Absolute Liability

In one line

An enterprise carrying on a hazardous activity owes an absolute and non-delegable duty to the community, and if harm results it must pay, without negligence, without fault and without the exceptions the English rule allows.

Why a new rule was needed

The English rule in Rylands v. Fletcher holds a person who brings a dangerous thing onto land liable if it escapes, but it carries exceptions: act of God, act of a stranger, statutory authority, the plaintiff's own default, and natural user. Every one of those is a defence a large chemical enterprise can run.

Two weeks after the Oleum leak in Delhi, and two years after Bhopal, the Supreme Court decided it would not be bound by a rule laid down in England in 1868, and would frame one fit for a country that had chosen to bring hazardous industry to its cities.

The rule

Facts. M.C. Mehta v. Union of India (Oleum Gas Leak), AIR 1987 SC 1086, (1987) 1 SCC 395. Oleum gas escaped from a plant of Shriram Foods and Fertiliser Industries in a densely populated part of Delhi. Applications for compensation were made by the Delhi Legal Aid and Advice Board and the Delhi Bar Association in a petition already pending under Article 32, and a bench of three judges referred the constitutional questions to a bench of five.

Held. An enterprise engaged in a hazardous or inherently dangerous industry which poses a potential threat to the health and safety of those working in it and living around it owes an absolute and non-delegable duty to the community to ensure that no harm results. If harm does result, the enterprise is absolutely liable to compensate, whether or not it took all reasonable care and whether or not there was negligence. The Court expressly declined to import the exceptions to Rylands v. Fletcher, saying it need not hesitate to evolve a new principle merely because England had not. And it held that the measure of compensation must be correlated to the magnitude and capacity of the enterprise, so that it has a deterrent effect.

Why it matters here. It is the rule MU's topic 7 needs when it asks how a multinational corporation is controlled and environmental hazards are contained.

The four elements, taken apart

Hazardous or inherently dangerous. The trigger is the nature of the activity, not the conduct of the defendant. A chemical plant qualifies; a bakery does not.

Absolute. No exceptions at all. Act of God will not answer, nor act of a stranger, nor statutory authority, nor the fact that every regulation was complied with. This is the whole difference from strict liability.

Non-delegable. The enterprise cannot escape by showing that it had contracted the operation out, or that the fault was a subsidiary's, or a contractor's, or an employee's.