Union Carbide Corporation V.

UOI 1990 AIR 273

INTRODUCTION

The Civil Appeal was presented in The Supreme Court of India before

The Bench: Pathak, R.S. (Cj), Venkataramiah, E.S. (J), Misra Rangnath,
Venkatachalliah, M.N. (J), Ojha, N.D. (J)

The case was decided on May 4, 1989

The judgment was given by: R.S. Pathak, C.J.

The Appellant in the case was: Union Carbide Corporation

The Respondent was: Union of India, Etc

Advocates who appeared in this case:

Anil B. Dewan, J.B. Dadachanji, Mrs. A.K. for the Appellants;

K. Parasaran, A. Mariarputham, Miss A. Subhashini and C.L. Sahu for the Respondents.

The Act referred in the case was :

Bhopal Gas Leak Disaster (Registration and Processing of claims) Act, 1985

FACTS

In the year 1934, Union Carbide India Ltd. (UCIL) was incorporated in India. It basically
manufactured batteries, chemicals, pesticides, etc. In 1970, it established a pesticide
plant in Bhopal, Madhya Pradesh. On the night of 2-3rd December 1984, highly
poisonous methyl isocyanate (MIC) leaked from the plant. It was estimated that while
the fatalities were about 20,000, the number of people who suffered irreparable physical
damage was about 60,000.

In the February of 1985, the Indian Government filed a case in the U.S Court for a claim
of $3.3 billions against the Union Carbide Corporation. But by 1986 all of these litigations
in the U.S District were transferred to India on the grounds of forum non conveniens. It
means that the case should be transferred to a more convenient forum so that the trial
proceeds smoothly. Meanwhile in March 1985, the Bhopal Gas Leak Disaster (Processing
of Claims) Act was passed which empowered the Central Government to become the sole
representative of all the victims in all kinds of litigations so that interests of the victims of
the disaster are fully protected and the claims for compensation are pursued speedily. In
the year 1987, cases were filed in the Bhopal District Court which ordered the Union
Carbide Corporation to pay 350 crores as interim compensation. But the interim order
could not be decreed and therefore the UCC refused to pay the amount. Later on, at the
High Court, this interim compensation amount was reduced to 250 crores. Both the

1
Union of India and the UCC preferred appeals by special leave against this High Court's
order.

RELEVANT LAWS

The Bhopal Gas Leak Disaster (Processing of Claim) Act, 1985 was assailed on the
touchstone of Article 141, 192 and 213 of the Constitution of India. It was contended by
the appellants that the Section 3, 4 and 11 of the Bhopal Act, 1985 insofar as they
take away the right of the victims to represent themselves should be, declared
unconstitutional.

It was urged to consider whether Section 3, 4 and 11 take away the rights of the victims
and the citizens to fight for their own causes and to assert their own grievances validly
and properly, in the light of the prevailing conditions at the time, the nature of the right
of the citizen, the purpose of the restrictions on their rights to sue for enforcement in the
courts of law or for punishment for offences against his person or property, the urgency
and extent of the evils sought to be remedied by the Act, and the proportion of the
impairment of the rights of the citizen with reference to the intended remedy prescribed.

The Act was also assailed on the ground of Article 14 whereby it was contended that
right to equality is guaranteed to every person under Article 14 in all matters like the
laws of procedure for enforcement of any legal or constitutional right in every
jurisdiction, substantive law defining the rights expressly or by necessary implication.
Denial of any of these rights to any class of citizen in either field must have nexus with
the constitutionally permissible object and can never be arbitrary.

It was further contended that the Union of India was a joint tort-feasor along with UCC
and UCIL. It had negligently permitted the establishment of such a factory without
proper safeguards exposing the victims and citizens to great danger. Such a person or
authority cannot be entrusted to represent the victims by denying the victims their rights
to plead their own cases.

The Supreme Court of India, in its judgment, upheld the constitutional validity of the Act
under which the Indian government gave itself the exclusive right to represent all Bhopal
victims in civil litigation against Carbide. The court acknowledged that the Bhopal act
entitled the victims to notice and an opportunity to be heard on any proposed settlement
and the settlement in the February 1989 failed to give any such notice.

Article 1374 of the Constitution  1950, provides that subject to provisions of any law
and rules made under Article 145, the Supreme Court has the power to review any
judgment pronounced or order made by it.

Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (the Bhopal Act)
1
Right to Equality, Constitution of India

2
Right to Freedom, Constitution of India

3
Right to Life and Liberty, Constitution of India

4
Constitution of India,1950
2
Union of India immediately to provide speedy justice to the victims enacted Bhopal Gas
Leak Disaster (Processing of Claims) Act, 1985 (the Bhopal Act) making the Union of
India representative of the victims by the virtue of Doctrine of Parens patriae. However,
the validity of this act was challenged in Supreme Court in Union Carbide Corporation v.
Union of India5 on the ground that since the Union of India was also owner of minority
shareholders, they are also responsible for the disaster. However, the court by
applying Charanlal Sahu v. Union of India 6 ruled in favor of the union of India and held
that the state is obligated to protect the interests of its citizens across the globe. The
court further held that our Constitution makes it imperative for the state to secure to all
its citizens the rights guaranteed by the Constitution and where the citizens are not in a
position to assert and secure their rights, the state must come into picture and protect
and fight for the rights of the citizens.

ISSUES:

 The validity of settlement ordered by the High Court of Madhya Pradesh.

JUDGMENT

The Supreme Court ordered UCC to pay a compensation of 750 crores “in full settlement
of all claims, rights, and liabilities relating to and arising out of Bhopal Gas Tragedy
disaster”. All civil proceedings were disposed and all criminal proceedings quashed. Later,
several petitions were filed to revive criminal charges.

The court decided as follows:

(1) The Union Carbide Corporation should pay a sum of U.S. Dollars 470 million (Four
hundred and seventy million) 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 Union Carbide Corporation shall pay the aforesaid sum to the Union of India on
or before 31st March 1989.

(3) To enable the effectuation of the settlement, all civil proceedings related to and
arising out of the Bhopal gas disaster shall there by stand transferred to the Supreme
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.

ANALYSIS

5
1990 AIR 273, 1989 SCC (2) 540
6
 AIR 1480, 1989 SCR Supl. (2) 597
3
Judge’s Reasoning

The Supreme Court ordered Union Carbide to pay US $470 million against all the
destruction that the leak of MIC gas from the industrial premise. In the reasoned order
Justice Pathak said that it was the duty of the court to secure immediate relief to the
victims of the MIC leak and while doing that the court did not entered into any virgin
territory. Pathak j. applying the polluters pay principle decided the quantum of
compensation to be US $470 Million. The court considered that the counter offers ranged
between US $426 Million and US $500 Million. Therefore, US $470 Million was calculated
as the mean of the counter ranges.

However, this settlement of US $470 Million was way less to the promised amount by the
government and also various jurists considered it to be an inappropriate compensation.
After analyzing the ratio, it seems that an amount less than INR 50,000 was delivered to
each victim.

Therefore, the legal validity of this settlement was challenged. The petitioners in this
case argued that the drop of criminal proceeding against Union Carbide was illegal and
the amount of Compensation was inappropriate to the injury the disaster caused. In this
case the majority opinion was given by Justice Venkatchaliah on behalf of himself and
K.N. Singh and N.D. Ojha JJ. while CJ Mishra concurred with him and Ahmadi J. wrote
the minority opinion. 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. On the point that whether such compensation is 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 that when Union of India is not even remotely connected to the MIC leak in
UCIL then how it could be made liable to pay the damages. In his opinion any deficiency
that may arise in rehabilitation of victims must be tendered by Union Carbide as applying
the formula of Rylands v. Fletcher7

Critique

The judgment has been criticized on several grounds, especially for quashing criminal
proceedings in the first place. The pertinent delay and lack of responsibility has often
raised the question “If lives in India are less valuable than the rest of the world?”
primarily because if such a ghastly act had taken place elsewhere, the grievances of the
people would have been actually addressed and the state would not have been allowed
to escape the liability. However, if we ignore the downside, we’ll notice that several
enactments like the Environmental Protection Act, 1986; Public Liability Insurance Act,
1991, etc have been enacted to introduce sustainable and responsible development.

The MIC leak disaster brought out the incompetence in Indian laws as well as the
institutions that claim themselves to be the protector of rights vested in the citizens of
the nation. From Parliament’s decision to fight the case in U.S. to the ambiguous and
inappropriate decision of SC, it was reflected that all the rights and freedom that a citizen
is guaranteed is only on papers.

7
(1868) L.R. 3 H.L. 330.
4
The government’s lack of confidence in the judiciary was a critical criticism on the judicial
system of the nation. The Parliament claimed that Indian courts are not well equipped to
entertain such huge matters. This shows how less Parliament thinks of Indian Judiciary.
Our legislature is asking a foreign state for justice when it should have faith in the Indian
Judiciary. Due to huge backlog in pending cases and no scope of Law of Tort in India
made Parliament to consider the option to approach US courts.

Further, the Indian courts in order to liberalize its standards did not order a
compensation that would suffice the loss of disaster. The judiciary should had considered
the fact that Union Carbide despite severe warnings did not adopted proper measures to
check harmful substances to escape its premises. The judiciary wasted two chances to
revise the quantum of compensation. Further, in 1991 it held that any deficiency in the
amount of compensation would be tendered by the Union & State government. The court
should have thought that why would public money be wasted for faults of private party.

Therefore, this a lesson from which all the constitutional functionaries should learn a
strict lesson. The Parliament must formulate such stringent laws by the virtue of which
India becomes self – sufficient in resolving such matters and not brag about its
incompetence in International arena. The executive should feel responsible to check such
harmful plants that whether they are complying with all the safety measures prescribed
by the appropriate laws. The judiciary should also understand when to deal with matters
liberally and when not. If the judiciary has in the first place awarded equitable
compensation the public exchequer of India shall not have suffered.

CONCLUSION

Who is to blame here? Many years after the Bhopal Gas leak, the worst industrial
catastrophe in history, it remains unclear who must bear the legal responsibility.
Certainly, there is plenty of blame to go around and the recipients include Union Carbide,
UCIL and the governments of India and Madhya Pradesh. The role of the India
government in the Bhopal disaster was that of an actor in many parts. The government
was keen that transnational corporations such as carbide set up shops in India, in the
hope of creating jobs and drawing new technology and industry into this rapidly
developing country.

The Government was also responsible for overseeing the construction and management
of the carbide plant ensuring that applicable health and safety standards were met. Then
with the passage of the Bhopal Act, the government named itself as the sole plaintiff in
all litigation, which created an enormous conflict of interests. And while the issues of
liability, an adequate amount of compensation, and strategies to resolve the Bhopal
controversy are of great significance and ought to concern us, the issues often ignored to
relate the Bhopal victims for whom the bell continues to toll.

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

5
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

Consequently, what is of utmost concern is to devise ways to ensure justice for the
Bhopal victims in the long run and to make certain that their relief and rehabilitation
needs are appropriately met.