Union Carbide Corp. v. Union of India

Author: Kajal Jain

Edited by: Sulesh Choudhary

ABSTRACT / HEADNOTE

  The Union Carbide (India) Ltd.. (UCIL), a sister concern of Union Carbide Corporation (UCC) owned and operated in Bhopal, a chemical plant manufacturing pesticides, one of the ingredients in the composition being Methyl Isocyanate (MIC), considered to be the most toxic chemical in industrial use. On the 2nd December 1984 night there was an escape of MIC from the tanks in which it was stored, affecting the residents, animals, flora and fauna. The Bhopal Gas Leak Disaster (Processing of Claims) Act,1985 confers certain powers on the Central Government to ensure that claims arising out of, or connected with, the Bhopal gas leak disaster are dealt with speedily and effectively. In the end, on February 15^th 1989, the Supreme court allowed the UCC and UCIL to settle the dispute and pay $470 million to the Union of India in a full and final settlement of all claims.

Keywords : Article 21, Principle of Absolute Liability, Article 142

CASE DETAILS:

INTRODUCTION:

Background of The Incident-

The Union Carbide Corporation an American company established a pesticide production plant in India and began its production in 1979. Along with pesticide a very toxic chemical known as Methyl Isocyanate was also produced in the plant.Complaints regarding leakage of the gas on smaller level were made since starting but no action was taken, On 3 December 1984 during midnight MIC was leaked at a large scale which caused death of around 3000 people, along with many animals instantly due to its toxic nature, those who survived the gas leak were severely injured along with permanent respiratory problem. This incident is known as the Bhopal Gas Tragedy (“Union Carbide Corporation Etc. Etc vs Union Of India Etc. Etc” ^[1]), one of the worst industrial disasters in India.

• After this tragedy principle of Absolute Liability^[2], Bhopal gas disaster (processing of claims) Act,1985^[3], Environment Protection act,1986 and the Public Insurance liability act^[4], 1991 came into existence. came into existence. The case also enhanced the scope of Article-21^[5](fundamental Right to a clean environment).
  Principle of Absolute Liability – The rule of Absolute liability was enforced by the Honourable Supreme Court of India in the landmark judgment of “M.C. Mehta V UOI2 and Bhopal Gas Leak3”.Where the Hon’ble Apex Court referring to the principle of strict liability laid down in “Ryland V. Fletcher”^[6] held that this principle cannot be applicable in this case due to extent of harm caused hence introduced Absolute Liability Principle. “The rule of absolute liability is similar to the rule of strict liability with some modification. This rule applies without any limitation or exception and creates a individual completely liable for any fault. The property to make anyone absolutely liable for the fault and imposition of high retraction make these liability as absolute liability”.
  Article 21- “no person shall be deprived of their life except according to the procedure established by law”– gives right to a clean environment (M.C. Mehta v. Union of India 1986)
  Bhopal gas disaster (processing of claims) Act,1985 –“ Sections 3, 4, 9: Settlement of claims before the Apex Court–Not affording ‘Fairness Hearing’- Non-incorporation of re-opener clause”

FACTS OF THE CASE:

Factual Background of the Case- 

The Union Carbide Indian Limited (UCIL) Plant, was a chemical company founded in 1934. UCIL asset was divided among UCC located in US and Indian Investors including the GOI and government-controlled banks in which percentage of shareholding was 50.9 and 49.1 respectively.

On the night of 3^rd December 1984, MIC (considered most toxic chemical in industrial use) leaked from the E610 storage tank from the plant.

The factual scenario emanating from the High Court order dated 04.04.1988^[7], where it was recorded that as per the Union of India, the total number of people who were found to be dead were 2660 and approximately 30,000 to 40,000 people were found to be seriously injured as a result of the disaster. The figures before the Supreme Court at that time were stated to be about 3000 fatal cases, and the number of serious personal injuries suffering permanent damage was about 30,000, as verifiable from hospital records.

The government was criticised for its lack of medical aid and not carrying the investigation according. Moreover in the beginning due to lack of information on the cause of sudden injury and deaths the doctors in the hospitals were also not able to operate which even caused the death of people admitted on time.

Procedural Background of the Case-

1. After the tragedy, The Bhopal Gas Leak Disaster (Processing of Claims) Act,1985 was passed on 29^th March 1985 as a way of ensuring claims and speedy trial, this act made the government the sole representative of all the victims in legal proceedings and fought on their behalf for the compensation.
2. The union of India took action on the behalf all the victims suffered against UCC before the U.S. District court, Southern District of New York for award of compensation for the damage caused by the company pesticide plant, all of the  claims came to be consolidated by the Judicial panel.
3. The plea of UCC and the UOI was dismissed in the U.S. District court due to jurisdiction of the case which was established in Bhopal, hence suit seeking compensation of 3.3 Billion Dollars against UCC and UCIL was filed in the District Court of Bhopal.
4. On which The District Court made an order directing Payment of Rs. 350 Crores by UCC , which was further in appeal in High Court made by UCC was reduced to Rs. 250 crores.
5. The UOI filed an appeal before the Hon’ble Supreme Court of India in which the Supreme court on February 15^th, 1989 recorded an overall settlement of the claims in the suit for 470 Million U.S. dollars and the termination of civil and criminal proceedings. ^[8]

LEGAL ISSUES RAISED

• Whether the Supreme Court of India had the power to quash the criminal proceedings against UCC and whether its order conferred blanket criminal immunity, which is a legislative function.
• Whether the settlement was fair and adequate given the inadequate compensation, lack of fairness hearing, and absence of re-opener clause to account for future injuries
• Whether the Union of India as the welfare state would be liable to make good any deficiencies if the compensation fund was found to be insufficient.

PETITIONER / APPELLANT’S ARGUMENTS

1. The counsels for Petitioner / Appellant stated that MIC- is one of the most toxic chemical in industrial use, therefore the petition relied upon certain studies carried out by Toxicology Laboratory, Department of Industrial Environment, Health Science etc and urged to the court that exposure to MIC has a mutagenic effect and the injury caused by it could be permanent and even affecting future generations.
2. It was argued that analysis of the case histories of persons manifesting general morbidity trends at various intervals from 3^rd Dec 1989 up to April 1990 indicate severely, moderately and mildly affected areas which showed a decline. But the later periods showed significant trends towards increasing of all three areas- respiratory, ophthalmic and general.
3. Long-term effects and exposure have not been taken into account in approving the settlement and the only way to protect the interest was by incorporating of appropriate re- opener clause.
4. UCC held 50.9% shares in UCIL. UCC’s liability was asserted on the arguments that UCC, apart from holding the company’s share , retained control over it with defective and inadequate safety standard, an indifference and disregard to human safety was the result of conscious and deliberate action of UCC.
5. The contention articulated with strong emphasis is that the court had no jurisdiction to withdraw and dispose of the main suits and the criminal proceedings in the course of hearing of appeals arising out of an interlocutory order in the suits. The disposal of the suits would require and imply their transfer and withdrawal to this court for which, it is contended, the Court had no power under law.

RESPONDENT’S ARGUMENTS

1. The counsels for Respondent submitted that the claims of a large number of persons who had filed their claims are not registered on the ground that they did not respond to the notices calling upon them to undergo the requisite medical tests for medical documentation. It was urged that no effective service of notice had taken place and that the claims of a large number of claimants—according to them almost over 30% of the total number—- have virtually gone for default.
2. It was urged by the petitioners that the very concept of injury’ as an element in the eligibility for medical documentation was erroneous as it tended to exclude victims who did not have or retain some medical documentation of their initial treatment immediately after the exposure-

“That it is unlikely that a person who was injured and suffered during the post-exposure period is not in possession of any form of medical record. The line of treatment was widely publicised. Therefore, the patient must have received treatment from one of the private practitioners, if not from one of the many temporary and permanent govt./semi-govt. institutions or institutions run by voluntary organisations, and he must be in possession of some form of record”

RELATED LEGAL PROVISIONS

1. Article 21^[9]: – “Protection of life and personal liberty No person shall be deprived of his life or personal liberty except according to procedure established by law.”^[10]
2. Article 142: ^[11]-“ empowers the Supreme Court to pass any decree or order necessary for doing complete justice in any case or matter pending before it. These decrees or orders are enforceable across India’s territory, making them significant tools for judicial intervention”

• Absolute liability

1. C. Mehta vs. UOI, 1987^[12]
2. Section 357A of the Criminal Procedure Code^[13]:- “ makes it the duty of the State Government to establish a compensation scheme for victims of crime, their dependents, and those who have suffered loss or injury as a result of crime and require rehabilitation”
3. Code of Civil Procedure, 1908: Order I Rule 8^[14]

JUDGEMENT

RATIO DECIDENDI

1. It was held by the Supreme Court that UCC (Union Carbide Corporation) must pay $470 Million as settlement of the claims and this amount was deemed as reasonable and fair.
2. The decision was aimed at balancing the practicalities of substantial compensation and the need for justice by also keeping in mind the harm caused by the disaster.
3. From the past judgments like in M.C. Mehta v. Union of India, the Court emphasized the applicability of the no-fault liability principle.
4. All civil and criminal proceedings against UCC in India were to be terminated, this was done to provide victims fast relief without prolonging the litigation process.

GUIDELINES

Court focused on the need for health care and rehabilitation of the victims and provide them with medical facilities

The compensation distribution must be in a proper way and should reach the needy.

OBITER DICTA

1. Showed concern and criticism towards the international corporate companies operating in India.
2. Concern for the environment and laws to prevent such tragedies .
3. Showed compassion for victims and also acknowledged the human suffering caused by the disaster.

CONCLUSION & COMMENTS

The Supreme Court completed the settlement as fast and effectively as possible by providing $470 million as settlement to the suffered victims, it also widened the scope of Article 21, the Right to a clean environment, and also showed that there is a need for strict rules and regulations for multinational companies and environment laws to prevent and avoid these kind of disasters in the future.

In my opinion, the judgment and reasoning given by the court are right as they also considered the practicalities of substantial compensation and giving justice to the victims, and there should be strict rules related to these things that will regulate the multinational companies as well as benefit the citizens. These multinationals companies should be bound to follow rules and regulations that are strict and rigid as this will protect the interest of citizens and also the employees.

REFERENCES

Important Cases Referred

1. Charan Lal Sahu v. Union of India, [1990] 1 SCC 613^[15]– principles of natural justice
2. Narasimha Raju v. V. Gurumurthy Raju & Ors., [1963] 3 SCR 687 ^[16]– On doctrine of stifling prosecution
3. Durga Shankar Mehta v. Thakur Raghuraj Singh & Others, [1955] SCR 267^[17] – Article 136 of the Constitution
4. Shivdeo Singh & Ors. v. State of Punjab & Ors., AIR 1963.SC 1909^[18],

Important Statutes Referred

1. Bhopal Gas Leak Disaster (Processing of Claims) Act 1985 – Governing compensation to Bhopal gas tragedy victims
2. Code of Criminal Procedure, 1973
3. Law of Torts
4. The Constitution of India, 1950

ENDNOTES:

^[1] https://main.sci.gov.in/jonew/judis/7699.pdf

^[2] https://www.legalserviceindia.com/legal/article-9689-m-c-mehta-v-union-of-india-air-1987-sc-965-oleum-gas-leak-case.html

^[3] https://indiankanoon.org/doc/1510537/

^[4] https://www.indiacode.nic.in/bitstream/123456789/4316/1/ep_act_1986.pdf

^[5] ttps://www.constitutionofindia.net/articles/article-21-protection-of-life-and-personal-liberty

^[6] The rule was formulated by Blackburn, J. in Exchequer Chamber in Fletcher v Rylands, (1866) L.R. 1 Ex 265 and the same was approved by the House of Lords in Rylands v Fletcher, (1868) L.R. 3 H.L. 330.

^[7] https://indiankanoon.org/doc/1344892/

^[8] (1989) 3 SCC 38

^[9] “An Informed Insight: UAPA, 1967” LawFoyer | A daily doze for inquisitors, 2024 available at: https://lawfoyer.in/an-informed-insight-uapa-1967/ (last visited July 20, 2024).

^[10] Article 21, Constitution of India (1950).

^[11] https://indiankanoon.org/doc/500307/

^[12] https://www.legalserviceindia.com/legal/article-9689-m-c-mehta-v-union-of-india-air-1987-sc-965-oleum-gas-leak-case.html

^[13] https://www.livelaw.in/columns/section-375a-of-the-crpc-constitution-victim-compensation-scheme-vcs-indian-penal-code-nalsa-guidelines-victim-compensation-fund-guidelines-cvcf-2016-pocso-rule-198885

^[14] https://www.legalserviceindia.com/legal/article-2393-representative-suit-under-the-code-of-civil-procedure-1908.html#:~:text=Order%20I%20Rule%208%20of,joined%20as%20parties%20to%20it.

^[15] https://main.sci.gov.in/jonew/judis/7699.pdf

^[16] https://main.sci.gov.in/jonew/judis/3788.pdf

^[17] https://indiankanoon.org/docfragment/937486/?formInput=article%20136

^[18] https://main.sci.gov.in/jonew/judis/26190.pdf