TABLE OF CONTENT

 TABLE OF CONTENTS
 LIST OF ABBREVIATIONS
 ABSTRACT
 INTRODUCTION
 MAIN TEXT
o BACKGROUND
o FACTS
o ISSUES
o ARGUMENTS
 PETITIONERS ARGUMENT
 RESPONDENTS ARGUMENT
o JUDGEMENT
 ANALYSIS
 CONCLUSION
 REFERENCES

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LIST OF ABBREVIATIONS

UOI -Union of India

UCIL- Uranium Corporation of India

UCC-Union Carbide Corporation

MIC-Methyl-Iso Cyanate

SC-Supreme Court

CPC- Civil Procedure Code

ICMR- Indian Council of Medical Research

SCC-Supreme Court Cases

CJ- Chief Justice

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ABSTRACT

The case of Union Carbide Corporation and Others V. Union of India and Others at Bhopal
resulted in the creation of new jurisprudence when the plight of victims reached the court i.e.,
the rule of absolute liability. The corporation is charged for absolute liability i.e., the
corporation which is engaged in a hazardous or inherently dangerous industrial activities which
possess a potential threat to the health and safety of 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 such activity the enterprise must be
"absolutely liable to compensate" for such harm and it should not be answerable to the
enterprise to say that it had taken all reasonable care and that the harm occurred without any
negligence on its part. This concept of absolute liability is introduced in the Oleum Gas Leak
case in which an enormous leakage of oleum gas took place in Shriram food and fertilizers
factory, a branch of Delhi cloth mills at Delhi which cause massive harm to the public around
200000 people were habituated near the factory. At the very beginning of this case’s
proceedings, the Supreme Court relied on the rule in Ryland v Fletcher. However, in the context
of the present case, the Chief Justice clarified that the strict liability rule has been in force for
100 years and is not sufficient to deal with such cases. As a result, the Supreme Court
introduced the rule of absolute liability can be also called “no fault liability”, the liability which
is without exception.

Keywords: absolute liability, compensation, no fault liability, strict liability, appellant, victim,
substantive tort.

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LIST OF CASES

 RYLANDS V. FLETCHER (1866) LR 1 EXCH 265, (1868) LR 3 HL 330

 MC MEHTA V. UNION OF INDIA AIR 1987 SC 965

 UNION CARBIDE CORPORATION AND OTHERS V. UNION OF INDIA AND

OTHERS 1990 AIR 273, 1989 SCC (2) 540

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UNION CARBIDE CORPORATION AND OTHERS V. UNION OF INDIA
AND OTHERS

EQUIVALENT CITATIONS: 1990 AIR 273, 1989 SCC (2) 540

DATE OF JUDGEMENT: 04 APRIL,1989

BENCH: PATHAK, R.S. (CJ), VENKATARAMIAH, E.S. (J), MISRA RANGNATH,

VENKATACHALLIAH, M.N. (J), OJHA, N.D. (J)

INTRODUCTION

Law should be ever-evolving and constantly adapting to the needs of the modern world. It is
no longer appropriate to apply centuries-old principles and laws to current cases and events as
the world changes or advances in technology, economic activity, behaviour, culture and overall,
at all levels.

The concept of absolute liability was also developed in the same way. Economic activity and
industrialization are very different from what they were in the past. Therefore, the principle of
No-Fault Liability is the foundation for the concept of absolute liability

In India, the principle of absolute liability was introduced by the Supreme Court following the
tragic events such as ‘Bhopal gas Leak Case1’ and ‘Oleum gas Leak case2’, where the principle
of ‘No Fault liability’ emerged from English law.

Essentials of absolute liability:

Hazardous substance: Any Hazardous substance should be used to cause such an accident. This
could be poisonous gas, fumes, pollutants, water reservoir, explosives etc.

Escapes: The hazardous substance must escape in such a way that it causes some harm to a
victim that constitutes absolute liability. However, Escape within a premise may also be
regarded as absolute liability.

1
UNION CARBIDE CORPORATION AND OTHERS V. UNION OF INDIA AND OTHERS 1990 AIR 273,
1989 SCC (2) 540

2
M.C. MEHTA V/ UNION OF INDIA AIR 1987 SC 965

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Non-natural use of land: It's pretty obvious what's natural and what's not. Keeping water for
home use is natural, but keeping a lot of it in a reservoir isn't. Growing plants or trees in the
ground is natural, but growing plants that are poisonous can be unnatural.

MAIN TEXT

1. BACKGROUND
In the case of Union Carbide Corporation v. Union of India, the Union of India filed a
separate appeal in the Supreme Court against section 155(1) of the CPC, in which the
Union of India sought damages on behalf of all those affected by the Bhopal Gas Leak
Disastrous Act 1985. The Union Carbide Corporation and Union of India filed separate
appeals in the Supreme Court, and both were heard at the same time. The Court sought
to determine the number of damages that the Union of India would be required to pay
in order to settle the case. The Court considered whether the amount of damages
payable was proportional to the size and capacity of the enterprises, as such
reimbursement would have a detrimental effect on them. The Court also considered
whether the decree was domesticated for execution in the United States.

2. FACTS
In 1970, a pesticide plant was established in the densely populated area of Bhopal in
the state of Madhya Pradesh. Repeated complaints were made about the safety measures
of this pesticide plant by agronomic engineer but no action was taken. On the night of
December 2nd, 1984, a gas leak occurred from the plant of methyl isocyanate
unleashing havoc on the people of Bhopal. This gas leak killed almost 2600 people
instantly. Thousands of people were injured and displaced. The final count showed that
nearly 20,000 people died due to gas leak and over 60,000 were affected. Not only flora
and fauna but even the life in mother's womb was affected. In order to provide quick
justice to the victims, the Union of India immediately enacted Bhopal gas leak disaster
(Processing of claims) law, 1985 (Bhopal Act) which made the Union of India the
representative of the victims. However, this act was challenged in the Supreme Court
by the Union of India in the case of Union Carbide Corporation vs. Union of India on
the grounds that because the Union of India owned minority shareholders, they were
also at fault for the disaster. The court ruled in Favor of the Union of India and ruled

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 that the state has a duty to protect the interests of its people all over the world. The
Union of India, however, decided to file appeals against Union Carbide in foreign courts
rather than in the Indian courts. All appeals against the Union of India were consolidated
into one file and were filed before Judge Keenan. However, the American court rejected
the case on the grounds that it falls under the jurisdiction of the Indian courts. In
September 1986, Union of India filed an action against Union Carbide against the
company in the District Court of Bhopal. The District Court asked the company to pay
a compensation of 350 million rupees for the damages suffered as a result of the gas
leak. However, the company appealed to the High Court, which reduced the amount of
compensation to 250 million rupees.
In the end, they appealed to the supreme court. The supreme court ordered the company
to pay $470 million to the federal government. However, the people were unhappy
because they didn’t get as much money as they had been promised. A petition was filed
to the supreme court stating that, “the settlement amount is too low, and it would be
unjust to dismiss the criminal case against Union Carbide.”

3. ISSUES
The High Court in Madhya Pradesh declared the settlement to be valid as follows:
Was the settlement amount reasonable or unreasonable?
Is it right to drop the charges against Union Carbide?

4. ARGUMENTS
4.1. PETITIONER’S ARGUMENT
The appellants called into question whether Indian tort courts have the power to grant
interim damages or compensation in the suits brought before them, and whether it is
permissible to selectively incorporate and adapt into Indian parts of the English
Statutory Law relating to the grant of interim damages while disregarding safeguards
specifically laid down in that Law. They also challenged the findings of law contained
in the judgment of the General Court of the Sixth Circuit of the State of New Delhi,
which they held to be per incuriam and therefore not binding under the Constitution of
India. According to the appellants, the judgment of the Court of First Instance of the
Sixth Circuit, in the case of M.C., Mehta vs. Union of the Union of India, “concluded
that the strict liability doctrine established in the Rylands case established in the case

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of M.C. Mehta.” The appellants also argued that the doctrine of Absolute liability,
introduced in M.C. Mehta, should not have retrospective effect.
The appellants claimed that the finding of liability of a shareholder (regardless of the
proportion of shares held) for the alleged torts of a limited company is contrary to both
the Scheme and the specific provisions of the companies’ law 1956 (S.34, S. 426). Did
the appellants also argue that, in the light of the doctrine of piercing the corporate veil,
the finding of liability by UCC was unlawful in law?
The appellants argued that since the District Judge had ruled that interim compensation
was not possible under S. 151, was it permissible for the Learned High Court Judge to
summarise the entire question of liability and to order that interim compensation be
paid under the “statutory law of torts”? UCC claimed that there was no statutory
procedure to be adhered to under the Scheme and that, even after two years of the
Scheme's promulgation, there was no evidence before the Court of First Instance as to
the nature, category and veracity of the claims or even a simple approximation as to the
injury and damage suffered by the alleged claimants. UCC claimed that, in those
circumstances (in the written submissions of August 17, 1987) it was significantly
prevented from making proposals for further immediate relief that may be required. It
also alleged that there was no evidence on record relating to any of the claimants'
current health status.

4.2. RESPONDENT’S ARGUMENT

The respondents submitted that the applicant was liable to pay the provisional
compensation to the gas victims on the basis of the principle of substantive torts. This
is because the concept of ‘other jurisdiction’ in the Constitution of India (Article 372(1)
Torts) includes a competent civil court (in the present case, the District Court, Bhopal),
exercising jurisdiction pursuant to S. 9 Torts (CPC).
Therefore, there is no doubt in the minds of the parties that, irrespective of whether it
was UCIL or UCC that was engaged in the high-risk activity, it was liable to pay the
compensation under the rules of absolute liability in the case of Bhopal. Moreover, they
denied that, even if the M.C. Mehta case was decided after the tragedy of Bhopal gas,
there is no reason to believe that the rule of absolute liability established in that case
cannot be applied in the present case.

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 The respondents repeated that because the UCIL didn’t have enough assets to support
the claims of the disaster injured parties, and UCC had majority shares, the Court was
right to reveal the corporate identity of the Indian Company, UCIL. As regards interim
payment, respondents asked that even though the Indian Council of Medical Research
(ICMR) is engaged in epidemiological research, will the gas injured parties survive
until all real data with accuracy is collected and proven and determined in a refined
forensic style to determine the final amount of compensation with accuracy in terms of
amount and quality? As regards the nature, type, and veracity of the claims, respondents
said that because of the huge number of claims filed, it will take time to review,
categorize, and verify their claims, and it is the responsibility of the government of
India to offer relief and rehabilitation to the injured parties.

5. JUDGEMENTS
To avoid wasting any more time in detailed judgment, the court ordered Union Carbide
on 14 February 1989 to pay a compensation of $470 million by 31 March 1989.
However, a few months later, on 4 May 1989, the Supreme Court passed a reasoned
order on the same matter. The order stated that Union Carbide must pay $470 million
compensation for all the destruction caused by the MIC gas leak from the industrial
premises. In the order, Justice Pathak stated that it was the court’s responsibility to
ensure immediate relief for the victims of the MIC leak and that the order did not enter
into any new territory. According to the order, Judge Pathak j. applied the polluter pay
principle and determined the amount of compensation to be $470 million. The counter
offers ranged from $ 426 million to $500 million. The settlement amount was therefore
calculated as the average of the counter ranges. The settlement amount was much lower
than the amount promised by the government. Various jurists also considered it as an
inadequate compensation. After analysis of the ratio, it appears that the compensation
amount for each victim was less than INR 50000. The legal validity of the settlement
was challenged in the Union of India vs. Union Carbide Corp. case. In the case, the
petitioners claimed that the dropping of the criminal proceeding against the company
was unlawful and the amount of Compensation was disproportionate to the injury
caused by the disaster. The majority opinion in the case was delivered by the Hon’ble
Justice of the Supreme Court of India, Mr. K. N. Singh (President-in-Office of the Board
of Appeal) on behalf of the petitioners, Mr. N. D.O. Jha (Member of the Board of

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 Directors) and Mr. J. K. Mishra (Rapporteur-appellate lawyer). The minority opinion
was delivered by Mr. J. D. Jha (Appellate Lawyer). The majority opinion ruled that the
criminal proceedings against Union Carbide were unjustified and ordered that the
criminal proceedings should be initiated. On the question of whether the compensation
was adequate or not, the majority bench ruled that the compensation was adequate,
reasonable and just, and in the event that there was a lack of money for rehabilitation,
the money would be offered by the Union and State government. Ahmadi J. disagreed
with the majority that if Union of India was not even remotely involved in the MIC leak
at UCIL, then how could it be held liable to pay the damages? According to Ahmadi J.,
Union Carbide must be held accountable for any shortfall in rehabilitation of victims
by applying the formula in Rylands v fletcher. 3

6. ANALYSIS
The consequences of the MIC leak disaster highlighted the inadequacy of Indian laws
and the institutions that claim to protect the rights of the people of the country. From
the Parliament's decision to file the case in the United States to the SC's ambiguous and
ill-advised decision, it showed that all rights and freedom a citizen is guaranteed are
only on paper. The government's lack of trust in the justice system was a critical
criticism on the justice system of the country. The Parliament said that Indian courts are
not well-equipped to deal with such matters. It shows how little Parliament thinks of
the Indian Judiciary, our legislature is asking for justice from a foreign state when it
should have faith in the justice system of India. The huge backlog of pending cases and
lack of scope of Law of Tort in the country forced the Parliament to consider recourse
to US courts. Furthermore, the Indian courts to liberalize their standards did not award
a compensation that would be sufficient for the loss of the disaster. The court should
have taken into account the fact that Union Carbide, despite being warned, did not take
appropriate steps to control the harmful substances that escaped from its premises. The
court missed two chances to review the quantum of compensation. Moreover, in 1991,
the court held that any shortfall in the quantum of compensation would be offered by
the Union and State government. Why should public money be wasted on the mistakes

3
RYLANDS V. FLETCHER (1866) LR 1 EXCH 265, (1868) LR 3 HL 330

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of private party? This is a lesson from which all constitutional functionaries must learn
a hard lesson. The Parliament should formulate such stringent laws by which India
becomes self-sufficient in resolving such matters and not boast about its inadequacy in
the international arena. The executive should feel responsible to control such harmful
plants whether or not they are adhering to all the safety measures as prescribed by the
relevant laws. The judiciary should also understand when to treat matters lightly and
when not to do so. If the judiciary has awarded equitable compensation in the first place,
then the general public of India will not suffer.

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CONCLUSION

While the effects of the disaster were positive, according to the state functionaries, justice was
done. The Bhopal gas disaster serves as a sobering reminder of the need for robust legislation
to contain any kind of disaster of this scale. In order to ensure economic development, public
health and safety at the same time, the legislature needs to formulate legislation that is enforced
responsibly by the executive while being freely audited by the judicial system. A disaster like
the one in Bhopal highlights our capacity to exist alongside sustainable development. This case
gave rise to the doctrine of absolute liability which has no exceptions that is “strict liability-
(minus)exceptions= absolute liability “

REFERENCES

 GN Pooja (2021) Union Carbide Corporation V. Union of India, SSRN

 I-Pleaders-https://blog.ipleaders.in/concept-absolute-liability/
 Bangia RK (2017) Law of Torts, Allahabad Law Agency
 Manupatra Paper absolute liability
 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3861768

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