The Bhopal Gas Disaster

The settlement, and the case that reviewed it

In February 1989 the Supreme Court recorded a settlement of all civil claims arising out of the disaster for 470 million United States dollars, and quashed the criminal proceedings that were then pending. Review and writ petitions followed, on the grounds that the amount was inadequate, that the victims had not been heard, and that criminal proceedings could not be bargained away.

Facts. Union Carbide Corporation v. Union of India, (1991) 4 SCC 584, decided on 3 October 1991 by five judges.

Held. The Court held that under article 142(1) of the Constitution it had jurisdiction to withdraw the suits pending at Bhopal to itself and dispose of them in terms of the settlement, and jurisdiction to withdraw criminal proceedings, but that on the particular facts the quashing of the criminal proceedings was not justified, and it restored them. It held that the settlement was not void for non-compliance with Order XXIII Rule 3B of the Code of Civil Procedure, and that the orders recording the settlement did not confer criminal immunity. It upheld the settlement of 470 million dollars while directing that the Union of India make good any shortfall in meeting the claims of the victims.

Why it matters here. Three propositions come out of it, and each is examinable: a court may use article 142 to do complete justice in a mass disaster; a settlement of civil claims does not buy off the criminal law; and where the State takes over the victims' claims it becomes answerable for their sufficiency.

What the disaster changed in the law

Absolute liability. The rule in M.C. Mehta v. Union of India, AIR 1987 SC 1086, was laid down two years after Bhopal and in the shadow of it, and chapter [Absolute Liability] works it out.

A statutory no-fault scheme. Parliament enacted the Public Liability Insurance Act 1991, whose section 3 gives immediate relief for death, injury or damage from an accident while handling a hazardous substance without any proof of fault, backed by compulsory insurance and by the Environmental Relief Fund under section 7A. Chapter [The Public Liability Insurance Act 1991] works out the whole Act.

The polluter pays principle. Indian Council for Enviro-Legal Action v. Union of India, AIR 1996 SC 1446, applied absolute liability to the poisoning of soil and groundwater at Bichhri and held that the cost of remedying pollution must lie with the undertaking that caused it.

A worked example

Suppose a similar escape happened today at a chemical plant in Maharashtra.

The claim in tort. Absolute liability under M.C. Mehta, with no exceptions available and compensation related to the magnitude and capacity of the enterprise.

Immediate relief. Section 3 of the Public Liability Insurance Act 1991, without proving fault, from the owner and his insurer, with the Environmental Relief Fund behind it.

Who sues? The victims may sue, and the Union may take over the claims by legislation, as it did in 1985; on Charan Lal Sahu that is constitutionally permissible under parens patriae, but the victims must be heard before any settlement.

Any settlement. May be recorded by the Court, including under article 142, but on Union Carbide it cannot extinguish the criminal case, and the State must make good a shortfall.

Clean-up. On the polluter pays principle in Indian Council for Enviro-Legal Action, the industry pays.

What it does NOT mean

The settlement did not end the criminal case. Union Carbide restored it.

The Act of 1985 did not abolish the victims' rights. It transferred the conduct of their claims and, on Charan Lal Sahu, required them to be heard.

Absolute liability was not laid down in the Bhopal case itself. It was laid down in M.C. Mehta, which arose from the Oleum gas leak in Delhi.

Article 142 is not a source of substantive liability. It is a power to do complete justice in a cause before the Court.

Quick revision

1. The escape of methyl isocyanate gas at Bhopal in December 1984.
2. The Bhopal Gas Leak Disaster (Processing of Claims) Act 1985 gave the Union the exclusive right to represent the victims.
3. Charan Lal Sahu v. Union of India, AIR 1990 SC 1480: the Act upheld on the doctrine of parens patriae, with notice and hearing to victims read in, and an obligation on the State to see them compensated.
4. February 1989: settlement of 470 million United States dollars; criminal proceedings quashed.
5. Union Carbide Corporation v. Union of India, (1991) 4 SCC 584: article 142 jurisdiction affirmed; the settlement upheld; the quashing of the criminal proceedings held unjustified and those proceedings restored; the Union to make good any shortfall.
6. The disaster produced absolute liability in M.C. Mehta v. Union of India, AIR 1987 SC 1086, and the Public Liability Insurance Act 1991.
7. Indian Council for Enviro-Legal Action v. Union of India, AIR 1996 SC 1446, added the polluter pays principle.

Test yourself

1. Write a note on the Bhopal Gas Disaster case. Methyl isocyanate gas escaped from the Union Carbide plant at Bhopal in the night of 2 and 3 December 1984, killing thousands. Because the victims were poor and disorganised and the defendant was a multinational corporation, Parliament passed the Bhopal Gas Leak Disaster (Processing of Claims) Act 1985, giving the Union Government the exclusive right to represent them in all claims in India and abroad. In Charan Lal Sahu v. Union of India, AIR 1990 SC 1480, a Bench of five judges upheld the Act on the doctrine of parens patriae, the obligation of the State to protect those unable to protect themselves, while reading into it a requirement that victims be given notice and an opportunity of being heard before any settlement, and holding that the State must see that they are compensated even if the company cannot pay. In February 1989 the Court recorded a settlement of 470 million United States dollars and quashed the pending criminal proceedings, and in Union Carbide Corporation v. Union of India, (1991) 4 SCC 584, it upheld the settlement, held that it did not confer criminal immunity, held that the quashing of the criminal proceedings was not justified, restored them, and directed the Union to make good any shortfall.

2. What is the doctrine of parens patriae and how was it applied at Bhopal? Parens patriae means parent of the country, and it describes the power and duty of the State to take into its care the rights of persons who are unable to protect themselves. In Charan Lal Sahu v. Union of India, AIR 1990 SC 1480, the Supreme Court used it to uphold the Bhopal Gas Leak Disaster (Processing of Claims) Act 1985, which had taken away the victims' individual right to sue and vested it in the Union. The Court held that victims who were poor, disorganised and facing a multinational corporation were exactly the class the doctrine exists for, so that legislation of that kind was within the State's power. It qualified the conclusion in two ways that matter: victims must be given notice and an opportunity to be heard where a settlement is proposed, and the State, having taken over their claims, is obliged to ensure that they are compensated even if the company is unable to pay.

3. What did the Supreme Court decide about the settlement and the criminal case? In Union Carbide Corporation v. Union of India, (1991) 4 SCC 584, the Court held that it had jurisdiction under article 142(1) of the Constitution to withdraw the suits pending in the District Court at Bhopal to itself and to dispose of them in terms of the settlement, and jurisdiction to withdraw criminal proceedings as well. It upheld the settlement of 470 million United States dollars and held that it was not void for non-compliance with Order XXIII Rule 3B of the Code of Civil Procedure, and that the orders recording it did not confer criminal immunity. But it held that on the particular facts the quashing of the criminal proceedings was not justified, and it restored them. It also directed the Union of India to make good any shortfall in meeting the claims of the victims, which follows from the obligation recognised in Charan Lal Sahu.