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IN
PETITIONER:
UNION CARBIDE CORPORATION ETC. ETC.
Vs.
RESPONDENT:
UNION OF INDIA ETC. ETC.
DATE OF JUDGMENT03/10/1991
BENCH:
VENKATACHALLIAH, M.N. (J)
BENCH:
VENKATACHALLIAH, M.N. (J)
MISRA, RANGNATH (CJ)
SINGH, K.N. (J)
AHMADI, A.M. (J)
OJHA, N.D. (J)
CITATION:
1992 AIR 248
1991 SCC (4) 584
1991 SCALE (2)675
CITATOR INFO :
D
1992 SC2084
(28)
ACT:
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 - Whether vitiates the settlementReview of settlement---If set aside by Court-- Whether Court
has inherent jurisdiction to order restitution of the fund
to the company-Review proceedings-Court would not refuse to
afford opportunity to parties on rigid technical grounds--In
case funds found inadequate in future--Whether Union of
India as Welfare State to make good the deficiency-Whether
settlement could be set aside on mere possibility that
medical documentation and categorisation were faulty and
figures of various kinds of injuries and disablement were
undependable--Liability of tortfeasor--Award of compensation--To be proportionate to economic superiority of the
offender.
Constitution of India, 1950:
Article 136, 137, 139-A, 142, 145: Inherent jurisdiction
under Articles 136 and 142 to withdraw or transfer and
finally dispose of the main suits and pending Criminal
proceedings in the course of hearing of appeals arising out
of interlocutory orders in suits--Whether taken away by
Article 139A--Words Cause or matter appearing in Article
142---Meaning and scope of-Apex Courts power to quash
criminal proceedings---Courts order recording settlement
between parties---Such agreement if opposed to public policy- Whether void and order of settlement liable to be set
aside-Special leave jurisdiction--Nature and scope of--Main
object--To meet ends of justice--Even specific provision for
appeal under the Constitution of other laws not to limit the
jurisdiction--Stifling of prosecution doctrine --Whether
attracted where the motive is to drop Criminal as also Civil
proceedings----Doctrine of restitution---Whether applicable
to appeals under Article 136--Conferment of immunity from
criminal proceedings--Whether legislative function--Whether
amounts to preferential treatment---Settlement of claims
recorded-Review of---Whether settlement could be set aside
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on
252
ground of insufficiency of settlement fund-In the event of
funds being found insufficient to meet the compensation
determined Whether Union of India as Welfare State to make
good the deficiency.
Civil Procedure Code, 1908:
Order XXIII, Rule 3B; Sections 112 and 114: Settlement
recorded by Court--Principles of natural justice-Persons
whose interests affected not made co-nomine parties-Order
recording
settlement not preceded by notice to
such
persons--Whether renders the proceedings void--Doctrine of
restitution --Applicability of
Law of Torts:
Mass tort action--Court assisted settlement--Non-affording
of pre-settlement Fairness Hearing and non-incorporation
of reopener clause in the settlement---Whether vitiate the
settlement---Assessment of once and for all damages in
personal injury actions---Unforeseen but likely
future
manifestation of the injury-- An important factor to be kept
in mind.
Admnistrative Law:
Principles of Natural Justice-Audi alteram pattern
rule-Non-compliance with the rule-Effect of--To be viewed in
circumstantial flexibility.
Practice & Procedure:
Plea of invalidity based on public policy--Not barred
by rule of estoppel.
Procedural
technicalities--To yield to
paramount
considerations of justice and fairness where matter involves
moral and humanitarian considerations.
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 escape of MIC
from the tanks in which it was stored. And the fumes blew
into the hutments abutting the plant premises affecting the
residents as also the flora and fauna. About 4000 people
lost their lives and the health of tens of thousands of
people was affected in various degrees of seriousness.
The Bhopal Gas Leak Disaster (Processing of Claims) Act,
1985 was
253
passed on 29.3.1985 authorising the Government of India, as
parent patriae exclusively to represent the victims so that
the interests of victims of the disaster could be fully
protected and that the claims for compensation were pursued
speedily, effectively and to the best advantage of the
claimants. In exercise of the power conferred under the Act,
the Union of India instituted an action on behalf of the
victims against Union Carbide Corporation before the U.S.
District Court, Southern District of New York for award of
compensation for the damage caused by the disaster. A large
number of fatal accidents and personal injury actions filed
by and on behalf of about 1,86,000 victims were already
pending in courts in U.S.A. All these claims came to be
consolidated by the Judicial Panel on Multi District Litigation and assigned to U.S. District Court, Southern District
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natural justice.
It was further contended that a large number of genuine
claims stood excluded on the ground that despite notices the
claimants did not
appear for medical documentation and
so the medical documentation
done was not reliable.
255
Through the Union of India did not assail the settlement, it sought to support the petitioners challenge to the
validity of the settlement. It was contended on behalf of
the Union of India that though it did not dispute the settlement, it was not precluded from pointing out the circumstances in the case which, if accepted, would detract from
the legal validity of the settlement.
Disposing of the petitions, this Court,
HELD: (By The Court)
1. Under Article 142(1) of the Constitution, this Court
did have the jurisdiction to withdraw to itself the original
suits pending in the District Court at Bhopal and dispose of
the same in terms of the settlement. So also this Court has
the jurisdiction to withdraw the criminal proceedings.
However, in the particular facts and circumstances, the
quashing of the criminal proceedings was not justified. [372
B-C & F]
2. The settlement ordered by this Court is not void for
noncompliance with the requirements of Order XXIII Rule 3B
of the Code of Civil Procedure. [372-E]
3. The orders recording time settlement in so far as
they seek to prohibit future criminal proceedings do not
amount to conferment of criminal immunity; but merely consequential. to the quashing of the criminal proceedings.
[372-G]
4. The orders recording the settlement are not void, as
they are not opposed to public policy and do not amount to
stifling of criminal proceedings. [373-A]
5. Having regard to the scheme of the Bhopal Gas Leak
Disaster (Processing of Claims) Act, 1985, Fairness Hearing procedure is not strictly attracted to the Courts
sanctioning of a settlement. Likewise, the absence of a
Re-opener clause does not, ipso-facto, vitiate the settlement. [373-B-C]
6. If the settlement is set aside, UCC shall be entitled
to the restitution of the amount brought in by it pursuant
to the orders of this Court, subject to its complying with
the terms of the order dated 30th Nov., 1986 made by the
Bhopal District Court. [373 C-D]
256
7. The settlement is not vitiated for not affording the
victims and victim-groups an opportunity of being heard.
[373-E]
8. If the settlement fund is found to be insufficient,
the deficiency is to be made good by the Union of India.
[373 E]
9. For expeditious disposal of the claims, a time-bound
consideration and determination of the claims are necessary.
[373-F]
Per Majority: (Venkatachaliah, J. for himself, K.N. Singh
and N.D.
Ojja, jj);:
1. Article 139-A of the Constitution in terms does not
apply to the facts of the ease. The appeals were by special
leave under Article 136 of the Constitution against an
interlocutory order. Article 136 vests in the Supreme Court
a plenary Jurisdiction in the matter of entertaining and
hearing of appeals by granting special leave against any
kind of judgment or order made by a Court or Tribunal in any
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referred to.
Agent
Orange
Litigation,
597
Federal
Supplement
740(1984); Florida Trailer and Equipment Co. v.. Deal, 284
F.2d 567 (1960), referred to.
15. The settlement is not vitiated by reason alone of
want of a Fairness Hearing procedure preceding it. Likewise, the settlement is not vitiated by reason of the absence of a re- opener clause built into it [341 C]
264
16.1 Strictly speaking no restitution in the sense that
any funds obtained and appropriate by the Union of India
requiring to be paid back, arises. The funds brought in by
the UCC are deposited in the Reserve Bank of India and
remain under this Courts control and jurisdiction. Restitution is an equitable principle and is subject to the discretion of the Court. Section 144, Code of Civil Procedure,
embodying the doctrine of restitution does not confer any
new substantive right to the party not already obtaining
under the general law. The section merely regulates the
power of the court in that behalf. But, in the present case,
Section 144 CPC does not in terms apply. There is always an
inherent jurisdiction to order restitution a fortiorari
where a party has acted on the faith of an order of the
court. A litigant should not go back with the impression
that the judicial-process so operated as to weaken his
position and whatever it did on the faith of the courts
order operated to its disadvantage. it is the duty of the
court to ensure that no litigant goes back with a feeling
that he was prejudiced by an act which he did on the faith
of the court order. Both on principle and authority it
becomes the duty of the court to-as much moral as it is
legal to order refund and restitution of the amount to the
UCC---if the settlement is set aside. [342 H; 343 A-D]
16.2. In the instant case, the UCC transported the funds
to India and deposited the foreign currency in the Reserve
Bank of India on the faith of the Courts order. If the
settlement is set aside they shall be entitled to have their
funds remitted to them back in the United States together
with such interest as has accrued thereon. A direction to
the UCC to prove and establish compliance with the District
Courts order dated 30th November, 1986, should be sufficient safeguard and should meet the ends of justice. Accordingly, in the event of the settlement being set aside the
UCC shall be entitled to have 420 million US Dollars brought
in by it. It will be remitted to UCC by the Union of India
at the United States along with such interest as has accrued
on it in the account. But this right to have the restitution
shall be strictly subject to the condition that the UCC
shall restore its undertaking dated 27.11.1986 which was
recorded on 30.11.1986 by the District Court at Bhopal and
on the strength of which the court vacated the order of
injunction earlier granted against the UCC. Pursuant to the
orders recording the settlement, the said order dated
30.11.1986 of the District Court was set aside by this
Court. If the settlement goes, the order dated 30.11.1986 of
the District Court will automatically stand restored and the
UCC would be required to comply with that order to keep and
265
maintain unencumbered assets of the value of 3 billion US
dollars during the pendency of the suit. The right of the
UCC to obtain the refund of and to repatriate the funds shad
be subject to the performance and effectuation of its obligations under the said order of 30.11.1986 of the District
Court at Bhopal. Till then the funds shall remain within the
jurisdiction of this Court and shall not be amenable to any
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JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Miscellaneous Petition
275
Nos.29377-A/88,
7942-43/89, 16093/89, 17965/89,
Review
Petition Nos. 229 and 623-24 of 2989.
IN
Civil Appeal Nos. 3187-88 of 1988.
From the Judgment and Order dated 4.4.1988 of the Madhya
Pradesh High Court in Civil Revision No. 26 of 1988.
(With W.P. Nos. 257, 297, 354, 379, 293, 399, 420/89,
231, 300, 378, 382/89 (In C.A.Nos. 3187-88/88 & I.A. NO.
1/90 (In W.P. Nos. 281/89) and W.P. Nos. 741/90, 3461/89).
Soli J. Sorabjee, Attorney General, Shanti Bhushan, Ms.
Indira Jaising, R.K. Garg, Danial Latif, B.R.L. lyengar,
P.P. Rao, Ashwani Kumar, D.N.M. Ghatate, F.S. Nariman, Anil
B. Dewan, Rajinder Singh, Prashant Bhushan, Ms. Kamini
Jaiswal, C.L. Sahu, Anil Nauriya, Vibhuti Jha, Mrs.
A. Mathur, Mrs. A. Mariarputham, R.P. Saxena, R. Venkataramani, P.K. Manohar, Madan Lokur, A.L. Trehan, Ms. C.S.
Lalitha, Harish Uppal in person, Mrs. K. Hingorani, R.B.
Mehrotra, Ms. Lalitha Kaushik, D.K. Garg, Raju Ramachandran,
Mukul Mudgal, S.R. Bhat, M.S. Ganesh, V.B. Mishra, A.N.
Khanwilkar, Ms. Madhu Khatri, P. Parmeswaran, Sakesh Kumar,
Satish K. Agnihotri, K. Kachwaha, Mrs. A.K. Verma, Ashok
Sagar, Dadachanji, Vijay Gupta, Ms. A. Subhashini, C.S.
Vaidyanathan and Ashok Singh for the appearing Parties.
The Judgment of the Court was delivered by
RANGANATH MISRA, CJ. I entirely agree with my noble and
learned Brother Venkatachaliah and hope and trust that the
judgment he as produced is the epitaph on the litigation. I
usually avoid multiple judgments but this seems to be a
matter where something more than what is and in the main
judgment perhaps should be said.
Early in the morning of December 3, 1984, one of the
greatest industrial tragedies that history has recorded got
clamped down on the otherwise quiet township of Bhopal, the
capital of Madhya Pradesh. The incident was large in magnitude - 2,600 people died instantaneously and suite a good
number of the inhabitants of the town suffered from several
ailments. In some cases the reaction manifested contemporaneously and in others the effect was to manifest itself much
later.
276
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Union Carbide Corporation (UCC for short), a multinational one, has diverse and extensive international operations in countries like India, Canada, West Asia, the Far
East, African countries, Latin America and Europe. It has a
sister concern known as Union Carbide India Limited (UCIL
for short). In the early hours of the 3rd of December, 1984,
there was a massive escape of lethal gas from the MIC Storage Tank of the plant into the atmosphere which led to the
calamity.
Several suits were filed in the United States of America
for damages by the local representatives of the deceased and
by many of the affected persons. The Union of India under
the Bhopal Gas Leak Disaster (Processing of Claims) Act of
1985 took upon itself the right to sue for compensation on
behalf of the affected parties and filed a suit for realisation of compensation. The suits were consolidated and Judge
Keenan by his order dated/.2th May, 1988, dismissed them on
the ground of forum non conveniens subject, inter alia, to
the following conditions:
1. Union Carbide shall consent to submit to
the jurisdiction of the Courts of India and
shall continue to waive defences based on the
statute of limitations, and
2. Union Carbide shall agree to satisfy any
judgment rendered against it in an Indian
Court, and if appealable, upheld by any appellate court in that country, whether such
judgment and affirmance comport with
the
minimal requirements of due process.
The United States Court of Appeals for the Second Circuit by its decision of January 14, 1987, upheld the first
condition and in respect of the second one stated:
"In requiring that UCC consent to enforceability of an Indian judgment against it, the
district court proceeded at least in part on
the erroneous assumption that, absent such a
requirement, the plaintiffs, if they should
succeed
in obtaining an Indian
judgment
against UCC, might not be able to enforce it
against UCC in the United States. The law,
however, is to the contrary, Under New York
law, which governs actions brought in New York
to
enforce
foreign
judgments
......
foreign-country judgment that is final, conclusive and enforceable where rendered must be
recognised and will be enforced as "conclusive
between the parties to the extent that it
grants or denies recovery of a sum of money"
except that it is not deemed to be conclusive
if:
277
"1. The judgment was rendered under a system
which does not provide impartial tribunals or
procedures, compatible with the requirements
of due process of law;
2. The foreign court did not have personal
jurisdiction over the defendant".
Art. 53. Recognition of Foreign Country
Money Judgments.
Although 5304 further
provides
that
under
certain
specified
conditions a foreign country judgment need not
be recognized,
none of these conditions
would apply to the present cases except for
the possibility of failure to provide UCC with
sufficient notice of procedings or the exist-
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ence of fraud in
obtaining the judgment,
which do not presently exist but conceivably
could occur in the future."
The Court rejected the plea advanced by UCC of breach of
due process by non-observance of proper standards and ultimately stated:
"Any denial by the Indian Courts of due process can be raised by UCC as a defence to the
plaintiffs later attempt to enforce a resulting judgment against UCC in this country."
After Judge Keenan made the order of 12th of May, 1986,
in September of that year Union of India in exercise of its
power under the Act filed a suit in the District Court at
Bhopal. In the plaint it was stated that death toll upto
then was 2,660 and serious injuries had been suffered by
several thousand persons and in all more than 5 lakh persons
had sought damages upto then. But the extent and nature of
the injuries or the aftereffect thereof suffered by victims
of the disaster had not yet been fully ascertained though
survey and scientific and medical studies had already been
undertaken. The suit asked for a decree for damages for such
amount as may be appropriate under the facts and the law and
as may be determined by the Court so as to fully, fairly and
finally compensate all persons and authorities who had
suffered as a result of the disaster and were having claims
against the UCC. It also asked for a decree for effective
damages
on an amount sufficient to deter the defendant
and other multi-national corporations involved in business
activities from committing wilful and malicious and wanton
disregard of the rights and safety of the citizens of India.
While the litigations were pending in the US Courts an offer
of 350 million dollars had been made for settlement of the
claim. When the dispute arising out of interim compensation
ordered by the District Court of Bhopal came before the High
Court, efforts for settlement were continued. When the High
Court reduced the quantum of interim compensation from
278
Rs. 350 crores to a sum of Rs. 250 crores, both UCC and
Union of India challenged the decision of the High Court by
filing special leave petitions. It is in these cases that
the matter was settled by two orders dated 14th and 15th of
February, 1989. On May 4, 1989, the Constitution Bench which
had recorded the settlement proceeded to set out brief
reasons on three aspects
"(a) How did this Court arrive at the sum of
470 million US dollars for an over-all settlement?
(b) Why did the Court consider this sum of 470
million 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
monolithics, economically entrenched multinational companies operating with inherently
dangerous
technologies in the
developing
countries of
the third world - questions
said to be of great
contemporary
relevance to the democracies of the thirdworld?"
The Court indicated that considerations of excellence
and niceties of legal principles were greatly overshadowed
by the pressing problems of very survival of a large number
of victims. The Court also took into account the laws
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review but has supported the stand of others who have asked
for review. The technical limitations of review have not
been invoked in this case by the Court and all aspects have
been permitted to be placed before the Court for its consideration.
It is interesting to note that there has been no final
adjudication in a mass tort action anywhere. The several
instances which counsel for the parties placed before us
were cases where compensation had been paid by consent or
where settlement was reached either directly or through a
circuitous process. Such an alternate procedure has been
adopted over the years on account of the fact that trial in
a case of this type would be protracted and may not yield
any social benefit. Assessment of compensation in cases of
this type has generally been by a rough and ready process.
In fact, every assessment of compensation to some extent is
by such process and the concept of just compensation is an
attempt to ap280
proximate compensation to the loss suffered. We have pointed
out in our order of May 4, 1989, that the estimate in the
very nature of things cannot share the accuracy of an adjudication. I would humbly add that even an adjudication
would only be an attempt at approximation.
This Court did take into account while accepting the
settlement the fact that though a substantial period of time
had elapsed the victim were without relief. For quite some
time the number of claim. In courts or before the authorities under the Act was not very appreciable. Perhaps an
inference was drawn from the figures that the subsequent
additions were to be viewed differently. I do not intend to
indicate that the claims filed later are frivolous particularly on account of the fact that there are contentions and
some prima facie materials to show that the iII-effects of
exposure to MIC could manifest late. The nature of injuries
suffered or the effect of exposure are not the same or
similar; therefore, from the mere number no final opinion
could be reached about the sufficiency of the quantum. The
Act provides for a Fund into which the decretal sum has to
be credited. The statute contemplates of a procedure for
quantification of individual entitlement of compensation and
as and when compensation becomes payable it is to be met out
of the Fund. The fact that the Union of India has taken over
the right to sue on behalf of all the victims indicates that
if there is a shortfall in the Fund perhaps it would be the
liability of Union of India to meet the same. Some of the
observations of the vires Bench support this view. The
genuine claimants thus have no legitimate grievance to make
as long as compensation statutorily quantified is available
to them because the source from which the compensation comes
into the Fund is not of significant relevance to the claimant.
When the settlement was reached a group of social activists, the Press and even others claiming to be trustees of
society came forward to question it. For some time what
appeared to be a tirade was carried on by the media against
the Court. Some people claiming to speak on behalf of the
social Think Tank in meetings disparaged the Court. Some of
the innocent victims were even brought into the Court premises to shout slogans at the apex institution. Some responsible citizens oblivious of their own role in the matter
carried on mud-slinging.
The main foundation of the challenge was twofold:
(i) The criminal cases could not have been
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law as it prevails
in England or for the matter of that in
any other foreign country. We no longer need the crutches
of a foreign legal order.
We are certainly prepared to
receive light from whatever
source it comes but we have to
build our own jurisprudence and we cannot countenance an
argument that merely because the law in England does not
recognise the rule of strict and
absolute liability in
cases of hazardous or inherently dangerous
activities or
the rule laid down in Rylands v. Fletcher as developed in
England
recognises
certain
limitations
and
excep
tions, we in India must hold back our hands and not venture
to evolve a new principle of liability since English courts
have not
done so. We have to develop our own law and if we
find that it
is 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 concommitant to an industrial economy, there is no reason why we
should hesitate to evolve
such principle of liability merely because it has not been so done in England. We are
of the view that an enterprise which is engaged in a hazardous or inherently dangerous industry
which poses a
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 on account of
hazardous or inherently dangerous nature of the activity
which it has undertaken. The enterprise must be held to be
under an
obligation to provide that the hazardous or
inherently
dangerous activity, the enterprise must be
absolutely liable to
compensate for such harm and it
should be no answer to the
enterprise to say that it had
taken all reasonable care and that
the harm occurred
without any negligence on its part. Since the
persons
harmed
on
account of the
hazardous
or
inherently
dangerous activity carried on by the enterprise would not be
in
283
a position to isolate the process of operation from the
hazardous preparation of substance or any other related
element that caused the harm the enterprise held strictly
liable for causing such harm as a part of the social cost of
carrying on the hazardous or inherently dangerous activity.
If the enterprise is permitted to carry on a hazardous or
inherently dangerous activity for its profit the law must
presume that such permission is conditional on the enterprise absorbing the cost of any accident arising on account
of such hazardous or inherently dangerous activity as an
appropriate item of its overheads. Such hazardous or inherently dangerous activity for private profit can be tolerated
only on condition that the enterprise engaged in such hazardous or inherently dangerous activity indemnifies all
those who suffer on account of the carrying on of such
hazardous or inherently dangerous activity regardless of
whether it is carried on carefully or not. This principle is
also sustainable on the ground that the enterprise alone has
the resource to discover and guard against hazards or dangers and to provide warning against potential hazards. We
would there fore hold that where an enterprise is engaged in
a hazardous or inherently dangerous activity and harm results to anyone on account of an accident in the operation
of such hazardous or inherently dangerous activity resulting, for example, in escape of toxic gas the enterprise is
strictly and absolutely liable to compensate all those who
are affected by the accident and such liability is not
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ury; it tends to give a high quality of justice only when, for one reason or another,
parties can surmount the substantial barriers
which it erects to most people and to many
types of claims."
We had then thought that the Bhopal dispute came within
the last category and now we endorse it.
285
When dealing with this case this Court has always taken
a pragmatic approach. The oft-quoted saying of the great
American Judge that life is not logic but experience has
been remembered. Judges of this Court are men and their
hearts also bleed when calamities like the Bhopal gas leak
incident occur. Under the constitutional discipline determination of disputes has been left to the hierarchical system
of Courts and this Court at its apex has the highest concern
to ensure that Rule of Law works effectively and the cause
of justice in no way suffers. To have a decree after struggling for a quarter of a century with the apprehension that
the decree may be ultimately found. not to be executable
would certainly not have been a situation which this Court
could countenance.
In the order of May 4, 1989, this Court had clearly
indicated that it is our obligation to uphold the rights of
the citizens and to bring to them a judicial fitment as
available in accordance with the laws. There have been
several instances where this Court has gone out of its way
to evolve principles and make directions which would meet
the demands of justice in a given situation. This, however,
is not an occasion when such an experiment could have been
undertaken to formulate the Mehta principle of strict liability at the eventual risk of ultimately losing the legal
battle.
Those who have clamoured for a judgment on merit were
perhaps not alive to this aspect of the matter. If they were
and yet so clamoured, they are not true representatives of
the cause of the victims, and if they are not, they were
certainly misleading the poor victims. It may be right that
some people challenging the settlement who have come before
the Court are the real victims. I assume that they are
innocent and unaware of the rigmarole of the legal process.
They have been led into a situation without appreciating
their own interest. This would not be the first instance
where people with nothing as stake have traded in the misery
of others.
This Court is entitled under the constitutional scheme
to certain freedom of operation. It would be wrong to assume
that there is an element of judicial arrogance in the act of
the Court when it proceeds to act in a pragmatic way to
protect the victims. It must be conceded that the citizens
are equally entitled to speak in support of their rights. I
am prepared to assume, nay, concede, that public activists
should also be permitted to espouse the cause of the poor
citizens but there must be a limit set to such activity and
nothing perhaps should be done which would affect the dignity of the Court and bring down the serviceability of the
institution to the people at large. Those who are acquainted
with jurisprudence and enjoy social privilege as men educated in law owe an obligation to the community of educating it
properly and allowing the judicial process to continue un286
soiled. Lord Simonds in Shaw v. Director of Public Prosecutions, (1981) 2 All E.R. 447 said:
"I entertain no doubt that there remains in
the courts of law a residual power to enforce
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Let us
context:
purpose of the
safety and order
the State."
in a different
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Corporate Policy and the establishment of the Bhopal Chemical Plant- with defective and inadequate safety standards
which, compared with designs of UCCs American plants,
manifested. an indifference and disregard for humansafetywas the result of a conscious and deliberate action of the
UCC. It was averred that UCC had, on considerations of
economic advantages, consciously settled and opted for
standards of safety for its plant in a developing country
much lower than what it did for its own American counterparts.The claim was partly based on Design liability on
the part of UCC. The liability was also said to arise out of
the use of ultra-hazardous chemical poisons said to engender
not merely strict liability on Rylands v. Fletcher principal
but an absolute liability on the principals of M.C. Mehtas
case.
The defences of the UCC, inter-alia, were that UCC was a
legal entity distinct in law from the UCIl that factually it
never exercised any direct and effective control over UCIL
and that its corporate policy itself recognised, and was
subject to, the over-riding effect of the municipal laws of
the country and therefore subject to the statutes in India
which prohibit any such control by a foreign company over
its Indian subsidiary, except the exercise of rights as
share-holder permitted by-law.
The UCC also resisted the choice of the American Forum
on the plea of Forum-Non-Conveniens. Union of India sought
to demonstrate that the suggested alternative forum before
the judiciary in India was not an adequate forum pointing
out the essential distinction between the American and
Indian systems of Tort Law both substantive and procedural
available under and a comparison of the rights, remedies and
procedure the competing alternative forums. The nature and
scope of a defendants plea of Forum Non-Conveniens and the
scope of an enquiry on such plea have received judicial
considerations before the Supreme Court of United States of
America in Gulf Oil Corp. v. Gilbert [330 U.S. 501], Koster
v. Lumbermens Mutual Casualty Co. 1330 U.S. 518] and Piper
Aircraft Co. v. Reyno [454 U.S. 235].
The comparison of rights, remedies and procedures available in the two proposed forums though not a "major-factor",
nevertheless, were relevant tests to examine the adequacy of
the suggested alternative forum. System of American Tort Law
has many features which make it a distinctive system. Judge
Keenan adopting the suggested approach in Pipers decision
that doctrine of forum non conveniens was desinged in part
to help courts in avoiding complex exercises in comparative
laws and that the decision should not hinge on an unfavourable change in law which was
291
lot a major factor in the analysis was persuaded to the view
that differences in the system did not establish inadequacy
of the alternative forum in India. Accordingly on 12th of
May, 1986, Judge Keenan allowed UCCs plea and held that the
Indian judiciary must have the "opportunity to stand all
before the world and to pass judgment on behalf of its own
people".
4. Thereafter the Union of India was constrained to
alter its choice of the forum and to pursue the remedy
against the UCC in the District Court at Bhopal. That is how
Original Suit No. 1113 of 1986 seeking a compensation of 3
Billion Dollars against the UCC and UCIL came to be field at
Bhopal.
Efforts were made by the District Court at Bhopal to
explore the possibilities of a settlement. But they were not
fruitful. Zahreeli Gas Kand Sangharsh Morcha one of the
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bring about a finality to the matters, it is common experience that day-in-and-day-out such matters are taken up and
decided in this court. It is true that mere practice, however long, will not legitimize issues of jurisdiction. But the
argument, pushed to its logical conclusions, would mean that
when an interlocutory appeal comes up before this Court by
special leave, even with the consent of the parties, the
main matter cannot be finally disposed of by this court as
such a step would imply an impermissible transfer of the
main matter. Such technicalities do not belong to the content and interpretation of constitutional powers.
To the extent power of withdrawal and transfer of cases
to the apex court is, in the opinion of the Court, necessary
for the purpose of effectuating the high purpose of Articles
136 and 142 (1), the power under Article 139A, must be held
not to exhaust the power of withdrawal and transfer.
305
Article 139A it is relevant to mention here, was introduced
as part of the scheme of the 42nd Constitutional Amendment.
That amendment proposed to invest the Supreme Court with
exclusive jurisdiction to determine the
constitutional
validity of central laws by inserting Articles 131 A, 139A
and 144A. But Articles 131A, and 144A were omitted by the
43rd Amendment Act 1977, leaving Article 139A in tact. That
article enables the litigants to approach the Apex Court for
transfer of proceedings if the conditions envisaged in that
Article are satisfied. Article 139A was not intended, nor
does it operate, to whittle down the existing wide powers
under Article 1.36 and 142 of the Constitution.
The purposed constitutional plenitude of the powers of
the Apex Court to ensure due and proper administration of
justice is intended to be co-extensive in each case with the
needs of justice of a given case and to meeting any exigency. Indeed, in Harbans Singh v. U.P. State [1982] 3 SCR 235
the Court said:
"Very wide powers have been conferred on this Court for
due and proper administration of justice. Apart from the
jurisdiction and powers conferred on this Court under Arts.
32 and 136 of the Constitution I am of the opinion that this
Court retains and must retain, an inherent power and jurisdiction for dealing with any extra-ordinary situation in the
larger interests of administration of justice and for preventing manifest injustice being done. This power must
necessarily bc sparingly used only in exceptional circumstances for furthering the ends of justice. Having regard to
the facts and circumstances of this case, I am of the opinion that this is a fit case where this Court should entertain the present petition of Harbans Singh and this Court
should interfere."
We find absolutely no merit in this hypertechnical
submission of the petitioners learned counsel. We reject
the argument as unsound.
A similar ground is urged in support of contention [B]
in relation to such withdrawal implicit in the quashing of
the criminal proceedings. On the merits of the contention
whether such quashing of the proceedings was, in the circumstances of the case, justified or not we have reached a
decision on Contentions IDI and [E]. But on the power of the
court to withdraw the proceedings, the contention must fail.
We. accordingly, reject both Contentions [At and IB].
306
Re: Contention (C)
10. Shri Shanti Bhushan contends that the settlement
recorded on the 14th and 15th of February, 1989, is void
under Order XXIII Rule 3B, Code of Civil Procedure, as the
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tion...."
The guiding principle in according permission for withdrawal of a prosecution were stated by this Court in M.N.
Sankarayanan Nair v.P.V. Balakrishnan & Ors. [1972] 2 SCC
599:
"...Nevertheless it is the duty of the Court
also to see in furtherance of justice that the
permission is not sought on grounds extraneous
to the interest of justice or that offences
which are offences against the State go unpunished merely because the Government as a
matter of general policy or expediency unconnected with its duty to prosecute offenders
under the law, directs the public prosecutor
to withdraw from the prosecution and the
Public Prosecutor merely does so at
317
the behest."
Learned counsel for the petitioners submitted that the
case involved the allegation of commission of serious offences in the investigation of which the society was vitally
interested and that considerations of public interest,
instead of supporting a withdrawal, indicate the very opposite.
The offences relate to and arise out of a terrible and
ghastly tragedy. Nearly 4,000 lives were lost and tens of
thousands of citizens have suffered injuries in various
degrees of severity. Indeed at one point of time UCC itself
recoginsed the possibility of the accident having been the
result of acts of sabotage. It is a matter of importance
that offences alleged in the context of a disaster of such
gravity and magnitude should not remain uninvestigated. The
shifting stand of the Union of India on the point should not
by itself lead to any miscarriage of justice.
We hold that no specific ground or grounds for withdrawal of the prosecutions having been set out at that stage the
quashing of the prosecutions requires to be set aside.
20. There is, however, one aspect on which we should
pronounce. Learned Attorney-General showed us some correspondence pertaining to a letter Rogatory in the criminal
investigation for discovery and inspection of the UCCs
plant in the United States for purposes of comparison of the
safety standards. The inspection was to be conducted during
the middle of February. 1989. The settlement, which took
place on The 14th of February, 1989, it is alleged, was
intended to circumvent that inspection we have gone through
the correspondence on the point. The documents relied upon
do not support such an allegation. That apart, we must
confess our inability to appreciate this suggestion coming
as it does from the Government of India which was a party to
the settlement.
However, on Contention (D) we hold that the quashing
and termination of the criminal proceedings brought about by
the orders dated 14th and 15th February, 1989 require to be,
and are, hereby reviewed and set aside,.
Re: Contention (E)
22. The written memorandum setting out the terms of the
settlement filed by the Union of India and the U.C.C. contains certain terms which are susceptible of being construed
as conferring a general future immunity from prosecution.
The order dated 15th February, 1989 provides in clause 3[a]
and 3[b]:
318
"....that any suits, claims or civil or criminal complaints which may be filed in future
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policy. Relying upon Sections 23 and 24 of the Indian Contract Act it was urged that if any part of a single consideration for one or more objects or any one or any part of
any one of several considerations for a single object is
unlawful, the agreement becomes "void".
27. At the outset, learned Attorney General sought to
clear any possible objections based on estoppel to the Union
of India, which was a consenting party to the settlement
raising this plea. Learned Attorney General urged that where
the plea is one of invalidity the conduct of parties becomes
irrelevant and that the plea of illegality is a good answer
to the objection of consent. The invalidity urged is one
based on publicpolicy. We think that having regard to the
nature of plea --- one of nullity
no preclusive effect
of the earlier consent should come in the way of the Union
of India from raising the plea. Illegalities, it is said,
are incurable. This position is fairly well established. In
re A Bankruptcy Notice (1924 2 Ch.D. 76 at 97) Atkin L.J.
said:
"It is well established that it is impossible in law for
a person to allege any kind of principle which precludes him
from alleging the invalidity of that which the statute has,
on grounds of general public policy, enacted shall be invalid."
In Maritime Electirc Co. Ltd. v. General Daines Ltd. AIR
1937 PC 114 at 116-117 a similar view finds expression:
.......... an estoppel is only a rule of evidence which
under certain special circumstances can be invoked by a
party to an action; it cannot therefore avail in such a case
to release the plaintiff from an obligation to obey such a
statute, nor can it enable the defendant to escape from
statutory obligation of such a kind on his part. It is
immaterial whether the obligation is onerous or otherwise to
the party suing. The duty of each party is to obey the law.
........
The court should first of all determine the
nature of the obligation imposed by the statute, and then
consider whether the admission of an estoppel would nullify
the statutory provision.
.....
there is not a single case in which an estoppel
has been allowed in such a case to defeat a statutory obligation of an unconditional character."
The case of this Court in point is of the State o/Kerala
&Anr. v. The Gwalior Rayon Silk Manufacturing (Wvg.) Co.
Ltd. etc. [1974] 1 SCR 671 at 688 where this court repelled
the contention that an agreement on the part of the Government not to acquire, for a period of 60 years the lands of
the company did not prevent the State from enacting or
giving
323
effect to a legislation for acquisition and that the surrender by the Government of its legislative powers which are
intended to be used for public good cannot avail the company
or operate against the Government as equitable estoppel. It
is unnecessary to expand the discussion and enlarge authorities.
We do not think that the Union of India should be precluded from urging the contention as to invalidity in-the
present case.
28. The main arguments on invalidity proceed on the
premise that the terms of the settlement and the orderS of
the court passed pursuant thereto contemplate, amount to
and permit a compounding of non-compoundable offences which
is opposed to public policy and, therefore, unlawful. The
orders of the court based on an agreement whose or part of
whose consideration is unlawful have, it is Urged, no higher
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however, necessary to bear in mind the distinction between the motive which may operate
in the mind of the complainant and the accused
and which may indirectly be responsible for
the agreement and the consideration for such
an agreement. It is only where the agreement
is supported by the prohibited consideration
that it fails within the mischief of the
principle, that agreements which intend to
stifle criminal prosecutions are invalid."
[Emphasis added]
37. On a consideration of the matter, we hold that the
doctrine of stifling of prosecution is not attracted in the
present case. In reaching this conclusion we do not put out
of consideration that ii is inconceivable that Union of
India would, under the threat of a prosecution, coerce UCC
to pay 470 million US dollars or any part thereof as consideration for stifling of the prosecution. In the context of
the Union of India theplea lacks as much in reality as in a
sense of proportion.
38.
Accordingly on Contention (F) we hold that the
settlement is not hit by Section 23 or 24 of the Indian
Contract Act and that no part of the consideration for
payment of 470 million US dollars was unlawful.
Re: Contention (G)
39.
This concerns the ground that a
"FairnessHearing", as understood in the American procedure is mandatory before a mass- tort action is settled and the settlement in the present case is bad as no such procedure had
preceded it. It is also urged that the quantum settled for
is hopelessly inadequate as the settlement has not envisaged
and provided for many heads of compensation such as the
future medical surveillance costs of a large section of the
exposed population which is put at risk; and that Ihc toxic
tort actions where the latency-period for the manifestation
of the effects of the exposure is unpredictable it is necessary to have a "re-opener" clause as in the very nature of
toxic injuries the latency period for the manifestation of
effects is unpredictable and any structured settlement
should contemplate and provide for the possible baneful
contingencies of the future. It is pointed out for the
petitioners that the order recording the settlement and the
order dated 4th May, 1989 indicate that no provision was
made for such imminent contingencies for the future which
even in332
dude the effect of the toxic gas on pregnant mothers resulting in congenital abnormalities of the children. These
aspects, it is urged, would have been appropriately discussed before the Court, had the victims and victimgroups
had a "Fairness-Hearing". It is urged that there has been no
application of the Courts mind to matters particularly
relevant to toxic injuries. The contention is two fold.
First is that the settlement did not envisage the possibilities of delayed manifestation or aggravation of toxic
morbidity, in the exposed population. This aspect, it is
urged, is required to be taken care of in two ways: One by
making adequate financial provision for medical surveillance
costs for the exposed but still latent victims and secondly,
by providing in the case of symptomatic victims a "re-opener
clause" for meeting contingencies of aggravation of damages
in
the case of the presently symptomatic victims. The
second contention is as to the infirmity of the settlement
by an omission to follow the Fairness-Hearing procedures.
40.
On the first aspect, Sri Nariman, however,
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In L.
said:
Lord
Atkin
"
...........
The duty of the Court when
awarding restitution under sec. 144 of the
Code is imperative. It shall place the applicant in the position in which he would have
been if the order had not made: and for this
purpose the Court is armed with powers [the
may is empowering, not discretionary] as to
mesne profits, interest and so forth. As long
ago as 1871 the Judicial Committee in 3 P.C.
465 (1) made it clear that interest was part
of the normal relief given in restitution: and
this decision seems right to have grounded the
practice in India in such cases ........ "
[P. 13]
In Jagendra Nath Singh v. Hira Sahu and
others. AIR 1948 All. 252 F.B. Motham J.
observed:
"Every Court has a paramount duty to ensure
that it does no injury to any litigant and the
provisions of Sec. 144 lay down a procedure
where effect can be given to that general
provision of the law. The Court should be slow
so to construe this section as to impose a
restriction upon its obligation to act right
and fairly according to the circumstances
towards all parties involved."
[p.253]
52. We are satisfied in this case that the UCC transported the funds to India and deposited the foreign currency
in the Reserve Bank of India on the faith of the Courts
order. If the settlement is set aside they shall be entitled
to have their funds remitted to them back in the United
States together with such interest as has accrued thereon.
So far as the point raised by the learned Attorney-General
as to the corporate changes of the UCC is concerned, we
think, a direction to the UCC to prove and establish compliance with the District Courts order dated 30the November,
1986,
345
should be sufficient safeguard and should meet the ends of
justice.
53
Accordingly, in the event of the settlement being
set aside the UCC shall be entitled to have 420 million US
Dollars brought in by it remitted to it by the Union of
India at the United States along with such interest as has
accrued on it in the account.
But this right to have the restitution shall be strictly
subject to the condition that the UCC shall restore its
undertaking
dated
27.11.1986 which was
recorded
on
30.11.1986 by District Court at Bhopal and on the strength
of which the court vacated the order of injunction earlier
granted against the UCC. Pursuant to the order recording the
Settlement, the said order dated 30.11.1986 of the District
Court was set-aside by this Court. If the settlement goes,
the order dated 30.11.1986 of the District Court will automatically stand restored and the UCC would be required to
comply with that order to keep and maintain unencumbered
assets of the value of US 3 billion dollars during the
pendency of the suit. The right of the UCC to obtain the
refund of and repatriate the funds shall be subject to the
performance and effectuation of its obligations under the
said order of 30.11.1986 of the District Court at Bhopal.
Till then the funds shall remain within the jurisdiction of
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hearing.
These are all accepted principles. Their wisdom, verity
and universality in the discipline of law are well established. Omission to comply with the requirements of the rule
of Audi Alteram Pattern, as a general rule, vitiates a
decision. Where there is violation of natural justice no
resultant or independent prejudice need be shown, as the
denial of natural justice is, in itself, sufficient prejudice and it is no answer to say that even with observance of
natural justice the same conclusion would have been reached.
The citizen "is entitled to be under the Rule of law and not
the Rule of Discretion" and "to remit the maintenance of
constitutional right to judicial discretion is to shift the
foundation of freedom from the rock to the sand".
But the effects and consequences of non-compliance may
alter with situational variations and
particularities,
illustrating a "flexible use of discretionary remedies to
meet novel legal situations". "One motive" says Prof. Wade
"for holding administrative acts to be voidable where according to principle they are void may be a desire to extend
the discretionary powers of the Court". As observed by Lord
Reid in Wiseman v. Borneman [1971 AC 297] natural justice
should not degenerate into a set of hard and fast rules.
There should be a circumstantial flexibility.
In Sahu case this Court held that there was no compliance with the principles of natural justice but also held
that the result of the non-compliance should not be a mechanical invalidation. The Court suggested curatives. The
Court was not only sitting in judicial review of legislation; but was a court of construction also, for, it is upon
proper construction of the provisions, questions of constitutionality come to be decided. The Court was considering
the scope and content of the obligations to afford a hearing
implicit in Section 4 of the Act. It cannot be said to have
gone beyond the pale of the enquiry when it considered the
further question as to the different ways in which that
obligation could be complied with or satisfied. This is, in
substance, what the Court has done and that is the law of
the case. It cannot be said that these observations were
made by the way and had no binding force.
350
Sri Garg submitted that when the Union of India did not,
even primafacie, probabilise that the quantification reflected in the settlement was arrived on the basis of rational criteria relevant to the matter, the determination
fails as the statutory authority had acted ultra-vires its
powers and trusts under the statutory scheme. Sri Garg said
that it would be a perversion of the process to call upon
the victims to demonstrate how the settlement is inadequate.
There was, according to Sri Garg, no material to shift the
risk of non-persuasion. Sri Garg urged that unless the
elements of reasonableness and adequacy- even to the extent
a settlement goes -are not established and the quantification shown to be justified on some tenable basis the settlement. would incur the criticism of being the result of an
arbitrary action of Government.
Shri Shanti Bhushan, however, strongly commended the
following observations of Megarry J in Leary v. National
Union of Vehicle Builders [1971] Ch.34 which were referred
to with approval by the court in Institute of Chartered
Accountants v. L.K. Ratna [1986] 4 SCC 537 as to the effect
of non-observance of natural justice:
"If one accepts the contention that a defect
of natural justice in the trial body can be
cured by the presence of natural justice in
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last mentioned expectation. Legal and procedural technicalities should yield to the paramount considerations of justice
and humanity. It is of utmost importance that in an endeavour of such great magnitude where the court is trusted with
the moral responsibility of ensuring justice to these tens
of thousand innocent victims, the issues of human suffering
do not become obscure in procedural thickets. We find it
difficult to accept Shri Narimans stand on the scope of the
review. We think that in a situation of this nature and
magnitude, the Review-proceeding should not be strict,
orthodox and conventional but one whose scope would accommodate the great needs of justice. That apart, quite obviously, the individual petitioners and the petitioner-organisations which have sought review cannot, be held to represent
and exhaust the interest of all the victims.
Those represented by the petitioner-organisations--even
if their claims of membership are accepted on face value-constitute only a small percentage of the total number of
persons medically evaluated. The rest of the victims constitute the great silent majority.
When an order affects a person not a party to the proceedings, the remedy of an affected person and the powers of
the Court to grant it are well-settled. For instance, in
Shivdeo Singh & Ors. v. State of Punjab & Ors. AIR 1963 SC
1909 on a writ petition filed under Article 226 of the
Constitution by A for cancellation of the order of allotment
passed by the Director of Rehabilitation in favour of B, the
High Court made an order cancelling the allotment though B
was not a party. Later, B filed a writ petition under Article 226 for impleading him as a party and for re-hearing the
whole matter. The High Court granted it. Before this Court,
the objection was this:
Learned counsel contends that Art. 226 of the
Constitution does not confer any power on the
High Court to review its own order and, therefore, the second order of Khosla, J, was
without jurisdiction."
This Court rejected the contention observing that:
"It is sufficient to say that there is nothing
in Art. 226 of the Constitution to preclude a
High Court from exercising the power of review
which inheres in every court of plenary jurisdiction to prevent miscarriage of justice or
to correct grave and
354
palpable errors committed by it. Here the
previous order of Khosla, J., affected the
interests of persons who are not made parties
to the proceedings before him. It was at their
instance and for giving them a hearing that
Khosla, J., entertained the second petition.
In doing so, he merely did what the principles
of natural justice required him to do. It is
said that the respondents before us had no
right to apply for review because they were
not parties to the previous proceedings. As we
have already pointed out, it is precisely
because they were not made parties to the
previous proceedings, though their interests
were sought to be affected by the decision of
the High Court, that the second application
was entertained by Khosla, J."
60. The nature of the present review proceedings is
indeed suigeneris. Its scope is pre-set by the terms of the
order dated 4th May 1989 as well as what are further neces-
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"These are two of the main sides in the controversy concerning the kind and amount of
scientific
evidence necessary to
support
legally a verdict for the plaintiff. Black
seems to urge that courts should only accept
evidence that is scientifically valid, and
adhere to the standards of evidence implicit
in the discipline, while the Ferebee court
urges that plaintiffs in presenting scientific
evidence
and expert scientific
testimony
should be held to legal standards of evidence.
Powerful forces are arrayed on both sides of
this issue. On the side of requiring scientific testimony only to measure up to legal
standards of evidence, the social
forces
include plaintiffs or potential plaintiffs,
plaintiffs attorneys, public interest groups,
consumer advocacy groups, all individuals who
are concerned to make it somewhat easier to
recover damages under personal injury law for
alleged injuries suffered as a consequence of
activities of others. On the other side of the
same issue are defendants, potential defendants (typically corporations, manufacturing
firms) and, interestingly, the
scientific
community." [Page 118]
In Sterling v. Velsicol Chemical Corp. (855 F 2d 1188
(1988)) the US Court of Appeals tended to the view that
generalised proof of damages is not sufficient to prove
individual damages and that damages in mass tort personal
injury cases must be proved individually by each individual
plaintiff. The Court held:
"We cannot emphasise this point
strongly
enough because generalised proof will not
suffice to prove individual damages. The main
problem on review stems from a failure to
differentiate between the general and the
particular. This is an understandably easy
trap to fall into in mass tort litigation.
Although many common issues of fact and law
will be capable of resolution on a group
basis, individual particularised damages still
must be proved on an individual basis."
68.
While Shri Nariman contends that admissibility of
scientific and statistical evidence is confined to Fairness
Hearings alone and not in adjudication where personal injury
by each individual plaintiff must be proved, the learned
Attorney-General, however, urges that such evidence and
estimates of damages are permissible in toxic-tort actions
and says that the fundamental principle is and should be
that countless injured persons must not suffer because of
the difficulty of proving damages with certainty or because
of the delay involved in pursuing each individual claim. He
363
referred to the following passage in Florance B. Bigelow v.
RKO Radio Pictures Inc., (327 US 251, 264 (1946):
"the most elementary conceptions of justice
and public policy require that the wrong doer
shall bear the risk of the uncertainty which
his own wrong has created."
Learned Attorney General also urged that in tort actions
of this kind the true rule is the one stated in Story Parchment Company v. Paterson Parchment Paper Co. (282 US 555,
568):
"The rule which precludes the recovery of
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categorisation.
72.
After a careful thought, it appears to us that while
it may not
be wise or proper to deprive the victims of the
benefit of the settlement, it
is, however, necessary to
ensure that in the-perhaps unlikely--event of
the settlement-fund being found inadequate to meet the compensation
determined in respect of all the present claimants, those
persons who may
have their claims determined after the
fund is exhausted are not left to fend
themselves. But,
such a contingency may not arise having regard to the size
366
of the settlement-fund. If it should arise, the reasonable
way to protect the interests of the victims is to hold that
the Union of India, as a welfare State and in the circumstances in which the settlement was made, should not be
found wanting in making good the deficiency, if any. We hold
and declare accordingly.
73.
It is relevant here that the Union of India while,
quite fairly, acknowledging that there was in fact such a
settlement, however, sought to assail its validity on certain legal issues. But the factum of the settlement was not
disputed. Indeed, Union of India did not initiate any substantive proceedings of its own to assail the agreement or
the consensual element constituting the substratum of the
order of the Court. The legal contentions as to the validity
of the settlement were permitted to be raised in as much as
that an order made on consent would be at no higher footing
and could be assailed on the grounds on which an agreement
could be. But, as stated earlier, the factum of the consensual nature of the transaction and its existence as a fact
was not disputed. Those legal contentions as to the validity
have now failed. The result is that the agreement subsists.
For all these reasons we leave the settlement and the
orders dated 14/15th February, 1989---except to the extent
set
aside
or
modified
pursuant
to
the
other
findings---undisturbed.
74.
We may here refer to and set at rest one other
contention which had loomed in the hearings. The petitioners
had urged that the principles of the liability and the
standards of assessment of damages in a toxic mass tort
arising out of a hazardous enterprise should be not only on
the basis of absolute liability-not merely on Rylands v.
Fletcher principle of strict liability--not admitting of any
exceptions but also that the size of the award be proportional to the economic superiority of the offender, containing a deterrent and punitive element. Sustenance was sought
from M.C. Mehta v. Union of India, AIR 1987 SC 1086. This
argument in relation to a proceeding assailing a settlement
is to be understood as imputing an infirmity to the settlement process as not being informed by the correct principle
of assessment of damages.
Respondents, however, raised
several contentions as to the soundness of the Mehta principle and its applicability. It was also urged that Mehta
principle, even to the extent it goes, does not solve the
issues of liability of the UCC as distinct from that of UCIL
as Mehta case only spoke of the liability of the offending
enterprise and did not deal with principles guiding the
determination of a holding-company for the torts of its
subsidiaries.
It is not necessary to go into this controversy. The settlement was
367
arrived at and is left undisturbed on an over-all view. The
settlement cannot be assailed as violative of Mehta principle which might have arisen for consideration in a strict
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cate.
375
The points which arise for determination on the pleadings, documents and submissions made at the Bar in the
course of the hearing of these petitions have been formulated at points (A) to (J) in paragraph 8 of my learned Brothers judgment and the conclusions reached by him have been
summarised and set out in the penultimate paragraph of his
judgment at (i) to (ix), with their sub-paragraphs. I am in
agreement with the conclusions at (i) to (vii) which answer
contentions (A) to (H). So far as conclusion (viii) pertaining contention (I) is concerned. I agree that the settlement
is not vitiated for not affording the victims or victimgroups an opportunity or being heard but I find it difficult
to persuade myself to the view that if the settlement. Fund
is found to be insufficient the shortfail must be made good
by the Union of India. For reasons which I will presently
state I am unable to comprehend how the Union of India can
be directed to suffer the burden of the shortfall, if any,
without finding the Union of India liable in damages on any
count.
As
regards
conclusion
(ix)
referable
to
contention(J). I am in agreement with sub-paragraphs (a),
(b) and (d) thereof but so far as sub-paragraphs (c) and (e)
are concerned I agree with the directions therein as I
understand them to be only recommendatory in nature and not
linked with the settlement.
In Charan Lal Sahus case [1990]1 SCC 613 this Court
upheld the constitutional validity of the Bhopal Gas Leak
Disaster (Processing of Claims) Act,. 1985 (herein after
called the Act). In that case although the question referred to the Bench was in regard to the constitutional
validity of the said enactment, submissions were made on the
question whether the impugned settlement was liable to be
set aside on the ground that it was in flagrant violation of
the principles of natural justice, in that, the victims as
well as the victim-groups had no opportunity to examine the
terms of the settlement and express their views thereon.
Mukharji, CJ. who spoke for the majority (Ranganathan, J.
and myself expressing separately) observed that on the
materials available "the victims have not been able to show
at all any other point or material which would go to impeach
the validity of the settlement". It was felt that though
the settlement without notice to the victims was not quite
proper, justice had in fact been done to the victims but did
not appear to have been done. Taking the view that in entering upon the settlement regard should have been had to the
views of the victims and for that purpose notices should
have been issued before arriving at the settlement, the
majority held that "post- decisional notice might be sufficient but in the facts and circumstances of this case, no
useful purpose would be served by giving a post-decisional
hearing having regard to the
376
circumstances mentioned in the order of this Court dated May
4, 1989, and having regard to the fact that there are no
further additional data and facts available with the victims
which can profitably and meaningfully be 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 have been agitated in the proceedings and will have further opportunity in the pending review
proceedings". It would, therefore, appear that the majority
had applied its mind fully to the terms of the settlement in
the light of the data as well as the facts and circumstances
placed before it and was satisfied that the settlement was a
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