CHARAN LAL SAHU ETC. ETC. v. UNION OF INDIA AND ORS

Citation: [1989] SUPP. 2 S.C.R. 597

Court: Supreme Court of India

Bench: SABYASACHI MUKHERJI, K.N. SINGH, S. RANGANATHAN, A.M. AHMADI, K.N. SAIKIA

Case summary

But there is no prohibition or inhibition, for Indian State taking over the claims of the victims or for the State acting for the victims as the Act has sought to provide.

Judgment text

CHARAN LAL SAHU ETC. ETC. v. UNION OF INDIA AND ORS. DECEMBER 22, 1989 [SABYASACHI MUKHARJI, CJ, K. N. SINGH, S. RANGA- NATHAN, . A. M. AHMADI AND K. N. SAIKIA, JJ. ] Constitution of India, 1950: Articles 14, 19 and 21-Bhopal Gas Leak Disaster (Processing of claims) Act, 1985-Whether constitutionally valid. · Preamble and Articles 38, 39 and 39A-Doctrine of 'parens patriae'-Applicabi/ity of Exercise of sovereign power-Limitations. Articles 21, 48A and 5J(g)-Human righ~tate's obligation to protect-Need for enacting law protecting the constitutional rights of citizens-Evolving standards highlighted by clauses Y and 13 of U. N. Code ofConduct on transnational corporations. Bhopal Gas Leak Disaster (Processing ofclaims) Act, 1985: Sections 3, 4, 5, 9 and 11-Constitutional validity of: Central Govt. representing victims m suit against multinational company-Govt. holding share in company-Govt.

alleged to be joint tort feasor-Whether competent to represent victims-Whether principles of natural justice violated. Settlement of claims before court-Pre-decisional and postdecisional notice-Needfor-Effect ofnon-issue ofnotice. Power conferred on Central Govt. to represent vidims in suit- Divesting individual rights to legal remedy-Procedure followed- Whether consistent with the Code ofCivil Procedure 1908. Interim Compensation-Payment of Precautionary measures- Need for-Guidelines for the future-Immediate relief to victims- Setting up of a Tribunal-Creation of Industrial Disaster Furid- Mooted. Code ofCivil Procedure, 1908: Order 1 Rule 8 and Order 23 Rule JR-Procedure followed under the Bhopal Gas Leak Disaster (Processing of claims) Act, 1985-Central Govt. representing victims in suit- Divesting individual rights to legal remedy-Whether procedure II standard and fair-Whether violative ofprinciples ofnatural justice.

Administrative Law-Principles ofNatural Justice: Act ofParliament within legislative competence-applicability ofthe principles. Pre-decisional notice not given-Effect of. Central Government representing victims in a suit against a multinational company-Govt. having shares in company-Alleged tort-feasor-Whether competent to represent victims-Doctrine that no man shall be judge of his own cause-Doctrine of necessity-Doctrine of 'de facto validity'-Doctrine ofbona fide representation-Applicability of. Statutory construction: Constructive intuition approach-statute to be read purposefully and meaningfully-Regard to be had to ihe spirit ofthe statute and the mischief intended to be cured by it.

Law of Torts: Bhopal Gas Leak Disaster (Processing of claims) Act, 1985-Grant of interim relief to the victims-Whether inherent in the Act and the Scheme framed thereunder-Liability of tort-feasor- Whether limited to civil liability to compensation-whether includes criminal liability to punitive damages also. Union Carbide (India) Ltd. (UCIL) is a subsidiary of Union Carbide Corporation (UCC), a New York Corporation. UCIL was incorporated in India in 1954. 50. 99% of its shareholding was with UCC and 22% of the shares were held by Life Insurance Corporation ofIndia and Unit Trust of India. UCIL owned a chemical plant in Bhopalfor the manufacture of pesticides using Methyl Isocyanate (MIC) a highly toxic gas. On the night between 2nd and 3rd December, J984, there was a massive escape of lethal gas from the MIC Storage tank at the Bhopal plant resulting in the tragic death of about 3,000 people. Thousands of people suffered injuries.

The environment also got polluted, badly affecting the flora and the fauna. On behalf of the victims, many suits were filed in various District -: Courts in the United States of America. All such suits were consolidated by the Judicial Panel on Multi-District Litigation and were assigned to the U. S. District Court, Southern District of New York and Judge Keenan was the Presiding Judge throughout. Later, the legal battle shilled to Indian Courts, as it could not proceed in the U. S. Courts, on the ground offorum non conveniens. C. l SAHU v. U. 0. 1 599 Meanwhile, the Bhopal Gas Leak Disaster (Processing of claims) Ac( 1985 was passed by the Government of India with a view to secure that the claims arising out of or connected with the Bhopal gas leak disaster were dealt with speedily, effectively and equitably. Union of India filed a snit for damages in the District Court of Bhopal on 5. 9. 86.

However, there were negotiationsfor a settlement; hut ultimately the settlement talks had failed. On 17. 12. 1987, the District . Jndge ordered interim relief of Rs. 350 crores. On appeal, the High Court, on 4. 4. 88 modified the order of the District Judge and ordered an interim reliefof Rs. 250 crores. Aggrieved, the UCC as also the Union of India filed petitions for spechtl leave before this Court. Leave was granted. By its orders dated 14. 2. 89 and 15. 2. 89, this Court, on the basis of a settlement arrived at between the parties, directed UCC to pay a sum of 470 million U. S. Dollars to the Union of India in full settlement of all claims, rights and liabilities related to and arising out ofthe Bhopal gas disaster. The said orders were passed keeping in view the Bhopal Gas Disaster (Processing of claims) Act, 1985.

The present Writ Petitions challenge the constitutional validity of the said Act inter alia on the Rronnds that the Act is violative of the fundamental rights guaranteed under Articles 14, 19 and 21 of the Constitution; that the Act is violative of the Principles of Natural Justice mainly on the ground that Union of India, being a joint tort-feasor, in that it has permitted establishment of such factories without necessary safe2uards, has no locusstandi to compromise on behalf of the victims; that tne victims and their legal heirs were not given the opportunity of being heard, before the Act was passed; that in the guise of giving aid, the State could not destroy the rights inherent in its citizens; nor could it demand the citizens to surrender their rights to the State; that vesting of the rights in Central Government was bad and unreasonable because there was conflict of interest between the Central Government and the victims.

since the Central Government owned 22% share in UCIL, and that would make the Central Government a Judge in its own cause. Disposing of the Writ Petitions, this Court, HELD: Sabyasachi Mukharji, CJ and K. N. Saikia, J. -Per CJ: 1. I The Act is constitutionally valid. It proceeds on the hypo· thesis that until the claims of the victims are realised or obtained from the delinquents, namely, UCC and UCIL by settlement or by adjudication and until the proceedings in respect thereof continue, the Central Government must pay interim compensation or maintenance for the victims. In entering upon the settlement in view of s. 4 of the Act, regard must be had to the views of the victims and for the purpose of giving regard to these, appropriate notices before arriving at any settlement, was necessary.

In some cases, however, post-decisional notice might be sufficient but in the facts and the circumstances of the present case, no useful purpose would be served by giving a post-decisional hearing having regard to the circumstances mentioned in the order of this Court dated 4th May, 1989 and having regard to the fact that there are no further additional data and facts available with the victims which can be profitably and meaningfully presented to controvert the basis of the settlement and further having regard to the fact that the victims had their say, or on their behalf their views had been agitated in these proceedings, and will have further opportunity in the pending review proceedings. [703E-H; 704A] 1. 2 Though settlement without notice is not quite proper, on the materials so far available, it is seen that justice has been done to the victims but justice has not appeared to have been done.

In view of the magnitude of the misery involved and the problems in this case, the setting aside of the settlement on this ground in view of the facts and the circumstances of this case keeping the settlement in abeyance and giving notice to the victims for a post-decisional hearing would not be in the ultimate interest of justice. It is true that not giving notice was not proper because principles of natural justice are fundamental in the constitutional set up of this country. No man or no man's right should be affected without an opportunity to ventilate his views. Justice is a psychological yearning, in which men seek acceptance of their view point by having an opportunity of vindication before the forum or the authority enjoined or obliged to take a decision affecting their right. Yet in the particular situations, one has to bear in mind how an infraction of that should be sought to be removed in accordance with justice. "To do a great right" after all.

it is permissible sometimes "to do a little wrong''. In the facts and circumstances of the case, this is. one of those rare occasions. [701G-H; 702A-C] 2. 1 The constitutional validity of the statute would have to be determined on the basis of its provisions and on the ambit of its operalion as reasonably construed. It has to be borne in mind that if so C. L. SAHU v. U. 0. 1. 601 jndged it passed the test of reasonableness, then the possibility of the power conferred being improperly used is no ground for pronouncing the law itself invalid. [659E-G] 2. 2 Conceptually and from the jurisprudential point of view, especially in the background of the Preamble to the Constitution of India and the mandate of the Directive Principles, it was possible to authorise the Central Government to take over the claims of the Victims to fight against the multinational corporation in respect of the claims.

Because of the situation the victims were under disability in pursuing their claims in the circumstances of the situation fully and properly. But there is no prohibition or inhibition, for Indian State taking over the claims of the victims or for the State acting for the victims as the Act has sought to provide. ! 6~0E-HJ 2. 3 The Act does provide a special procedure in respect of rights of the victims and to that extent the Central Govt. takes upon itself the rights of the victims. It is a special Act providing a special procedure for a kind of special class of victims.

In view of the enormity of the disaster the victims of the Bhopal gas leak disaster, as they were placed against the multi-national and a big Indian Corporation and in view of the presence of foreign contingency lawyers to whom the victims were exposed, the claimants and victims can legitimately be described as a class by themselves different and distinct, sufficiently separate and "" identifiable to be entitled to special treatment for effective, speedy, equitable and best advantageous settlement of their claims. There indubitably is differentiation. But this differentiation is based on a principle which has rational nexus with the aim intended to be achieved by this differentiation. The disaster being unique in its character and in the recorded history of industrial disaster, situated as the victims were against a mighty multinational with the presence of foreign contingency lawyers looming on the scene, there were sufficient grounds for such differentiation and different treatment.

in treating the victims of the gas leak disaster differently and providing them a procedure, which was just, fair,- reasonable and which was not unwarranted or unauthorised by the Constitution, Article 14 is not breached. [683E-H; 684A-B] Collector of Customs, Madras v. Nathella Sampathu Chetty, [1962] 3 SCR 786; P. J. Irani v. State of Madras, [1962] 1 SCR 169; D. K. Trivedi v. State ofGujarat, [1986] Suppl. SCC 20, relied on. Ba/fast Corporation v. O. D. Commission, [1960] AC 490, refer- ~~ 3. 1 The present case is one where the Govt. of India only represented the victims as a party" and did not adjudicate between the victims and the UCC. It is the court which would adjudicate the rights of the victims. The representation of the victims by the Government of India cannot be held to be bad, and there is and there was no scope of violation ofany principle of natural justice. [670B] 3.

2 The connotation of the term "parens patria" differs from country to country, for instance, in England it is the King, in America it is the people, etc. According to Indian concept parens patria doctrine recognised King as the protector of all citizens as parent. The Government is within its duty to protect and to control persons under disability. Conceptually, the parens patriae theory is the obligation of the State to protect and take into custody the rights and privileges of its citizens for discharging its obligations. Our Constitution makes it imperative for the State to secure to all its citizens the rights guaranteed by the Costitution 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 right of the citizens. The Preamble to the 0 Constitution, read with the Directive Principles contained in Articles 38, 39 and 39A enjoins the State to take up these responsibilities.

It is the protective measure to which the social welfare state is committed. It is necessary for the State to ensure the fundamental rights in conjunction with the Directive Principles of State Policy to effectively discharge its obligation and for this purpose, if necessary, to deprive some rights -• and privileges of the individual victims or their heirs to protect their rights better and secure these further. [638E-H; 639AJ 3. 3 The UCC had to be sued before the American courts. The tragedy was treated as a national calamity and the Govt. of India had the right, and indeed the duty, to take care of its citizens, in the exercise of its parens patriae jurisdiction or on principles analogous thereto. After having statutorily armed itself in recognition of such parens patnae right or on principles analogous thereto, it went to the American Courts. No other person was properly designed for representing the victims, as a foreign court had to recognise a right of representation. The Govt.

of India was permitted to represent was permitted to represent the victims before the American courts. Private plaintiffs were also represented by their attorneys. The order of Judge Keenan permitted the Govt. of India to represent the victims. If there was any remote conflict of interests between the Union of India and the victims from the theoretical point of view the doctrine of necessity would override the possible violation of the principles of natural justice-that no man should be Judge in his own case. [669C-F] C. L. SAHU v. U. 0. 1. 603 3. 4 The Act in question has been passed in recognition of the right of the sovereign to act as parens patriae. The Government of India in order to effectively safeguard the rights of the victims in the matter of the conduct of the case was entitled to act as parens patriae, which position was reinforced by the statutory provisions, namely the Act.

It has to be borne in mind that conceptually and jurisprudentially, the doctrine of parens patriae is not limited to representation of some of the victims outside the territories of the country. It is true that the doctrine has been so utilised in America so far. Where citizens of a country are victims of a tragedy because of the negligence . of any multinational a peculiar situation arises which calls for suitable effective machinery to articulate and effectuate the grievance and demands of the victims, for which the conventional adversary system would be totally inadequate. The State in discharge of its sovereign obligation must come forward. The Indian State becanse of its constitutional commitment is obliged to take upon itself the claim of the victims and to protect them in their hour of need. [6588-F) 3. 5 There is no bar on the State to assume responsibilities analogous to parens patriae to discharge the State's obligations under the Constitution.

What the Central Government has done in the instant case seems to be an expression of its sovereign power. This power is plenary and inherent in every sovereign state to do all things which promote the health, peace, moral, education and good order of the people and tend to increase the wealth and prosperity of the State. Sovereignty is difficult to define. By the nature of things, the State Sovereignty in these matters cannot be limited. It has to be adjusted to the conditions touching the common welfare when covered by legislative enactments. This power is to the public wh~t the law of necessity is to the individnal. It is comprehended in the maxim sa/us populi suprema /ex-regard for public welfare is the highest law. It is not a rule, it is an evolution. This power has always been as broad as public welfare and as strong as the arm of the stat~, this can only be measured by the legislative will of the people, subject to the fundamental rights and constitutional limitations.

This is an emanation of sovereignty and it is the obligation of the State to assume such responsibilities and protect its citizens. l658G-H; 659A-CJ 3. 6 In the instant case, the victims cannot be considered to be any match to the multinational companies or the Government with whom in the conditions that the victims or their representatives were after the disaster physically, mentally, financially, economically and also because of the position of litigatimi would have to contend. In such a situation of predicament the victims can legitimately be considered to be disabled. They were in no position by themselves to look after their own interest effectively or purposefully. In that background, they are people who needed the State's protection and should come within the umbrella of State's sovereignty to assert, establish and maintain their rights against the wrong doers in this mass disaster.

In that perspective, it is jurisprudentially possible to apply the principle ofparens patriae doctrine to the victims. But quite apart from that, it bas to be borne in mind that in this case the State is acting ou the basis of the Statute itself. For the authority of the Central Government to sue for and on behalf of or instead in place of the victims, no other theory, concept, or any jurisprudential principle is required than the Act itself. The Act empowers and substitutes the Central Government. The victims have been divested of their rights to sue and such claims and such rights have been vested in the Central Government. The victims have been divested because the victims were disabled. The disablement of the victims vis-a-vis their adversaries in this matter is a self evident factor. Even if the strict application of the 'parens patriae' doctrine is not in order, as a concept it is a guide.

The jurisdiction of the State's power cannot be circumscribed by the limitations of the traditional concept of parens patriae. Jurisprudentially it could be utilised to suit or alter or adapt itself to the changed circumstances. In the situation in which the victims were, the State had to assume the role of a parent protecting the rights of the victims who must come within the protective umbrella of the State and the common sovereignity of the Indian people. The act is an exercise of the sovereign power of the State. It is an appropriate evolution of the expression of sovereignty in the situation that had arisen. It has to be accepted as such. [685C-H] 3. 7 The concept of parens patriae can be varied to enable the Government to represent the victims effectively in domestic forum if the situation so warrants. There is no reason to confine the 'parens patriae' doctrine to only quasi-sovereign right of the State independent of and behind the title of the citizen. [692B-C] 3.

8 The power to compromise and to conduct the proceedings are not uncanalised or arbitrary. These were clearly exercisable only in the ultimate interests of the victims. The possibility of abuse of a statute does not impart to it any element ofinvalidity. [659C-D] E. P. Royappa v. State of Tamil Nadu, [1974] 2 SCR 348; Menaka Gandhi v. Union of India, [1978] 2 SCR 621; R. D. Shetty v. International AirportAuthority ofIndia, [1979] 3 SCR 1014 followed. C. L. SAHU v. U. U. 1. 605 Ram Saroop v. S. P. Sahi, [1969] 2 Suppl. SCR 583 relied ou. Budhkaran Chankhani v. Thakur Prasad Shah, AIR 1942 Col 311; Banku Behari Monda/ v. Banku Behari Hazra, AIR 1943 Cal 203; Medai Dalavoi T. Kumaraswamy Mudaliar v. Medai Dalavoi Rajammal, AIR 1957 Mad. 563 approved. State of U. P. ·v. Poosu, [1978] 3 SCR 1005; K. M. Nanavati v. State of Bombay, [1961] l SCR 497; Ram Gopal Sarubai v. Smt. Sarubhai & Ors. , [1981] 4 SCC 505; India Mica & Micanite Industries Ltd. v. State of Bihar & Ors.

[1982] 3 SCC 182; Alfred L Snapp & Soninc. v. Puerto Rico, 458 US 592 73, Ed. 2d 995, 102 s. ct. 3260; Stute of Georgia v. Tennessee Copper Co. , 206 US 230, 51L. Ed. 1038 27 s. ,t. 618, referred to. B. K. Mukherjea on Hindu Religious and Charitable Trusis, Tagore Law Lectures, Sth Edu. p. 404; Words & Phrases, permanent Edn. vol. 33 p. 99; Black's Law Dictionary, 5th Edn. 1979, p. 1003; Weever's Constitutional Law, p. 490; American Costitutional Law by Lawrence H. Tribe 1978 Edn. para 3. 24, referred to. 4. 1 Section 3 provides for the substitution of the Central Government with the right to represent and act in place of (whether within or outside India) every person who has made or is entitled to make, a claim in respect of the disaster.

The State has taken over the rights and claims of the victims in the exercise of sovereignty in order to discharge the constitutional obligations as the parent and guardian of the victims who in the situation as placed needed the umbrella of protection. Thus, the State has the power and jurisdiction and for this purpose unless the Act is otherwise unreasonable or violative of the constitutional provisions no question ofgiving a hearing to the parties for taking over these rights by the State arises. For legislation by the Parliament, no prin~iple of natural justice is attracted provided such legislation is within the competence of the legislature. Indeed the present Act is within the competence of the Parliament. Section 3 makes the Central Government the dominus litis and it has the carriage of the proceedings, but that does not solve the problem of by what procedure the proceedings shOuld be carried. [692A-D] 4.

2 Section 4 means and entails that before entering into any settlement affecting the rights and claims of the victims some kind of notice or information should be given to the victims. I699DJ 4. 3 Sections 3 and 4 are categorical and clear. When the expression is explicit, the expression is conclusive, alike in what it says and in what it does not say. These give the Central Government an exclnsive right to act in place of the persons who are entitled to make claim or have already made claim. The expression 'exclusive' is explicit and significant. The exclusivity cannot be wittled down or watered down. The said expression must be given its foll meaning and extent. This is corroborated by the use of the expression 'claim' for all purposes.

If such duality of rights are given to the Central Government alongwith the victims in instituting or proceeding for the realisation or the enforcement of the claims arising out of Bhopal gas leak disaster, then that would be so cumbersome that it would not be speedy, effective or equitable and would not be the best or more advantageous procedure for securing the claims arising out of the leakage. [683A-C] 4. 4 Sections 3 and 4 of the Ad should be read together alongwith other provisions of the Act and in particular s. ections 9 and II of the Act. These should be appreciated in the context of the object sought to be achieved by the Act as indicated in the Statement of objects and Reasons and the Preamble to the act. The Act was so designed that the victims of the disaster a.

re fully protected and the claims of compensation or damages for loss of life or personal injuries or in respect of other matters arising out of or connected with the disaster are processed speedily, effectively, equitably and to the best advantage of the claimants. ·. Section 3 of the Act is subject to other provisions of the Act which includes Sections 4 and II. Section 4 of the Act opens with non-obstante clause, vis-a-vis, section 3 and, therefore overrides section 3. [659G-H; 660A-B] 4. 5 In the instant case, the Government 11f India is only capable to represent the victims as a party. The adjudication of the claims would be done by the Court. The doctrine of •Bona fide Representation' as also 'de facto validity' are not applicable to the present case. [690F] Basheshar v. Income Tax Commissioner, AIR 1959 SC 149; In re Special Courts Bill, [I979] 2 SCR 476; A. R. Antulay v. R. S. Nayak & A'nr. , [1988] 2 SCC 602; Ram Krishna Dalmia v.

Tendulkar, [1955] SCR 279; Ambika Prasad Mishra v. State of U. P. & Ors. etc. [1980] 3 ,_, SCR 1159; Bodhan Chowdhary v. State of Bihar, [1955] 1 SCR 1045; Lakshmi Kant Pandey v. Union of India, [1984] 2 SCR 795; Mis Mackinnon Mackenzie & Co. Ltd. v. Audrey D' Costa and Anr. , [I987] 2 SCC 469; Sheela Barse v. Secretary, Children Aid Society & Ors. , [1987] l SCR 870; Gokaraju Rangaraju v. State ofA. P. , [1981] 3 SCR 474; Pushpadevz M. Jatia v. M. L. Wadhwan. [1987] 3 SCC 367; C. L. SAHU V, IJ. 0. 1. 607 Mis Beopar Sahayak (P) Ltd. & Ors. v. Vishwanath & Ors. , [1987] 3 SCC 693; Dharampal Singh v. Director of Small Industries Services & Ors. , AIR 1980 SC 1888; N. K. Mohammad Sulaiman v. N. C. Mohammed Ismail & Ors. , [1966] 1 SCR 937; Malkariun Bin Shidrammappa Pasare v. Narhari Bin Shivappa & Anr. , 27 IA 216, referred to. Black's Law Dictionary 5th Edn. p. 437, referred to. 5.

The restrictions or limitations on the substantive and procedural rights in the Act will have to be judged from the point of view of the particular Statute in quetion. No abstract rule or standard of reasonableness can be applied. That question has to be judged having regard to the nature of the rights alleged to have been infringed in this case, the extent and urgency of the evil sought to be remedied, disproportionate imposition, prevailing conditions at the time, all these facts will have to be taken into consideration. Having considered the background, the plight of the impoverished, the urgency of the victims' need, the presence of the foreign contingency lawyers, the procedure of settlement in USA in mass action, the strength of the foreign multinationals, the nature of injuries and damages, and the limited but significant right of participation of the victims as contemplated by s. 4 of the Act, the Act cannot be condemned as unreasonable. [684C-E] State ofMadras v. V. G.

Row, [1952] SCR 597, referred to. 6. 1 In view of the principles settled by this Court and accepted all over the world in a case of this magnitude and nature, when the victims have been given some say by Section 4 of the Act, in order to make that opportunity contemplated by section 4 of the Act, meaningful and effective, it should be so read that the victims have to be given an oppor- •( tunity of making their representation before the court comes to any conclusion in respect of any settlement. How that opportunity should be given, would depend upon the particular situation. Fair procedure should be followed in a representative mass tort action. l696E-FJ 6. 2 One assumption under which the Act is justified is that the victims were disabled to defend themselves in an action of this type. If that is so, then the Court cannot presume that the victims were a lot, capable and informed to be able to have comprehended or contemplated the settlement.

In the aforesaid view of the matter notice was necessary. The victims at large did not have the notice. The Central Government as the representative of the victims must have the views of the victims and place such view before the court in such manner it considers neces- • sary before a settlement is entered into. If the victims want to advert to certain aspect of the matter during the proceedings under the Act and settlement indeed is an important stage in the proceedings, opportunities must be given to the victims. Individual notices may not be necessary. The Court can, and should in such situation formulate modalities of giving notice and public notice can also be. given inviting views of the victims by me help of mass media. However, it is not necessary that such views would require the consent of all the victims. [698B-C; 698G-H; 699A] 6,3 One of the important requirements of justice is that people affected by an action or inaction should have opportunity to have their say.

That opportunity the victims have got when these applications were heard and they were heard after utmost publicity and they would have further opportunity when review application against the settlement k·would be heard. [700G-H; 701A] 7. I The Act does not expressty exclude tne application of the Code of Civil Procedure. Section I I of the Act provides the overriding effect indicating that anything inconsistent with the provisions of the Act or in other laws including-the Civil Procedure Code should be ignored and the Act should prevail. Strictly speaking, Order I Rule 8 will not apply to a suit or a proceeding under the Act. It is not a case of one having common interest with others. Here the plaintiff, the Central Government has replaced and divested the victims. [696H; 697A-BJ 7. 2 In the instant case, there is no question of abandonment as • such of the suit or part of the suit, the provisions of order XXIII Rule I would also not strictly apply.

However, Order XXIII Rule 3H of the I ,- Code is an important and significant pointer and the principles behind the said provision wrndd apply to this case. The said rule 3B provides that no aweement of compromise in a representative suit shall be entered into without the leave of the Court expressly recorded in the proceedings; and sub-rule (2) of rule 3B enjoins that before grantini: such leave the court shall give notice in such manner as it may think fit in a representative action. Representative suit has been defined under Explaination to the said rule vide clause (d) as any other suit in which I the decree passed may, by virtue of _the provisions this Code or of •ny other law for the time being in force, bind any person who is not named as party to the snit. Indubitably the victims would be bound by the settlement thoul! h not named in the suit. This is a position conceded by all.

If that is so, it would be a representative suit in terms of and for the purpose of Rule 3H of Order XXIII of the Code. lf the prmciples of this rule are the principles of natural justice then we are of the opinion that C. L. SAHU v. U. 0. I. 609 the principles behind it would be applicable; and also that section 4 of the Act should be so construed in spite of the difficulties of the process '! f notice and other difficulties of making "infOrmed decision making process cumbersome". ,l697C-G] 7. 3 Inasmuch as section 4 of the Act had given a qualified right of participation to the victims, there cannot be any question of violation of the principles of natural justice. The scope of the application of the principles of natural justice cannot be judged by any strait jacket formula. l662G-HJ R. Viswanathan v. Rukn-ul-Mulk Syed Abdul Wajid, [1963] 3 SCR 22; M. Narayanan Nambiar v. State of Kerala, [1963] Supp. (2) 724; Chintaharan Chose & Ors. v. Gujaraddi Sheik & Ors.

, All , legitimately be called the 'constructive intution' which is a permissible mode of viewing the Acts of Parliament. The freedom to search for 'the spirit of the Act' or the quantity of the mischief at which it is aimed (both synonymous for the intention of the parliament) opens up the possibility of liberal interpretation "that delicate and important branch of judicial power, the concession of which is dangerous, the denial ruinous". Given this freedom it is a rare opportunity though never to be misused and challenge for the Judges to adopt and give meaning to C. L. SAHU v. U. 0. 1. 611 the act, articulate and inarticulate and thus translate the intention of the Parliament and fulfil the object of the Act. After all, the Act was passed to give relief to the victims, who, it was thought, were unable to establish their own rights and fight for themselves. [687E-H; 688AJ 11.

1 The circumstances that financial institutions held shares in the UCIL would not disqualify the Government of India from acting as parens patriae and in discharging its statutory duties under the Act. The suit was filed only against the UCC and not against UCIL. On the basis of the claim made by the Government of India, UCIL was not a necessary party. It was suing only the multinational based on several legal grounds of liability of. the UCC, inter alia, on the basis of enterprise liability. If the Government of India had instituted a suit against UCIL to a certain extent it would have weakened its case a. gainst UCC in view of the judgment of this Court in M. C. Mehta's case. [668H; 669A-B] M. C. Mehta v. Union ofIndia, [1987] I SCR 819, referred t~. 11. 2 Even if there was any remote conflict of interests between the Union of India and the victims on account of the sharesholding, doctrine of necessity would override the possible violation of the principles of natural justice.

T669FJ Kasturilal Ralia Ram Jain v. State of UP, [1965] I SCR 375; State of Rajasthan v. Vidyawati, [1962] 2 Supp. SCR 989; J. Mahapatra & Co. & Anr. v. State ofOrissa & Anr. , [1984] 4 SCC 103, referred to. Halsbury's Laws of England, Vol. I, 4th Edn. para 73 Smith's Judicial Review of Administrative Action, 4th Edn. pp. 276-277; Natural Justice by G. A. Flick, [1979] Edn. pp. 138-141, referred to. 12. The Act does not create new causes of action or create special courts. The jurisdiction of the civil coutt to entertain suit would still arise out of section 9 of the CPC and the substantive cause of action and the nature of the reliefs available would also continue to remain unchanged. The only difference produced by the •provisions of the . Act would be that instead of the suit being filed by the victims them- . selves the suit would be filed by the Central Government on their behalf. [65SFJ 13. Normally, in measuring civil liability,.

the law has attached more importance to the principle of compensation than that of punishment. ·Penal redress, however, involves both compensation to the person injured and punishment as deterrence. The Act, as such does DOI abrigde or curtail damage or liability whatever that might be. So the challenge to the Act on the ground that there has been curtailment or deprivation of the rights of the victims which is unreasonable in the situation is unwarranted and cannot be sustained. [680G-H; 68IA-F] Roshanlal Kuthiala & Ors. v. R. B. Mohan Singh, Oberoi (1975) 2 SCR 491; Nandram Heeralalv. Union of India & Anr. , AIR 1978 )\1. P, 209; Ryland v. Flatcher, (1868) Vol 3 LR E & I Appeal Cases 330; Rookes v. Barnard, [1964] AC 1129, referred to. Salmond's Law ofTorts, 15th Edn. p. 30, referred to. 14. The Act in question does not purport to deal with the criminal liability, if any, of the parties or persons concerned nor it deals with any of the consequences flowing from those.

This position is clear from the provisions and the preamble to the Act. [636FJ IS. The major inarticulate premise apparent from the Act and the scheme and the spirit of the Act is that so long as the rights of the victims are prosecuted the state must protect the victims. Otherwise the object of the Act would be defeated its purpose frustrated. Therefore, continuance of the payments of the interim maintenance for the continued sustenance of the victims is an obligation arising out of State's assumption of the power and temporary deprivation of the rights of the victims and divestiture of the right of the victims to fight for 'their own rights. This is the only reasonable interpretation which is just, fair and proper. l 686B-CI 16. The promises made to the victims and hopes raised in their hearts and minds can only be redeemed in some measure if attempts are made vigorously to distribute the amount realised to the victims in accordance with the scheme.

That would be redemption to a certain extent. The law relating to damages and payment of interim damages or compensation to the victims of this nature should be seriously and scientifically examined by the appropriate agencies. ,[704F-H; 705A] 17. The Bhopal Gas Leak disaster and its aftermath emphasise the need for laying down certain norms and standards that the Government may follow before granting permission or licences for the running of industries dealing with materials which are of dangerous potentialities. The Government, should, therefore, examine or have the problem examined by an expert committee as to what should be the conditions on C. L. SAHU v. U. 0. 1. 613 which future licences and/or permission for running industries on Indian soil would be granted and for ensuring enforcement of those conditions, sufficient safety measures should be formulated and scheme of enforcement indicated.

The Government should insist as a condition precedent to the grant of such licences or permission, creation of a fund in anticipation by the industries to be available for payment of damages out of the said fund in case of leakages or damages in case of accident or disaster flowing from negligent working of such industrial operations or failure to ensure measures preventing such occurrence. The Government should also ensure that the parties must agree to abide to pay such damages out of the said Fund by procedure separately evolved for computation and payment of damages without exposing the victims or sufferers of the negligent act to the long and delayed procedure. Special procedure must be provided for and the industries must agree as a condition for the grant of licence to abide by such procedure or to abide by statutory arbitration.

The basis for damages in case of leakages and accident should also be statutorily fixed taking into consideration the nature of damages inflicted, the consequences thereof and the ability and capacity of the parties to pay. Such should also provide for deterrant or punitive damages, the basis for which should be formulated by a proper expert committee or by the Government. For this purpose, the Government should have the matter examined by such body as it considers necessary and proper like the _Law. Commission or other competent bodies. This is vital for the future. [705B-F] 18. That people are born free, the dignity of the persons must be recognised, and competent tribunal is one of the surest methods of effective remedy.

If, therefore, as a result ofthis tragedy new consciousness and awareness on the part of the people of this country to be more vigilant about measures and the necessity of ensuring more strict vigilance for permitting the operations of such dangerous and poisonous gases dawn, then perhaps the tragic experience of Bhopal would not go in vain. [682D-E] Per Singh,]. (concurring): 1. 1 In India, the need for industrial development has led to the establishment of a number of plants and factories by the domestic companies and under-takings as well as by Transnational Corporations. Many of these industries are engaged in hazardous or inherently dangerous activities which pose potential threat to life, health and safety of persons working in the factory, or residing in the surrounding areas.

Though working of such factories and plants is regulated by a number of laws of our country, there is no special legislation providing for compensation and damages to outsiders who may suffer on account of any industrial accident. As the law stands today, affected persons have to approach civil courts for obtaining compensation and damages. In civil courts, the determination of amount of compensation or damages as well the liability of the enterprise has been bound by the . B shackles of conservative principles. [707D-Gl 1. 2 The principles laid down in Ryland v. Fletcher made it difficult to obtain adequate damages from the enterprise and that too only after the negligence of enterprise was proved. [707G-H) 1. 3 The law laid down in Oleum Gas Leak case made a land-mark departnre from the conservative principles with regard to the liability of an enterprise carrying on hazardous or inherently dangerous activities. [709C] l.

4 In the instant case, there is no scope for any doubt regarding the liability of the UCC for the damage caused to the human beings and nature in and around Bhopal. [709E] Ryland v. Fletcher, [1868] LR 3 HL 330; M. C. Mehta v. Union of India, [1987] I SCR 819, referred to. 2. In the context of our national dimensions of human rights, right to life, liberty, pollution free air and water is guaranteed by the Constitution under Articles 21, 48A and Sl(g), it is the duty of the State to take effective steps lo protect the constitutional rights guaranteed. These rights must be integ~ated and illumined by evolving international dimensions and standards, having regard to our sovereignty as highlighted by Clauses 9 and 13 of U. N. Code of Conduct on Transnational Corporations. Such a law may provide for conditions for granting licence to Transnational Corporations, prescribing norms and standards for running industries on Indian soil ensuring the abovesaid constitutional rights of our people.

A Transnational Corporation should be made liable and subservient to laws of our country and the liability should not be restricted to affiliate company only but the parent corporations should also be made liable for any damage caused to the human beings or ecology. The law must require transnational Corporations to agree to pay such damages as may be determined by the statutory agencies and forum constituted under it without exposing the victims to long drawn litigation. In order to meet the situation, to avoid delay and to ensure immediate relief to the victims, the law should C. L. SAHU v. U. 0. l. 615 provide for constitution of tribunals regulated by special procedure for determining compensation to victims of industrial disaster or accident, appeal against which may lie to this Court on the limited ground of questions of law only after depositing the amount determined by the Tribunal. The law should also provide for interim relief to victims during the pendency of proceedings.

These steps would minimise the misery and agony of victims of hazardous enterprises. [7IOH; 71JA-F] 3. Industrial development in our country and the hazards involved therein, pose a mandatory need to constitute a statutory "Industrial Disaster Fund", contributions to which may be made by the Government, the industries whether they are transnational corporations or domestic undertakings, public or private. The extent of contribution may be worked out having regard to the extent of hazardous nature of the enterprise and other allied matters. The fund should he permanent in nature. so that money is readily available for providing immediate effective relief to the victims. [711G-H; 712A] Ranganathan and Ahmadi, JI-Per Ranganathan, J. (Concurring): I. The provisions of the Act, read by themselves, guarantee a complete and full protection to the rights of the claimants in every respect. Save only that they cannot file a suit themselves, their right to .

acquire redress has not really been abridged by the provisions of the Act. Sections 3 and 4 of the Act completely vindicate the objects and reasons which compelled Parliament to enact this piece of legislation. Far from abridging the rights of the claimants in any manner, these provisions are so worded as to enable the Government to prosecute the litigation with the maximum amount of resources, efficiency and competence at its command . as well as with all the assistance and help that can be extended to it by such of those litigants and claimants as are capable of playing more than a mere passive role in the litigation. [720G-H; 721A-BI 2. Even if the provisions of s. 3 had been scrupulously observed and the names of all parties, other than the Central Government, had been got deleted from the array of parties in the suits and proceedings pending in this country, the result would not have. been fatal to the interests of the litigants.

On the contrary, it enabled the litigants to obtain the benefit of all legal exp~rtise at the command of the Government of India in exercising their rights against the Union Carbide Corporation. Such representation can well be justified by resort to a principle analogous to, if not precisely the same, as that of, "parens • patriae". A victim of the tragedy is compelled to part with a valuable right of his in order that it might be more efficiently and satisfactorily ·exploited for his benefit than he himself is capable of. It is of course possible ,that there may be an affluent claimant or lawyer engaged by him, who may be capable of fighting the litigation better. It is possible that the Government of India as a litigant may or may not be able to pursue the litigation with as much determination or capability as such a litigant. But in a case of theJ>resent type one should not be confounded by such a possibility. There are more indigent litigants than affluent ones.

There are more illiterates than enlightened ones. There are very few of the claimants, capable of finding the financial wherewithal required for fighting the litigation. Very few of them are capable or prosecuting such a litigation in this country not to speak of the necessity to run to a foreign country. The financial position of UCIL was negligible compared to the magnitude of the claim that could arise and, though eventually the battle had to be pitched on our own soil, an initial as well as final recourse to legal proceedings in the United States was very much on the cards, indeed inevitable. In this situation, the legislature was perfectly justified in coming to the aid of the victims with this piece of legislation and in asking the Central Government to shoulder the responsibility by substituting itself in place of the victims for all purposes connected with the claims. ]716C-H; 717AJ 3. Section 4 adequately safeguards the interest of individual victims.

It enables each one of them to bring to the notice of the Union any special features or circumstances which he would like to urge in respeci of any maller and if any such features are brought to its notice the Union is obliged to take it into account. The individual claimants are also at liberty to engage their own counsel to associate with the State counsel in conducting the proceedings. If the suits in this case had proceeded, in the normal course, either to the stage of a decree or even to one of settlement the claimants could have kept themselves abreast of the developments and the statutory provisions would have been more than adequate to ensure that the points of view of all the victims are presented to the court. Even a settlement or compromise could not have been arrived at without the court being apprised of the views of any of them who chose to do so.

The statute has J>rovided that though the Union of India will be the dominus litis in the suit, the interest of all the victims and their claims should be safeguarded by giving them a voice in the proceedings to the extent indicated above. This provision of the statute is an adaptation of the principle of Order 1 Rule 8 and of order XXIII Rule 38 of the Code of Civil Procedure in its application to the suits governed by it and, though the extent of partcipation allowed to C. L. SAHU v. U. 0. 1. 617 the . victims is somewhat differently enunciated in the legislation, substantially speaking, it does incorporate the principles of natural justice to the extent possible in the circumstances. The statute cannot, therefore, be faulted on the ground that it denies the victims an opportunity to present their views or places them at any disadvantage in the matter of having an effective voice in settling the suit by way of compromise. [724G-H; 725A-D] 4.

Sections 3 and 4 combine together the interest of the weak, illiterate, helpless and poor victims as well as the interest of those who could have managed for themselves, even without the help of this enactment. The combination thus envisaged enables the Government to fight the battle with the foreign adversary with the full aid and assistance of such of the victims or their legal advisers as are in a position to offer any such assistance. Though section 3 denies the claimants the benefit of being eo nominee parties in such suits or proceedings, section 4 preserves to them substantially all that they can achieve by proceeding on their own. In other words, while seeming to deprive the claimants of their right to take legal action on their own, it has preserved those rights, to be exercised indirectly.

A conjoint reading of sections 3 and 4 would show that there has been no real total deprivation of the right of the claimants to enforce their claim for damage in appropriate proceedings before any appropriate forum. There is only a restriction of this right which, in the circumstances, is totally reasonable and justified. [7180-G] 5. It is not possible to bring the suits brought under the Act within the categories of representative action envisaged in the Code of Civil Procedure. The Act deals with a class of action which is sui generis and for which a special formula has been found and encapsuled in s. 4. The Act divests the individual claimants of their right to sue and vests it in the Union. In relation to the suit in India, the Union is the sole Plaintiff. none of the others are envisaged as plaintiffs or respondents. The victims of the tragedy were so numerous that they were never defmed at the stage of filing the plaint nor do they need to be defined at the stage of settlement.

The litigation. is carried on by the State in its capacity not exactly the same as, but somewhat analogous to that of "parens patriae". In the case of a litigation by a Karta of a Hindu undivided family or by a guardian on behalf of a ward, who is non-sui juris, the junior members of the family or the wards, are not to be consulted before entering into a setl_lt:ment. In s~ch eheme. Counsel submitted that this Court should set up a procedure which would ensure that an impartial judge assisted by medical experts and assessors would adjudicate the basis on which an individual claimant would fall into a particular category. Itwas also urged that this Court should quantify the amount of compensation payable to each category of claimant in clause 5(2) of the Scheme~ This decision cannot, it was submitted, be left to the Central Government aS is purported to be done by clause 11(2) of the Scheme.

· This Court must set up, it was urged, a trust with independent tru~tees to administer the trust and trustees to be accountable to this Court. An independent census should be carried out of number of claim:mt~. nature and extent of injury caused to them, the category -into which they fall. Apportionment of amounts should be set aside or invested for future claimants, that is the category in clause 5(2)(a) of the . Scheme, which is, according to counsel, of utmost importance C. L. SAHU •. U. 0. 1. [MUKHAful, en-·--. _ 649 "·-·--. ,,. since the injuries are said to be. carcinogenic and ontogenic and wide affecting persons yet unborn. · · 47. Shri Garg, further and on behalf of some of the victims counsel; urged before us that deprivation of the rights of the victims and vesting of those rights in the State is violative. of the rights of the victims and cannot.

be justified or warranted by the ject to disqualification, they may be authorised and obliged to hear that matter by virtue of the operation of the common law doctrine of necessity. Reference was also made to De Smith's Judicial Review of Administrative Action (4th Edn. pages 276-277. See also G. A. Flick-Naturallustice, (1879) pages 13S-141. Reference was also made to the observations of this Court in J. Mohapatra & Co. & Anr. v. State of Orissa & Anr. , [1984) 4 SCC 103, where at page 112 of the report, the Court recognised the principle of necessity. It was submitted that these were situations where on the principle of doctrine of necessity a person interested was held not disqualified to adjudicate on his rights. The present is a case where the Govt. of India only represented the victims as a party and did not adj'! dicate between the victims and the UCC. It is the Court which would adjudicate the rights of the victims. The representation of the victims by the Govt.

of India cannot be held to be bad, and there is and there was no scope of violation of any principle of natural justice. We are of the opinion in the facts and the circumstances of the case that this contention urged by Union of India is right. There was no scope of violation of the principle of natural justice on this score. 76. It was also urged that the doctrine of de facto representation will also apply to the facts and the circumstances of the present case. Reliance was placed on the decision of this Court in Gokaraju Rangaraju etc. v. State of A. P. , [1981] 3 SCR 474, where it was held that the doctrine of de facto representation envisages that acts performed within the scope of assumed official authority in the interest of public or third persons and not for one's own benefit, are generally to be treated as binding as if they were the acts of officers de jure. This doctrine is founded on good sense, sound policy and practical expediency.

It is aimed at the prevention of public and private mischief and protection of public and private interest. It avoides endless confusion and needless chaos. Reference, was made to the observations of this Court in Pushpadevi M. Jatia v. M. L. Wadhawan, [1987] 3 SCC 367 at 389-390 and Mis. Beopar Shayak (P) Ltd. & Ors. v. Vishwa Nath & Ors. , [1987] 3 SCC 693 at 702 & 703. Apart from the aforesaid doctrine, doctrine of bona fide representation was sought to be resorted to in the circumstances. In this connection, reference was made to Dharampal Singh v. Director of Small Industries Services & Ors. , AIR i980 SC 1888; N. K. Mohammad Sulaiman v. N. C. Mohammad Ismail & Ors. , [1966] 1SCR 937 and Malkarjun Bin Shigramappa Pasara v. Narhari Bin Shivappa &Anr. , 27IA 216. 77. It was further submitted that the initiation of criminal proceedings and then quashing thereof, would not make the Act ultra vires so far as it concerned.

Learned Attorney General submitted that the Act only authorised the Govt. of India to represent the victims to enforce their claims for damages under the Act. The Govt. as such had nothing to do with the qu. ashing of the criminal proceedings and it was not representing the victims in respect of the criminal liability of C. L. SAHU v. U. 0. 1. IMUKHARJI, CJ. ) 671 the UCC or UCIL to the victims. He further submitted that quashing of criminal proceedings was done by the Court in exercise of plenary powers under Articles 136 and 142 of the Constitution. In this connection, reference was made to State of UP. v. Poosu & Anr. , [1976] 3 SCR 1005; K. M. Nanavati v. The State of Bombay, [1961] 1SCR497. According to the learned Attorney General, there is also power in the Supreme Court to suggest a settlement and give relief as in Ram Gopal v. Smt. Sarubai & Ors. , [1981] 4 SCC 505; India Mica & Micanite Industries Ltd. v. State ofBihar & Ors. , [1982] 3 SCC 182. '78.

Learned Attorney General urged that the Supreme Court is empowered to act even outside a Statute and give relief inaddition tv what is contemplated by the latter in exercise of its plenary power. This Court acts not only as a Court of Appeal but is also a Court of Equity. See Roshanlal Kuthiala & Ors. v. R. B. Mohan Singh Oberoi, [1975] 2 SCR 491. During the course of hearing of the petitions, he informed this Court that the Govt. of India and the State Govt. of Madhya Pradesh refuted and denied any liability, partial or total, of any sort in the Bhopal gas Leak disaster, and this position is supported by the present state of law. It was, however, submitted that any claim against the Govt. of India for its alleged tortious liability was outside the purview of the Act and such claims, if any, are not extinguished by reason of the orders dated ! 4th &. 15th February, 1989 of this Court. • 79.

Learned Attorney General further stated that the amount of $ 470 million which was secured as a result of the memorandum of settlement and the said orders. of this Court would be meant exclusively for the benefit of the victims who have suffered on account of the Bhopal gas leak disaster. The Govt. of India would not seek any reimburseme. nt on account of the expenditure incurred suo motu for relief and rehabilitation of the Bhopal victims nor will the Govt. or its instrumentality make any claim on its own arising from this disaster. He further assured this Court that in the event of disbursement of compensation being initiated either under the Act or under the orders of this Court, a notification would be instantaneously issued under Section 5(3) of the Act authorising the Commissioner or any other officers to discharge functions and exercise all or any powers which the Central Govt. may exercise under Section 5 to enable the victims to place before the Commissioner or the Dy.

Commissioner any additional evidence that th~y would like to be considered. 80. The Constitution Bench of this Court presided over by the learned Chief Justice has pronounced an order on 4th May, 1989 giving reasons for the orders passed on 14th-15th February, 1989. Inasmuch as good deal of criticism was advanced before this Court during the hearing of the arguments on behalf of the petitioners about the propriety and validity of the settlement dated 14th-15th February, 1989 even though the same was not directly in issue before us, it is necessary to refer briefly to what the Constitution Bench has stated in the said order dated 4th May, 1989. After referring to the facts leading to the settlement, the Court has set out the brief reason on the following points: (a) How did the Court arive at the sum of 470 million US dollars for an overall settlement!? (b) Why did the Court consider the sum of 470 millions US dollars as 'just, equitable and reasonable'?

(c) Why did the Court not pronounce on certain important legal questions of far-reaching importance said to arise in the appeals as to the principles of liability of monolithic, economically entrenched multinational companies operating with inherently dangerous technologies in the developing countries of the third world? These questions were said to be of great contemporary relevance to the democracies of the third world. This Court recognised that there was another aspect of the review pertaining to the part of the settlement which terminated the criminal proceedings. The questions raised on the point in the review-petitions, the Court was of the view, prima facie merit consideration and therefore, abstained from saying anything which might tend to pre-judge this issue one way or the other. 81.

The basic consideration, the Court recorded, motivating the conclusion of the settlement was the compelling need for urgent relief, and the Court set out the law's delavs duly considering thilt there was a compelling duty both judicial and hwnane, to secure immediate relief to the victims. In doing so, the Court did not enter upon any forbidden ground, the court stated. The Court noted that indeed efforts had already been made in this direction by Judge Keenan and the learned District Judge of Bhopal. Even at the opening of the arguments in the appeals, the Court had suro:ested to learned counsel to reach a just and fair settlement. And when counselmet for re-scbednlingofthe hearings the suggestion was reiterated.

The Court recorded that the response of learned counsel was positive in attempting a settlement but they expressed a certain degree of uneasiness and scepticism at the prospects of success in view of their past experience of such negotations when, as they stated, there had been uninformed and even irresponsible criticism ofthe attempts at settlement. C. L. SAHU v. U. 0. 1. [MUKHARJI, CJ. ] 673 82. Learned Attorney General \lad made available to the Court the particulars of offers and counter-offers made on previous occasions and the history of settlement. In those circumstances, the Court examined the prima facie material as the basis of quantification of a sum which, having regard to all the circumstances including the prospect of delays inherent in the judicial process in India and thereafter in the matter of domestication of the decree in the U. S.

for the purpose of execution and directed that 470 million US dollars, which upon immediate payment with interest over a reasonable period, pending actual distribution amongst the claimants, would aggregate to nearly 500 million- US dollars or its rupee equivalent of approximately Rs. 750 crores which the learned Attorney General had suggested, be made the basis of settlement, and both the parties accepted this direction. 83. The Court reiterated that the settlement proposals were considered on the premise that the Govt. had the exclusive statutory authority to represent and act on behalf of the victims and neither counsel had any reservation on this. The order was also made on the premise that the Act was a valid law. The Court declared that in the event the Act is declared void in the pending proceedings challenging its validity, the order dated 14th February, 1989 would require to be examined in the. light of that decision.

The Court also reiterated that if any material was placed before it from which a reasonable inference was possible that the UCC had, at any time earlier, offered to pay any sum higher than an outright down payment of US 470 million dollars, this Court would straightway initiate suo motu action requiring the concerned parties to show cause why the order dated 14th February'89 should not be set aside and the parties relegated to their original positions. The Court reiterated that the reasonableness of the sum was based not only on independent quantification but the idea of reasonableness for the present purpose was necessarily a broad and general estimate in the context of a settlement of the dispute and not on the basis of an accurate assessment by adjudication. The Court stated that the question was, how good or reasonable it was as a settlement, which would avoid delay, uncertainties'and . assure immediate payment.

An estimate in the very nature of things, would not have the accuracy of an adjudication. The Court recorded the offers, counter-offers, reasons and the numbers of the persons treated and the claims already made. The Court found that from the order of the High Court and the admitted position on the plaintiff's side, a reasonable prima facie estimate of the number of fatal cases and serious personal injury cases, was possible to be made. The Court referred to the High Court's assessment and procedure to examine the task of assessing the quantum of interim compensatibn. The Court referred to M. C Mehta's case reiterated by the High Court, bearing in mind the factors that if the suit proceeded to trial the plaintiff-Union of India would obtain judgment in respect of the claims relating to deaths and personal injuries in the following manner:- (a) Rs. 2 lakhs. in each case of death; (b) Rs. 2 lakh in each case of total permanent disability; (c) Rs.

I lakh in each case of permanent partial disablement; and (d) Rs. 50,000 in each case of temporary partial disablement. 84. Half of these amounts were awarded as interim compensation by the High Court. 85. The figures adopted by the High Court in regard to the number of fatal cases and cases of serious personal injuries did not appear to have been disputed by anybody before the High Court, this Court observed. From those figures, it came to the conclusion that the total number of fatal cases was about 3,000 and of grievous and serious personal injuries, as verifiable from the records was 30,000. This Court also took into consideration that about 8 months after the occurrence a survey had been conducted for the purpose of identification of cases. These figures indicated less than 10,000.

In those circumstances, as a rough and ready estimate, this Court took into consideration the prima facie findings of the High Court and estimated the number of fatal cases of 3,000 where compensation could range from Rs. l lakh to Rs. 3 lakhs. This would account for Rs. 70 crores, nearly 3 times higher than what would have otherwise been awarded in comparable cases in motor vehicles accident claims. 86. The Court recognised the effect of death and ,reiterated · that loss of precious human lives is irreparable. The law can onty hope to compensate the estate of a person whose life was lost by the wrongful act of another only in the way the law was equipped to compensate i. e. by monetary compensation calculated on certain well-recognised principles.

"Loss to the estate" which is the entitlement of the estate and the 'loss of dependency' estimated on the basis of capitalised present value awardable to the heirs and dependants, this Court considered, were the main components in the computation of compensation in fatal accident actions, but the High Court adopted a higher basis. The Court also took into account the personal injury cases, and stated that these apportionments were merely broad coqsiderations generally guiding the idea of reasonableness of the overall basis of C. L. SAHU v. U. 0. 1. [MUKHARJJ, CJ. ] 675 settlement, and reiterated that this exercise was not a pre-determination of the quantum of compensation amongst the claimants. either individually or catagory-wise, and that the determination of. the actual quantum of compensation payable to the claimants has to be done by the authorities under the Act. These were the broad assessments and on that basis the Court made the assessment.

The Court believed that this was a just and reasonable assessment based on the materials available at that time. So far as the other question, namely, the vital juristic principles of great contemporary relevance to the Third World generally, and to India in particular, touching problems emerging from the pursuit of such dangerous technologies for economic gains by multinationals in this case, the Court recognised that these were great problems and reiterated that there was need to evolve a national policy to protect national interests from such ultra-hazardous pursuits of economic gain; and that Jurists, technologists and other experts in economics, environmentology, futurology, sociology and public health should identify the areas of common concern and help in evolving proper criteria which might receive judicial recognition and legal sanction. The Court reiterated that some of these problems were referred to in M. C. Mehta's case (supra).

But in the present case, the compulsions of the need for immediate relief to tens of thousands of suffering victims could not wait till these questions vital though these be, were resolved in due course of judicial proceeding~; and the tremendous suffering of thousands of persons compelled this Court . to move into the direction of immediate relief which, this Court thought, should not be subordinated to the uncertain promises of the law, and when the assessment of fairness of the amount was based on certain factors and assumptions not disputed even by the plaintiffs. 87. Before considering the question of constitutional validity of the Act, in the light of the background ·of the facts and circumstances of this case and submissions made, it is necessary to refer to the order dated 3rd March, 1989 passed by the Constitution Bench in respect of writ petitions Nos. 164/86 and 268/89, consisting of 5 learned Judges presided over by the Hon'ble the Chief Justice of India.

The order stated that these matters would be listed on 8th March, 1989 before a Constitution Bench for decision "on the sole question whether the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 is ultra vires". This is a judicial order passed by the said Constitution Bench. This is not an administrative order. Thus, these matters are before this Court. the question, therefore, arises; what are these mattern? The aforesaid order specifically state~ that these matters were placed before this Bench on the "sole question" whether the Act is ulta vires. Hence, these matters are not before this Bench for disposal of these writ petitions. If as a result of the determination, one way or the other, it is held, good and bad, and that some relief becomes necessary, the same cannot be given or an order cannot be passed in respect thereof, except declaring the Act or any portion of the Act, valid or invalid constitutionally as the decision might be. 88. In writ petition No.

268/89 there is consequential prayer to set aside the order dated 14/15th February, 1989. But since the order dated 3rd March, 1989 above only snggests that these matters have been placed before this Bench 'on the sole question' whether the Bhopal Act is ultra vires or no<, it is not possible by virtue of that order to go into the question whether the settlement is valid or liable to be set aside as prayed for in the prayers in these applications. 89. The provisions of the Act have been noted and the. rival contentioμs of the parties have been set out before. It is, however,. necessary to reiterate . that the Act does not in any way circumscribe o the liability of the UCC, UCIL or even the Govt. of India or Govt. of Madhya Pradesh if they are jointly or severally liable. This follows from the construction of the Act, from the language that is apparent. The context and background do not indicate to the contrary. Counsel for the victims plead that that is so.

The learned Attorney General accepts that position. The liability of the Government is, however, disputed. This Act also does not deal with any question of criminal liability of any of the parties concerned. On an appropriate reading of the relevant provisions of the Act, it is apparent that the criminal liability arising out of Bhopal gas leak disaster is not the subjectmatter of this Act and cannot be said to have been in any way affected, abridged or modified by virtue of this Act. This was the contention of learned counsel on behalf of the victims. It is also the contention of the learned Attorney General. In our opinion, it is the correct analysis and consequence of the relevant provisions of the Act. Hence, the submissions made on behalf of some of the victims that the Act was bad as it abridged or took away the victims' right to proceed criminally against the delinquent, be it UCC.. or UCIL or jointly or severally the Govt. of India, Govt. of Madhya Pradesh or Mr.

Arjun Singh, the erstwhile Chief Minister of Madhya Pradesh, is on a wrong basis. There is no curtailment of any right with respeCt to any criminal liability. Criminal liability is not the subject-matter of the Act. By the terms of the Act and also on the concessions made by the learned Attorney GeneraCif that be so, then can non-prosecution in criminal liability be a conSi' R deration or valid consideration for settlement of claims under the Act? C. L. SAHU v. U. 0. 1. [MUKHARJI, CT. ] 677 ·• This is a question which has been suggested and articulated by learned counsel appearing for the victims. On the other hand, it has been asserted by the learned Attorney General that that part of the order dated 14/15th February, 1989 dealing with criminal prosecution or the order of this Court was by virtue of the inherent power of this Court under Articles 136 & 142 of the Constitution. These, the learned Attorney General said, were in the exercise of plenary powers of this Court.

These are not considerations which induced the parties to enter into settlement. For the purpose of determination of constitutional validity of the Act, it is however necessary to say that criminal liability of any of the delinquents or of the parties is not the subject-matter of this Act and the Act does not deal with either claims or rights arising out of such criminal liability. This aspect is necessary to be reiterated on. the question of validity of the Act. 90. We have set out the language and the purpose of the Act, and also noted the meaning of the expression 'claim' and find that the Act was to secure the claims connected with or arising out of the disa. ster so that these claims might be dealt with speedily, affectively, equitably and to the best advantage of the claimants.

In our opinion, Clause (b) of Section 2 includes all claims of the victims· arising out of and connected with the disaster for compensation and damages or loss of life or personal injury or loss to the busines and flora and fauna. What, however, is the extent of liability, is another question. This Act does not purport to or even to deal with the extent of liability arising out of the said gas leak disaster. Hence, it would be improper or incorrect to contend as did Ms. Jaising, Mr Garg and other learned counsel appearing for the victims, that the Act circumscribed the liability-criminal, punitive or absolute of the parties in respect of the leakage. The Act provides for a method or procedure for the establishment and enforcement of that liability.

Good deal of argument was advanced before this Court· on the question that the settlement has abridged the liability and this Court has lost the chance of laying down the extent of liability arising out of disaster like the Bhopal Gas Leak disaster. Submissions were made that we should lay down clearly the extent of liability arising out of these types of disasters and we should further hold that the Act abridged such liability and as such curtailed the rights of the victims and was bad on that score. As mentioned hereinbefore, this is an argument under a misconception. The Act does not in any way except to the extent indicated in the relevant provisions of the Act circumscribe or abridge the extent of the rights of the victims so far as the liability of the delinquents are concerned. Whatever are the rights of the victims and whatever claims arise out of the gas leak disaster for compensation, personal injury, loss of life and property, suffered or.

likely to be sustained or expenses to be incurred or any other loss are covered by the Act and the Central Govt. by operation of Section 3 of the Act has been given the exclusive right to represent the victims in their place and stead. By the Act, the extent of liability is not in any way abridged and, therefore, if in case of any industrial disaster like the Bhopal Gas Leak disaster, there is right in victims to recover damages or compensation on the basis of absolute liability, then the same is not in any manner abridged or curtailed. 91. Over 120 years ago Rylands v. Fletcher, [1868] Vol. 3 LR E & I Appeal Cases 330 was decided in England. There A, was the lessee of certain mines. B, was the owner of a mill standing on land adjoining that under which the mines were worked. B, desired to construct a reservoir, and employed competent persons, such as engineers and a contractor, to construct it.

A, had worked his mines up to a spot where there were certain old passages of disused mines; these passages were connected with vertical shafts which communicated with the land above, and which had also been out of use for years, and were apparently filled with marl and the earth of the surrounding land. No care had been taken by the engineer or the contractor to block up these crafts, and shortly after water had been introduced into the reservoir it broke through some of the shafts, flowed through the old passage and flooded A's mine. It was held by the House of Lords in England that where the owner of land, without wilfulness or negligence, uses his land in the ordinary manner of its use, though mischief should thereby be occasioned to his neighbour, he will not be liable in damages.

But if he brings upon his land any thing which would not naturalty come upon it, and which is in itself dangerous, and may become mischievous if not kept under proper control, though in so doing he may act without personal wilfulness or negligence, he will be liable in damages for any mischief thereby occasioned. In the background of the facts it was held that A was entitled to recover damages from B, in respect of the injury. The question of liability was highlighted by this Court in M. C. Mehta's case (supra) where a Constitution Bench of this Court had to deal with the rule of strict liability. This Court held that the rule in Rylands v. Fletcher, (supra) laid down a principle that if a person who brings on his land and collects and keep there anything likely to do harm and such thing escapes and does damage to another, he is liable to compensate for the damage caused.

This rule applies only to nonnatural user of the land and does not apply to thin~s naturally on the land or where the escape is due to an act of God and an act of a stranger or the default of the person injured or where the things which escape C. L. SAHU v: U. 0. I. [MUKHARJI, CJ. ] 679 are present by the consent of the person injured or in certain cases where there is a statutory authority. There, this Court observed that the rule in Rylands v. Fletcher, (supra) evolved in the 19th century at a time when all the developments of science and technology had not taken place, and the same cannot afford any guidance in evolving any standard of liability consistent with the constitutional norms and the needs of the present day economy and social structure. In a modem industrial society with highly developed scientific knowledge and tech- .

nology where hazardous or inherently dangerous industries are necessary to be carried on as part of the developmental process, Courts should not feel inhibited by this rule merely because the new law does not recognise the rule of strict and absolute liability in case oCan enterprise engaged in hazardous and dangerous activity. This Court noted that law has to grow in order to satisfy the needs of the fastchanging society and keep abreast with the economic developments taking place in the country. Law cannot afford to remain static. This Court reiterated there that if it is found necessary to construct a new principle of liability to deal with an unusual situation which has arisen and which is likely to arise in future on account of hazardous or inherently dangerous industries which are concomitant to an industrial economy, the Court should not hesitate to evolve such principle of liability merely because it has not been so done in England.

According to this Court, an enterprise which is engaged in a hazardous or inherently dangerous industry which poses potential threat to the health and safety of the persons working in the factory and residing in the surrounding areas owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone. The enterprise must be held to be under an obligation to provide that the hazardous or inherently dangerous activity in which it is engaged must be conducted with the highest standards of safety and if any harm results to anyone on account of an accident in the operation of such activity resulting, for instance, in escape of toxic gas the enterprise is strictly and absolutely liable to compensate all those who were affected by the accident as part of the social cost for carrying on such activity, regardless of whether it is carried on carefully or not. Such liability is not subject to any of the exceptions which operate