CASE ANALYSIS

UNION CARBIDE CORPORATION V. UNION OF INDIA

Facts of the Case

In 1934, Union Carbide India Ltd (UCIL) was consolidated in India. It manufactured chemicals, batteries, and pesticides. In 1970, in Bhopal, Madhya Pradesh,  UCIL established a pesticide plant. On the night of 2-3rd December 1984,very toxic methyl isocyanate (MIC) leaked from the plant. Although no official death count was undertaken, it is estimated that while the casualities were about 20000, the number of people who suffered unrecoverable physical damage was about 60000.

Issue before the Court

The validity of the agreement ordered by the Madhya Pradesh High Court.

Arguments Raised

Appellants

  • The appellants challenged that whether in the suits for damages, tort courts in India have the jurisdiction to grant interim compensation or damages, and is it permissible to selectively incorporate and adapt in Indian parts of English Statutory Laws relating to the grant of interim compensation while ignoring safeguards specifically indicated in that Law?
  • The appellants questioned the observations of the judgment in M.C. Mehta v. Union of India, which are per incuriam, and thus, not binding under Article 141 of the Constitution of India. They argued that the M.C. Mehta case had confined the doctrine of strict liability established in Rylands v. Fletcher, and the newly introduced doctrine of absolute liability should not have retrospective effects.
  • The appellants argued the responsibility determination of a shareholder of a company (whatever his percentage of shareholding) for the so-called torts of a company limited by shares, this is contrary to the Scheme and specific provisions of the Companies Act 1956 (particularly S. 34 and S. 426). Did they maintain the same, given the doctrine of piercing the corporate veil was holding UCC liable impermissible in Law?
  • The appellants contended that having held that interim compensation could not be awarded under S.151 of the Civil Procedure Code (as found by the District Judge). Was it permissible for the learned High Court Judge to summarize the entire issue of liability and hold that interim compensation was payable under the “substantive law of torts.”

UCC pointed out the absence of statutory procedure required to be followed under the Scheme, which was not observed even after two years had elapsed since the Scheme promulgation. It claimed that no credible information was there before the Court about the nature, category, and genuineness of the claims nor even any simple approximation about the injury and damage caused to the alleged claimants. In these circumstances submitted (in the written submission dated August 17, 1987), the formulation of proposals for further immediate relief that may be required was considerably hampered. It also pointed out that there was no material on record about any of the claimants’ present health status.

Respondents

  • The respondents furnished that the appellant was responsible to pay the interim compensation to gas victims under ‘substantive law of torts’ because the terms “other authority” used in Article 372 (1) of the Constitution of Indian, in the context of the said Law, included a competent Civil Court (which in this case is District Court of Bhopal) exercising jurisdiction under S. 9 of the Civil Procedure Code. As a result, it was beyond doubt in the Bhopal suit, whichever was the enterprise occupied in the high-risk activity, be it UCC or UCIL, it was responsible to pay the damages as per the rules of absolute liability
  • Moreover, they withstood that even if the decision in M.C Mehta’s case was taken after the Bhopal gas tragedy, there was no reason to think that the principle of absolute liability laid in the case can not be used here.
  • The respondents reiterated that since the UCIL did not have sufficient assets to meet the claims of the magnitude of disaster injured parties and UCC held majority shares, thus, the Court was justified in raising the corporate veil of the Corporate entity of Indian Company, UCIL.
  • Concerning the interim payment, the respondents questioned that while the Indian Council of Medical Research is involved in epidemiological studies, can the gas injured parties survive till the time all the real data with correct preciseness is collected and proved and adjudged in refined forensic style in working out final amount of reimbursement with the precision of quantity  and quality?
  • In response to the nature, category, and genuineness of the claims, the respondents responded that due to the enormous magnitude of filing of claims, the process of scrutinizing, categorizing, and ascertaining of their claims is bound to take time, and it was the responsibility of Government of India to provide relief and rehabilitation of the injured parties.

Judgment

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

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

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