages in tort law would have been much
simpler and easier. If a disaster such as Bhopal had happened in the United States of America, it
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would have been much simpler to extract a substantial amount of money, and possibly resulting
in Union Carbide's bankruptcy. Instead the case was tossed back to the Indian courts.
Investigation of the Bhopal catastrophe showed that the responsibility of both the
Government as well as the company went far too beyond the mere neglect of basic safety
measures. In an analysis in the British trade publication Project Management, a UN expert
enumerated 16 factory shortcomings, 13 operational errors, 19 failures in communication and 26
short comings. A multi-billion dollar reputed company like UCC shocked the society with the
mistakes it committed. The cooling system which was supposed to keep the MIC at a
temperature of zero degrees Celsius to prevent a reaction had been too turned off six months
before the accident; same had been done for the burner in the tower for burning off the poison.
Both steps had been taken with approval of the company headquarters. These are the factors that
eventually lead to the unfortunate disaster.

The main accused in the Bhopal Gas Leak case, CEO of UCC at that time, Warren
Anderson was shielded by the US Government and was a fugitive from law, while the 7 Indian
accused of UCIL were sentenced to 2 years imprisonment more than a quarter of a century after
the disaster, but immediately released on bail amounts of $2,100 each. On the issue of extradition
of Warren Anderson, it is our opinion that the U.S. government cannot be wholly or only be
blamed for refusing to extradite him, since many pre-disaster facts were not produced by the
prosecution, to establish the guilt of the accused. The half-hearted manner in which the Indian
state has pursued this whole affair is disappointing. The delay and the manner in which the
Government has handled the issue is nothing but a mockery of justice and if things are not set
right, we feel that, the victims of this unfortunate tragedy will never get the justice they actually

The US Courts did not encourage litigations against UCC on American soil at all. Even
the cases that were registered eventually fell apart, and the same is destined to happen to a few
which are pending appeals. For the disaster of such a magnitude, the compensation paid can be
said to be least satisfactory and insufficient for the victims. Although it is argued, that the field of
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Indian Tort law was not developed to a mature extent back in 1984, but still, the figure of the
eventual compensation awarded does not match up to the graveness of the case even remotely.

The Indian Judiciary tried to make a strong case following the Bhopal Gas Tragedy,
(Union Carbide Company vs. Union of India) to enforce greater amount of protection given to its
people. The Doctrine of Absolute Liability can be said to be a strong legal tool against rogue
corporations that were negligent towards health risks for the public. This legal doctrine was
much more powerful than the legal Doctrine of Strict Liability. This meant that the defaulter
could be held liable for even third party errors when the public was at a realistic risk. This could
ensure stricter compliance to standards that were meant to safeguard the public.

Social justice theorists consider tort law as a device for correcting imbalances in political
powers. In a corrupt society as India's, ruling political parties take advantage of their power and
get all the necessary provisions for an enterprise like Carbide which would readily fund their
party in return. As a result these interests of parties pursue self-interest at the expense of public
by producing dangerous products and hiding critical information about their dangerousness. By
aiding citizens with the power to sue corporations for misconduct outside of the legislative and
regulatory process, tort law serves to correct this imbalance of power.


Negligence is the failure to take adequate care and this care requires one to take costjustified precautions. Precautions can be cost-justified whenever their cost is less than the costs
of the harm risked; by not taking precautions, discounted by the probability of the harm's
occurrence. Once this concept of negligence is understood as the failure to take the cost justified
precautions it is necessary to decide what decides imposing liability on those who have failed to
take these precautions. The economic analysis primarily relies on this concept of negligence. In
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conclusion, a great level of negligence by Carbide and its failure to take cost justified precautions
led to this disaster is seen. Union Carbide should be held liable for all the damages to the people
of Bhopal...

Negligence has main 3 elements:-

1. Duty of Care
Duty of care is a legal obligation which is imposed on an individual requiring the
following of a standard of reasonable care while performing any acts that could harm the near future.
In the English case Caparo v. Dickman [1990]4 the three fold principles of duty of care
were introduced. Harm must be (1) reasonably foreseeable (2) there must be a
relationship of proximity between the plaintiff and defendant and (3) it must be 'fair, just
and reasonable' to impose liability. However, these act as guidelines for the courts in
establishing a duty of care; much of the principle is still at the discretion of judges.
This principle was also used in "Perre v Apand" [1999]5.
In this case Union carbide is guilty of negligence specifically in the matter of Duty of
care as the harm that was going to happen due to lack of maintenance was reasonably
foreseeable. Also there was proximity between the plaintiff and defendant and of course it
was obviously fair and reasonable to impose liability on UCC. Thus according to this
principle UCC had a legal obligation/duty towards the people of Bhopal and the country
as a whole and ensure that no harm came to any of them.
2. Breach of Duty
After it is established that the defendant owed a duty to the plaintiff/claimant, the matter
of whether or not that duty was breached must be settled. Breach of duty is not limited to
professionals or persons under written or oral contract; all members of society have a
duty to exercise reasonable care toward others and their property. A person, who engages
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in activities that pose an unreasonable risk toward others and their property that actually
results in harm, breaches their duty of reasonable care.
Implementing this above principle it is clear that UCC is guilty of breach of duty as it did
not exercise reasonable care even though they were aware about the risks.
United States v. Carroll Towing Co. 159 F.2d 169 (2d. Cir. 1947)6 is a decision from
the 2nd Circuit Court of Appeals that proposed a test to determine the standard of care for
the tort of negligence. In this case a ship sank due to proper standards were not followed
and the negligence of the authorities who were responsible for setting up the barrages on
the docks.
3. Damages
Damages place a monetary value on the harm done. Once breack of suty is confirmed
what remains is compensating the person the victim.
In this case, UCC was proven to be guilty of breach of duty and was liable to pay
damages to victims.

In M.C. Mehta v The Union of India (Oleum Gas Leak case of December 1985) the Supreme
Court of India observed that where an enterprise is engaged in a hazardous or inherently
dangerous activity and harm results to anyone on account of an accident in the operation of such
hazardous or inherently dangerous activity resulting, for example, in escape of 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 which operate vis--vis the
tortious principle of strict liability under the rule in Rylands v. Fletcher7. It was also pointed
out that the measure of compensation for such cases must be co-related to the magnitude and
capacity of the enterprise because such compensation must have a deterrent effect. The larger
and more prosperous the enterprise, the greater must be the amount of compensation payable by
it for the harm caused on account of an accident in the carrying on of the hazardous or inherently
dangerous activity by the enterprise. Thus was evolved the principle of Absolute liability in
Indian Tort law, which can be said to be directly related to the recent occurring of the Bhopal
leak at that time. Here in MC Mehta case the principle of Absolute Liability was introduced
which now forms the basis of our case which is Union Carbide v. Union of India. Also in
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Rylands v. Fletcher the concept of deterrent effect which was introduced also forms an important
aspect of the Bhopal Gas Tragedy.
The Texas City Refinery case [2005], which is much on the lines of the Bhopal case,
saw widespread attention given to it. It was in this case that the Bhopal Incident was mentioned
and linked legally as a similar event. BP paid out compensations and fines amounting to more
than US $1.5 billion for an accident, which was just a trifle, compared to the disaster of Bhopal.
Personal injury cases were also heard, and awarded compensations, as it is a well-known fact
that the field of Torts is well developed and awareness to seek compensation for personal legal
injuries widespread in the US. It reinforced in the facts that you cannot get away with doing a
wrong on the people of the United States, but if a US Corporation and US citizens are involved
in wrongs against the people of other developing nations, the same strict measures otherwise
undertaken are, invariably, very slack. But for fixing the liability in Bhopal, the suspicious role
of the Government of India in aiding UCC and UCIL also cannot be ruled out.

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The main sentiment at the beginning of our study was the feeling of anger towards Union
Carbide and the government of the United States but as we went further into our study of the
case, we felt that the government of India played a huge role in it, right from the cause of the
disaster to the delayed justice to the victims.
As they say the rich are getting richer and the poor are getting poorer, seemed to be the case. To
elaborate on this, India has a history of a socio judicial system of casteism, the people most
affected in this catastrophe were from the lower caste (shudras).They were the poor from nearby
villages who had come and settled around the factory in the hope of finding work, in fact
ironically many were employed at the factory for odd jobs and also at the managers homes etc.
There were so many lapses on our part, starting from allowing the factory in such a location in
bhopal(right in the middle of town)even though the Municipal Corporation had disapproved of it.
Then to not have laid down strict and stringent rules for a factory of such a volatile nature .Then
once the accident happened and the CEO , Mr Warren Anderson, came down for the hearing, the
then chief minister of MP, Mr Arjun Singh, had him arrested , for the sake of publicity as
elections were around the corner, to gain some electoral benefit , to show that he was going to
get them justice, of course he was immediately released on bail, but that scared the UCC officials
forever , they were scared of the consequences of setting foot on Indian soil, which led to further
delay in hearings of the case.
Further the compensations were decided without consulting the victims and years after the
compensation was awarded however meagre has yet not den the light of day by many concerned.
30 years after the catastrophe we can still see the effects of the Gas Leak in Bhopal, yet justice
has eluded them. So many governments have changed and they have all used this tragedy to the
advantage of their vote counts but not one has been able to bring the dues to the victims. Every
opportunity has been milked by every do gooder to their advantage but horrors of 1984 still live

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on in the form of victims, pollution and city that may never be more famous for anything more
than its tragic failure.
In this day and age of Globalization, the Law of Torts and a universal jurisdiction become more
relevant than ever before. So as to avoid companies/corporations from coming into a country for
their benefit and to run out at the first sign of trouble. As did UCC, they were in a dominant
position as India was in a very poverty stricken state and they were bringing in pesticide making
technology that would help in the growth of wheat and other agricultural produce that was
drought resistant , but with the use of a lot of pesticide. We were in a hurry to get this started and
the company took advantage of that and the relaxed attitude of the government plus the later
losses faced by the company, led to the unfortunate incident.
There has to be a clear law which makes sure that its application holds them liable for their
actions and the weaker section in the society are not exploited, abused and left to their fate. As
we know that the most affected in this case were the poor slum dwellers around the factory,
many of whom worked even for the factory managers etc. at their homes and also many who did
odd jobs for the factory. Green Peace and Amnesty International played a huge rule in
bringing UCC to the task and questioning the US government on how they were cooperating in
these matters and also what kind of global cooperation policies are required
In the event of such a large scale disaster as Bhopal, the questions like who is right and who is
wrong and who was negligent and who was not become totally irrelevant in the plight of
thousands of people who get affected in one single night.
The tragedy is still considered to be the worlds worst industrial disaster. If we Google it, it still
shows up as one of the top 10 man-made disasters in the world, rivalling London's Killer fog, the
Russian Nuclear Plant explosion in Chernobyl, etc.
To prevent such events from occurring in the future, the government should thoroughly check
and regulate such industries. They should be placed under constant surveillance and the activities
of such industries should be monitored at least once in every six months. Any kind of repair in
any of the machines or equipments should be immediately attended to. The government should
take it upon itself to make sure that everything is functioning properly.

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Apart from this, the government should also make sure that there is a proper mechanism for
compensation to the victims. It should ensure speedy justice and should make sure that proper
relief is given to the victims.
It is totally unjustifiable to leave even a single victim without providing relief. Hopefully, such
incidents should never occur again, and even if they do, we should not forget the lessons from
Bhopal and we should make sure that any law capping the limit on the liability of such large
magnitude disasters should be declared as unconstitutional.
The initial charges against the accused should not have been quashed since the accused deserved
a trial under Section 304 Part II. Everything now depends on the petition filed by the C.B.I. to
reconsider the 1996 judgment. A curative petition can only be allowed in rarest of rare cases, the
burden is on the government to prove to the Court that declining to reconsider the 1996 judgment
would be against the judicial integrity and would show irremediable injustice and give out a bad
message to the society. Owing to the manner in which the government has handled the case so
far, the victims cannot but wait in anguish to see whether this petition is only an illusion of hope
or a small part of justice which they might receive.

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Butterworths Common Law Series (The Law of DAMAGES, TORT, NEGLIGENCE & CONTRACT) LexisNexis Butterworths
LexisNexis Quick Reference Guide Law of Torts

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