PETITIONER:
CHARAN LAL SAHU ETC. ETC.
Vs.
RESPONDENT:
UNION OF INDIA AND ORS.
DATE OF JUDGMENT22/12/1989
BENCH:
MUKHARJI, SABYASACHI (CJ)
BENCH:
MUKHARJI, SABYASACHI (CJ)
SINGH, K.N. (J)
RANGNATHAN, S.
AHMADI, A.M. (J)
SAIKIA, K.N. (J)
CITATION:
1990 AIR 1480 1989 SCR Supl. (2) 597
1990 SCC (1) 613 JT 1989 (4) 582
CITATOR INFO :
E 1991 SC 101 (30,278)
E 1992 SC 248 (31,33,35,36,44,70,71,79,80,81
ACT:
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’–Applicability of Exercise of sovereign
power–Limitations. Articles 21, 48A and 51(g)–Human
rights–State’s obligation to protect–Need for enacting law
protecting the constitutional rights of citizens–Evolving
standards highlighted by clauses 9 and 13 of U.N. Code of
Conduct on transnational corporations.
Bhopal Gas Leak Disaster (Processing of claims) Act,
1985: Sections 3, 4, 5, 9 and 11–Constitutional validity
of. Central Govt. representing victims in suit against
multinational company–Govt. holding share in company–Govt.
alleged to be joint tort feasor–Whether competent to repre-
sent victims–Whether principles of natural justice violat-
ed.
Settlement of claims before court–Pre-decisional and
post decisional notice–Need for—-Effect of non-issue of
notice.
Power conferred on Central Govt. to represent victims in
suit-Divesting individual rights to legal remedy–Procedure
followed-Whether consistent with the Code of Civil Procedure
1908.
Interim Compensation–Payment of. Precautionary meas-
ures-Need for–Guidelines for the future–Immediate relief
to victims-Setting up of a Tribunal–Creation of Industrial
Disaster Fund-Mooted.
Code of Civil Procedure, 1908: Order I Rule 8 and Order
23 Rule 3B–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
598
standard and fair–Whether violative of principles of natu-
ral justice.
Administrative Law–Principles of Natural Justice.’ Act
of Parliament within legislative competence–applicability
of the principles.
Pre-decisional notice not given–Effect of. Central
Government representing victims in a suit against a multina-
tional company–Govt. having shares in company–Alleged
tort-feasor–Whether competent to represent victims–Doc-
trine that no man shall be judge of his own cause–Doctrine
of necessity—-Doctrine of ‘defacto validity’–Doctrine of
bona fide representation–Applicability of.
Statutory construction: Constructive intuition ap-
proach–statute to be read purposefully and
meaningfully–Regard to be had to the spirit of the 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.
HEADNOTE:
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 share
holding was with UCC and 22% of the shares were held by Life
Insurance Corporation of India and Unit Trust of India. UCIL
owned a chemical plant in Bhopal for the manufacture of
pesticides using Methyl Isocyanate (MIC) a highly toxic gas.
On the night between 2nd and 3rd December, 1984, 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 shifted to Indian Courts, as it could not proceed in
the U.S. Courts, on the ground of forum non conveniens.
599
Meanwhile, the Bhopal Gas Leak Disaster (Processing of
claims) 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 suit for damages in the District
Court of Bhopal on 5.9.86. However, there were negotiations
for a settlement; hut ultimately the settlement talks had
failed.
On 17.12.1987, the District Judge 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 relief of Rs.250 crores.
Aggrieved, the UCC as also the Union of India filed
petitions for special 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 of
the 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 grounds 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 with-
out necessary safeguards, has no locus standi to compromise
on behalf of the victims; that the 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 Govern-
ment 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,
600
HELD: Sabyasachi Mukharji, CJ and K.N. Saikia, J.–Per C J:
1.1 The Act is constitutionally valid. It proceeds on
the hypothesis 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 proceed-
ings in respect thereof continue, the Central Government
must pay interim compensation or maintenance for the vic-
tims. 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-decision-
al 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 prop-
er, 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-deci-
sional 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 in-
fraction of that should be sought to be removed in accord-
ance 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 operation as reasonably construed. It has
to be borne in mind that if so
601
judged it passed the test of reasonableness, then the possi-
bility 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 Govern-
ment 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 situa-
tion 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. [640E-H]
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 contin-
gency lawyers to whom the victims were exposed, the claim-
ants 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 effec-
tive, 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 differen-
tiation. 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 differentia-
tion and different treatment. In treating the victims of the
gas leak disaster differently and providing them a proce-
dure, 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 Chet-
ty, [1962] 3 SCR 786; P.J. Irani v. State of Madras, [1962]
1 SCR 169; D.K. Trivedi v. State of Gujarat, [1986] Suppl.
SCC 20, relied on.
Ballast Corporation v. O.D. Commission, [1960] AC 490,
referred to-
602
3.1 The present case is one where the Govt. of India
only represented the victims as a party’ and did not adjudi-
cate between the victims and the UCC. It is the court which
would adjudicate the rights of the victims. The representa-
tion of the victims by the Government of India cannot be
held to be bad, and there is and there was no scope of
violation of any 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 pro-
tector 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 Constitu-
tion 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 Constitution, read with the Directive Prin-
ciples contained in Articles 38, 39 and 39A enjoins the
State to take up these responsibilities. It is the protec-
tive 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; 639A]
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 juris-
diction or on principles analogous thereto. After having
statutorily armed itself in recognition of such parens
patriae 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 vic-
tims 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 vic-
tims. 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]
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 jurispru-
dentially, the doctrine of parens patriae is not limited to
representation of some of the victims outside the territo-
ries 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 in 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 because of its constitutional
commitment is obliged to take upon itself the claim of the
victims and to protect them in their hour of need. [658B-F]
3.5 There is no bar on the State to assume responsibili-
ties analogous to parens patriae to discharge the State’s
obligations under the Constitution. What the Central Govern-
ment 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 what the law of necessity is to the indi-
vidual. It is comprehended in the maxim salus populi suprema
lex–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
state, this can only be measured by the legislative will of
the people, subject to the fundamental rights and constitu-
tional limitations. This is an emanation of sovereignty and
it is the obligation of the State to assume such responsi-
bilities and protect its citizens. [658G-H; 659A-C]
3.6 In the instant case, the victims cannot be consid-
ered 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 litigation would have to contend. In such a
situation of
604
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 of parens patriae doctrine to the victims. But
quite apart from that, it has to be borne in mind that in
this case the State is acting on 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 substi-
tutes 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 sovereignty 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 proceed-
ings 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 of invalidity. [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 Airport Authority of India, [1979] 3
SCR 1014 followed.
605
Ram Saroop v. S.P. Sahi, [1969] 2 Suppl. SCR 583 relied on.
Budhkaran Chankhani v. Thakur Prasad Shah, AIR 1942 Col
311; Banku Behari Mondal 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] 1 SCR 497; Ram Gopal Sarubai v.
Smt. Sarubhai & Ors., [1981] 4 SCC 505; India Mica & Mican-
ite 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; State of Georgia v. Tennessee
Copper Co., 206 US 230, 51 L.Ed. 1038 27 s. et. 618, re-
ferred to.
B.K. Mukherjea on Hindu Religious and Charitable Trusts,
Tagore Law Lectures, 5th Edn. p. 404; Words & Phrases,
permanent Edn.
vol. 33 p. 99; Black’s Law Dictionary, 5th Edn. 1979, p.
1003; Weaver’s Constitutional Law, p. 490; American Consti-
tutional 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 of giving a hearing to the parties
for taking over these rights by the State arises. For legis-
lation by the Parliament, no principle 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 dominoes 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. [699D]
606
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 exclusive 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 signifi-
cant. The exclusively cannot be wittled down or watered
down. The said expression must be given its full 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 en-
forcement 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 Act should be read together
alongwith other provisions of the Act and in particular
sections 9 and 11 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 vic-
tims of the disaster are fully protected and the claims of
compensation or damages for loss of life or personal in-
juries or in respect of other matters arising out of or
connected with the disaster are processed speedily, effec-
tively, equitably and to the best advantage of the claim-
ants. Section 3 of the Act is subject to other provisions of
the Act which includes Sections 4 and 11. 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 of India is only
capable to represent the victims as a party. The adjudica-
tion of the claims would be done by the Court. The doctrine
of ‘Bona fide Representation’ as also ‘defacto validity’ are
not applicable to the present case. [690F]
Basheshar v. Income Tax Commissioner, AIR 1959 SC 149; In re
Special Courts Bill, [1979] 2 SCR 476; A.R. Antulay v. R.S.
Nayak & Anr., [1988] 2 SCC 602; Ram Krishna Dalmia v. Ten-
dulkar, [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; M/s Mackinnon Mackenzie &
Co. Ltd. v. Audrey D’ Costa and Anr., [1987] 2 SCC 469;
Sheela Barse v. Secretary, Children Aid Society & Ors.,
[1987] 1 SCR 870; Gokaraju Rangaraju v. State of A.P.,
[1981] 3 SCR 474; Pushpadevi M. Jatia v. M.L. Wadhwan.
[1987] 3 SCC 367;
607
M/s 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. Mohammed
Sulaiman v. N.C. Mohammed lsmail & Ors., [1966] 1 SCR 937;
Malkariun Bin Shidrammappa Pasare v. Narhari Bin Shivappa &
Anr., 271 A 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 question. 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 considera-
tion. 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 settle-
ment 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 vic-
tims as contemplated by s. 4 of the Act, the Act cannot be
condemned as unreasonable. [684C-E]
State of Madras 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 opportunity
of making their representation before the court comes to any
conclusion in respect of any settlement. How that opportuni-
ty should be given, would depend upon the particular situa-
tion. Fair procedure should be followed in a representative
mass tort action. [696E-F]
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-
608
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 impor-
tant 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 invit-
ing views of the victims by tile help of mass media. Howev-
er, 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 oppor-
tunity 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 opportu-
nity when review application against the settlement would be
heard. 1700G-H; 701A]
7.1 The Act does not expressly exclude the application
of the Code of Civil Procedure. Section 11 of the Act pro-
vides the overriding effect indicating that anything incon-
sistent 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 1 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. 1696H; 697A-B]
7.2 In the instant case, there is no question of aban-
donment as such of the suit or part of the suit, the provi-
sions of order XXIII Rule 1 would also not strictly apply.
However, Order XXIH Rule 3B of the Code is an important and
significant pointer and the principles behind the said
provision would apply to this case. The said rule 3B pro-
vides that no agreement 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 granting 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 Explanation to the said rule vide clause (d) as any
other suit in which the decree passed may, by virtue of the
provisions this Code or of any other law for the time being
in force, bind any person who is not named as party to the
suit. Indubitably the victims would be bound by the Settle-
ment though not named in the suit. 11his 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 315 of Order
XXIII of the Code. If the principles of this rule are the
principles of natural justice then we are of the opinion
that
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 of notice and other difficulties
of making “informed decision making process cumbersome”.
[697C-G]
7.3 In as much 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 princi-
ples of natural justice cannot be judged by any strait
jacket formula. [662G-H]
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 Ghose & Ors. v. Gujaraddi Sheik &
Ors., AIR 1951 Cal. 456; Ram ‘Sarup v. Nanak Ram, AIR 1952
All. 275; referred to.
8. The Act has to be understood that it is in respect of
the person responsible, being the person in-charge-of the
UCIL and the parent company UCC. This interpretation of the
Act is further strengthened by the fact that a ‘claimant”
has been defined in clause (c) of Section 2 as a person who
is entitled to make a claim and the expression “person” in
Section 2(e) includes the Government. Therefore, the Act
proceeded on the assumption that the Government could be a
claimant being a person as such. [690A-B]
9.1 The fact that the provisions of the principles of
natural justice have to be complied with, is undisputed.
This is well-settled by the various decisions of the Court.
The Indian Constitution mandates that clearly, otherwise the
Act and the actions would be violative of Article 14 of the
Constitution and would also be destructive of Article
19(1)(g) and negate Article 21 of the Constitution by deny-
ing a procedure which is just, fair and reasonable. [693D-E]
9.2 Rules of natural justice are not embodied rules.
Hence, it was not possible to make an exhaustive catalogue
of such rules. Audi alteram partem is a highly effective
rule devised by the Courts to ensure that a statutory au-
thority arrives at a just decision and it is calculated to
act as a healthy check on the abuse or misuse of power. The
rules of natural justice can operate only in areas not
covered by any law validly made. The general principle as
distinguished from an absolute rule of uniform application
is that where a statute does not in terms exclude the rule
of prior hearing but contemplates a post-decisional hearing
610
amounting to a full review of the original order on merits
then such a statute would be construed as excluding the audi
alteram partem rule at the pre-decisional stage. If the
statute conferring the power is silent with regard to the
giving of a pre-decisional hearing to the person affected
the administrative decision after post-decisional hearing
was good. [694A-D]
9.3 In the instant case, no question of violation of the
principle of natural justice arises, and there is no scope
for the application of the principle that no man should be a
Judge in his own cause. The Central Government was not
judging any claim, but was fighting and advancing the claims
of the victims. The adjudication would be done by the
courts, and therefore, there is no scope of the violation of
any principle of natural justice. [688G-H; 689A-B]
Menaka Gandhi v. Union of India, [1978] 2 SCR 621; Olga
Tellis v. Bombay Municipal Corporation, [1985] Supp. 2 SCR
51; Union of India v. Tulsi Ram Patel, [1985] Supp. 2 SCR
131; Swadeshi Cotton Mills v. Union of India, [1981] 2 SCR
533, relied on.
Ganga Bai v. Vijay Kumar, [1974] 3 SCR 882; S.L. Kapoor
v. Jagmohan, [1981] 1 SCR 745; Sangram v. Election Commis-
sion, [1955] 2 SCR 1, referred to.
10. Though not expressly stated, the Act proceeds on
‘the major inarticulate premise’. It is on this promise or
premise that the State would be justified in taking upon
itself the right and obligation to proceed and prosecute the
claim and deny access to the courts of law to the victims on
their own. If it is only so read, it can only be held to be
constitutionally valid. It has to be borne in mind that the
language of the Act does not militate against this construc-
tion but on the Contrary. Sections 9, 10 and the scheme of
the Act suggest that the Act contains such an obligation. If
it is so read, then only meat can be put into the skeleton
of the Act making it meaningful and purposeful. The Act
must, therefore, be so read. This approach to the interpre-
tation of the Act can legitimately be called the ‘construc-
tive intuition’ 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 conces-
sion 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
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; 688A]
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 neces-
sary 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 against UCC in view of the
judgment of this Court in M.C. Mehta’s case. [668H; 669A-B]
M.C. Mehta v. Union of India, [1987] 1 SCR 819, referred to.
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.
[669F]
Kasturilal Ralia Ram Jain v. State of UP, [1965] 1 SCR
375; State of Rajasthan v. Vidyawati, [1962] 2 Supp. SCR
989; J. Mohapatra & Co. & Anr. v. State of Orissa & Anr.,
[1984] 4 SCC 103, referred to.
Halsbury’s Laws of England, Vol. 1, 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 court
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 un-
changed. The only difference produced by the provisions of
the Act would be that instead of the suit being filed by the
victims themselves the suit would be filed by the Central
Government on their behalf. [655F]
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
612
person injured and punishment as deterrence. The Act, as
such does not abridge or curtail damage or liability whatev-
er 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; 681A-F]
Roshanlal Kuthiala & Ors. v. R.B. Mohan Singh, Oberoi
(1975) 2 SCR 491; Nandram Heeralal v. Union of India & Anr.,
AIR 1978 M.P. 209; Ryland v. Flatcher, (1868) Vol 3 LR E& I
Appeal Cases 330; Rookes v. Barnard, [1964] AC 1129, re-
ferred to.
Salmond’s Law of Torts, 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. [636F]
15. 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.
[686B-C]
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 scientif-
ically 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 stand-
ards that the Government may follow before granting permis-
sion or licences for the running of industries dealing with
materials which are of dangerous potentialities. The Govern-
ment, should, therefore, examine or have the problem exam-
ined by an expert committee as to what should be the condi-
tions on
613
which future licences and/or permission for running indus-
tries 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 negli-
gent 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 separate-
ly 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 in-
flicted, the consequences thereof and the ability and capac-
ity 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 Govern-
ment. 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 per-
sons must be recognised, and competent tribunal is one of
the surest methods of effective remedy. If, therefore, as a
result of this 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, J. (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 surround-
ing areas. Though working of such factories and plants is
regulated by a
614
number of laws of our country, there is no special legisla-
tion 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 shack-
les of conservative principles. [707D-G]
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 departure from the conservative principles with
regard to the liability of an enterprise carrying on hazard-
ous or inherently dangerous activities. [709C]
1.4 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] 1 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
51(g), it is the duty of the State to take effective steps
to protect the constitutional rights guaranteed. These
rights must be integrated and illumined by evolving interna-
tional dimensions and standards, having regard to our sover-
eignty as highlighted by Clauses 9 and 13 of U.N. Code of
Conduct on Transnational Corporations. Such a law may pro-
vide for conditions for granting licence to Transnational
Corporations, prescribing norms and standards for running
industries on Indian soil ensuring the above said constitu-
tional 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
615
provide for constitution of tribunals regulated by special
procedure for determining compensation to victims of indus-
trial 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. [710H;
711A-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 be
permanent in nature. so that money is readily available for
providing immediate effective relief to the victims. [711 G
-H; 712A]
Ranganathan and Ahmadi, J J—-Per Ranganathan, J. (Concur-
ring).’
1. The provisions of the Act, read by themselves, guar-
antee 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 com-
mand. 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-B]
2. Even if the provisions of s. 3 had been scrupulously
observed and the names of all parties, other than the Cen-
tral Government, had been got deleted from the array of
parties in the suits and proceedings pending in this coun-
try, 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 expertise 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
616
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 deter-
mination or capability as such a litigant. But in a case of
the present 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 litiga-
tion in this country not to speak of the necessity to run to
a foreign country. The financial position of UCIL was negli-
gible 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 Govern-
ment to shoulder the responsibility by substituting itself
in place of the victims for all purposes connected with the
claims. [716C-H; 717A]
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 circum-
stances which he would like to urge in respect of any matter
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 provided 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 participation al-
lowed to
617
the victims is somewhat differently enunciated in the legis-
lation, 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 climants 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. [718D-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 defined 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 settlement. In such cases,
court acts as guardian of such persons to scrutinise the
settlement and satisfy itself that it is in the best inter-
est of all concerned. If it is later discovered that there
has been any fraud or collusion, it may be open to the
junior members of the
618
family or the wards to call the Karta or guardian to account
but, barring such a contingency, the settlement would be
effective and binding. In the same way, the Union as “parens
patriae’ would have been at liberty to enter into such
settlement as it considered best on its own and seek the
Court’s approval therefore. [723G-H; 724A-D]
6. It is common knowledge that any authority given to
conduct a litigation cannot be effective unless it is accom-
panied by an authority to withdraw or settle the same if the
circumstances call for it. The vagaries of a litigation of
this magnitude and intricacy could not be fully anticipated.
There were possibilities that the litigation may have to be
fought out to the bitter finish. There were possibilities
that the UCC might be willing to adequately compensate the
victims either on their own or at the insistence of the
Government concerned. There was also the possibility, which
had already been in evidence before Judge Keenan, that the
proceedings might ultimately have to end in negotiated
settlement. In most of the mass disaster cases reported,
proceedings finally end in a compromise, if only to avoid an
indefinite prolongation of the agonies caused by such liti-
gation. The legislation, therefore, cannot be considered to
be unreasonable merely because in addition to the right to
institute a suit or other proceedings it also empowers the
Government to withdraw the proceedings or enter into a
compromise. [719B-E]
M.C. Mehta v. Union of India, [1987] 1 SCR 819, referred to.
7. The Act has provided an adequate opportunity to the
victims to speak out and if they or the counsel engaged by
some of them in the trial court had kept in touch with the
proceedings in this court, they could have most certainly
made themselves heard. If a feeling has gained ground that
their voice has not been fully heard, the fault was not with
the statute but was rather due to the development leading to
the finalisation of the settlement when the appeal against
the interim order was being heard in this Court. [726B-D]
8. In the field of torts, under the common law of Eng-
land, no action could be laid by the dependants or heirs of
a person whose death was brought about by the tortious act
of another on the maxim actio personalis maritur cum persona
although a person injured by a similar act could claim
damages for the wrong done to him. In England this situation
was remedied by the passing of Fatal Accidents Act, 1846,
popularly known as Lord Compbell’s Act. Thereafter the
Indian Legislature enacted the Fatal Accidents Act, 1855.
This Act is fashioned on the
619
lines of the English Act of 1840. Even though the English
Act has undergone a substantial change, our law has remained
static and seems a trifle archaic. The magnitude of the gas
leak disaster in which hundreds lost their lives and thou-
sands were maimed, not to speak of the damage to livestock,
flora and fauna, business and property, is an eye opener.
The nation must learn a lesson from this traumatic experi-
ence and evolve safeguards atleast for the future. The time
is ripe to take a fresh look at the outdated century old
legislation which is out of tune with modern concepts.
[728F-H; 729A-B]
9. The Central Government will be well advised to insist
on certain safeguards before permitting a transnational
company to do business in the country. It is necessary to
insist on a right to be informed of the nature of the proc-
esses involved so as to take prompt action in the event of
an accident. The victims in this case have been considerably
handicapped on account of the fact that the immediate tort-
feasor was the subsidiary of a multi-national with its
Indian assets totally inadequate to satisfy the claims
arising out of the disaster. It is, therefore, necessary to
evolve, either by international consensus or by unilateral
legislation, steps to overcome these handicaps and to ensure
that foreign corporations seeking to establish an industry
here, agree to submit to the jurisdiction of the Courts in
India in respect of actions for tortious acts in this coun-
try; that the liability of such a corporation is not limited
to such of its assets (or the assets of its affiliates) as
may be found in this country, but that the victims are able
to reach out to the assets of such concerns anywhere in the
world; and that any decree obtained in Indian Courts in
compliance with due process of law is capable of being
executed against the foreign corporation, its affiliates and
their assets without further procedural hurdles. in those
other countries. [729G-H; 730A-E]
10. It is hoped that calamities like the one which this
country has suffered will serve as catalyst to expedite the
acceptance of an international code on such matters in the
near future. [730F-G]
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition No. 268 of 1989
etc. etc.
(Under Article 32 of the Constitution of India).
K. Parasaran, Attorney General, R.K. Garg, Ms. Indira
Jaising, L.N. Sinha, Dr. V. Gauri Shankar, Vepa P. Sarathi,
Shanti Bhushan, Rakesh Luthra, C.L. Sahu, Indeevar
Goodwill, N.S. Malik, N.S. Pundir, R.C, Kaushik, D.K. Garg,
Rajeev Dhawan, Miss Kamini
620
Jaiswal, Anip Sachthey, R.C. Pathak, H.D. Pathak, Harish
Uppal, S.K. Gambhir, Gopal Subramanium, D.S. Shastri, Arun
Sharma, Miss A. Subhashini, C.V.S. Rao, Satish K. Agnihotri,
Ashok Kumar Singh, R.K. Jain, Kailash Vasdev and Prashant
Bhushan for the appearing parties.
The Judgments of the Court were delivered by
SABYASACHI MUKHARJI, CJ. 1. Is the Bhopal Gas Leak
Disaster (Processing of Claims) Act, 1985 (hereinafter
referred to as ‘the Act’) is constitutionally valid? That is
the question.
2. The Act was passed as a sequel to a grim tragedy. On
the night of 2nd December, 1984 occurred the most tragic
industrial disaster in recorded human history in the city of
Bhopal in the State of Madhya Pradesh in India. On that
night there was massive escape of lethal gas from the MIC
storage tank at Bhopal Plant of the Union Carbide (I) Ltd.
(hereinafter referred to as ‘UCIL’) resulting in large scale
death and untold disaster. A chemical plant owned and oper-
ated by UCIL was situated in the northern sector of the city
of Bhopal. There were numerous hutments adjacent to it on
its southern side, which were occupied by impoverished
squatters. UCIL manufactured the pesticides, Sevin and
Tamik, at the Bhopal plant, at the request of, it is stated
by Judge John F. Keenan of the United States District Court
in his judgment, and indubitably with the approval of the
Govt. of India. UCIL was incorporated in 1984 under the
appropriate Indian law: 50.99% of its shareholdings were
owned by the Union Carbide Corporation (UCC), a New York
Corporation, L.I.C. and the Unit Trust of India own 22% of
the shares of U.C.I.L., a subsidiary of U.C.C.
3. Methyl Isocyanate (MIC), a highly toxic gas, is an
ingredient in the production of both Sevin and Temik. On the
night of the tragedy MIC leaked from the plant in substan-
tial quantities. the exact reasons for and circumstances of
such leakage have not yet been ascertained or clearly estab-
lished. The results of the disaster were horrendous. Though
no one is yet certain as to how many actually died as the
immediate and direct result of the leakage, estimates at-
tribute it to about 3,000. Some suffered injuries the ef-
fects of which are described as Carcinogenic and ontogenic
by Ms. Indira Jaisingh, learned counsel; some suffered
injuries serious and permanent and some mild and temporary.
Livestock was killed, damaged and infected. Businesses were
interrupted. Environment was polluted and the ecology af-
fected, flora and fauna disturbed.
621
4. On 7th December, 1984, Chairman of UCC Mr. Warren
Anderson came to Bhopal and was arrested. He was later
released on bail. Between December 1984 and January 1985
suits were filed by several American lawyers in the courts
in America on behalf of several victims. It has been stated
that within a week after the disaster, many American law-
yers, described by some as ‘ambulance chasers’, whose fees
were stated to be based on a percentage of the contingency
of obtaining damages or not, flew over to Bhopal and ob-
tained Powers of Attorney to bring actions against UCC and
UCIL. Some suits were also filed before the District Court
of Bhopal by individual claimants against UCC (the American
Company) and the UCIL.
5. On or about 6th February, 1985, all the suits in
various U.S. Distt. Courts were consolidated by the Judicial
Panel on Multi-District Litigation and assigned to U.S.
Distt. Court, Southern Distt. of New York. Judge Keenan was
at all material times the Presiding Judge there.
6. On 29th March, 1985, the Act in question was passed.
The Act was passed to secure that the claims arising out of
or connected with the Bhopal gas leak disaster were dealt
with speedily, effectively and equitably. On 8th April, 1985
by virtue of the Act the Union of India filed a complaint
before the U.S. Distt. Court, Southern Distt. of New York.
On 16th April, 1985 at the first pre-trial conference in the
consolidated action transferred and assigned to the U.S.
Distt. Court, Southern Distt., New York, Judge Keenan gave
the following directions:
(i) that a three member Executive Committee be
formed to frame and develop issues in the case
and prepare expeditiously for trial or settle-
ment negotiations. The Committee was to com-
prise of one lawyer selected by the firm
retained by the Union of India and two other
lawyers chosen by lawyers retained by the
individual plaintiffs.
(ii) that as a matter of fundamental human
decency, temporary relief was necessary for
the-victims and should be furnished in a
systematic and coordinated fashion without
unnecessary delay regardless of the posture of
the litigation then pending.
7. On 24th September, 1985 in exercise of powers con-
ferred by section 9 of the Act, the Govt. of India framed
the Bhopal Gas Leak Disaster (Registration and Processing of
Claims) Scheme, 1985 (hereinafter called the Scheme).
622
8. On 12th May, 1986 an order was passed by Judge Keenan
allowing the application of UCC on forum non convenience as
indicated hereinafter. On 21st May, 1986 there was a motion
for fairness hearing on behalf of the private plaintiffs. On
26th June, 1986 individual plaintiffs filed appeal before
the US Court of Appeal for the second circuit challenging
the order of Judge Keenan. By an order dated 28th May, 1986
Judge Keenan declined the motion for a fairness hearing. The
request for fairness hearing was rejected at the instance of
Union of India in view of the meagerness of the amount of
proposed settlement. On 10th July, 1986 UCC filed an appeal
before the US Court of Appeal for the Second Circuit. It
challenged Union of India being entitled to American mode of
discovery, but did not challenge the other two conditions
imposed by Judge Keenan, it is stated. On 28th July, 1986
the Union of India filed cross-appeal before the US Court of
Appeal praying that none of the conditions imposed by Judge
Keenan should be disturbed. In this connection it would be
pertinent to set out the conditions incorporated in the
order of Judge Keenan, dated 12th May, 1986 whereby he had
dismissed the case before him on the ground of forum non
convenience, as mentioned before. The conditions were fol-
lowing:
1. That UCC shall consent to the jurisdiction
of the courts of India and shall continue to
waive defenses based on the statute of limita-
tion,
2. That UCC shall agree to satisfy any judg-
ment rendered by an Indian court against it
and if applicable, upheld on appeal, provided
the judgment and-affirmance “comport with
minimal requirements of due process”; and
3. That UCC shah be subject to discovery under
the Federal Rules of Civil Procedure of the US
after appropriate demand by the plaintiffs.
9. On 5th September, 1986 the Union of India filed a
suit for damages in the Distt. Court of Bhopal, being regu-
lar suit No. H 13/86. It is this suit, inter alia, and the
orders passed therein which were settled by the orders of
this Court dated 14th & 15th February, 1989, which will be
referred to later. On 17th November, 1986 upon the applica-
tion of the Union of India, the Distt. Court, Bhopal, grant-
ed a temporary injunction restraining the UCC from selling
assets, paying dividends or buying back debts. On 27th
November, 1986 the UCC gave an undertaking to preserve and
maintain unencumbered assets to the extent of 3 billion US
dollars.
623
10. On 30th November, 1986 the Distt. Court, Bhopal
lifted the injunction against the Carbide selling assets on
the strength of the written undertaking by UCC to maintain
unencumbered assets of 3 billion US dollars. On 16th Decem-
ber, 1986 UCC filed a written statement contending that they
were not liable on the ground that they had nothing to do
with the Indian Company; and that they were a different
legal entity; and that they never exercised any control and
that they were not liable in the suit. Thereafter, on 14th
January, 1987 the Court of Appeal for the Second Circuit
affirmed the decision of Judge Keenan but deleted the condi-
tion regarding the discovery under the American procedure
granted in favour of the Union of India. It also suo motu
set aside the condition that on the judgment of the Indian
court complying with due process and the decree issued
should be satisfied by UCC. 1t ruled that such a condition
cannot be imposed as the situation was covered by the provi-
sions of the Recognition of Foreign Country Money Judgments
Act.
11. On 2nd April, 1987, the court made a written propos-
al to all parties for considering reconciliatory interim
relief to the gas victims. In September, 1987, UCC and the
Govt. of India sought time from the Court of Distt. Judge,
Bhopal, to explore avenues for settlement. It has been
asserted by the learned Attorney General that the possibili-
ty of settlement was there long before the full and final
settlement was effected. He sought to draw our attention to
the assertion that the persons concerned were aware that
efforts were being made from time to time for settlement.
However, in November’87 both the Indian Govt. and the Union
Carbide announced that settlement talks had failed and Judge
Deo extended the time.
12. The Distt. Judge of Bhopal on 17th December, 1987
ordered interim relief amounting to Rs.350 crores. Being
aggrieved thereby the UCC filed a Civil Revision which was
registered as Civil Revision Petition No. 26/88 and the same
was heard. On or about 4th February, 1988, the Chief Judi-
cial Magistrate of Bhopal ordered notice for warrant on
Union Carbide, Hong Kong for the criminal case filed by CBI
against Union Carbide. The charge sheet there was under
sections 304, 324, 326, 429 of the Indian Penal Code read
with section 35 IPC and the charge was against S/Shri Warren
Anderson, Keshub Mahindra. Vijay Gokhale, J. Mukund, Dr.
R.B. Roy Chowdhay. S.P. Chowdhary, K.V. Shetty, S.1. Qureshi
and Union Carbide of U.S.A., Union Carbide of Hong Kong and
Union Carbide having Calcutta address. It charged the Union
Carbide by saying that MIC gas was stored and it was further
stated that MIC had to be stored and handled
624
in stainless steel which was not done. The charge sheet,
inter alia, stated that a Scientific Team headed by Dr.
Varadarajan had concluded that the factors which had led to
the toxic gas leakage causing its heavy toll existed in the
unique properties of very high reactivity, volatility and
inhalation toxicity of MIC. It was further stated in the
charge sheet that the needless storage of large quantities
of the material in very large size containers for inordi-
nately long periods as well as insufficient caution in
design, in choice of materials of construction and in provi-
sion of measuring and alarm instruments, together with the
inadequate controls on systems of storage and on quality of
stored materials as well as lack of necessary facilities for
quick effective disposal of material exhibiting instability,
led to the accident. It also charged that MIC was stored in
a negligent manner and the local administration was not
informed, inter alia, of the dangerous effect of the expo-
sure of MIC or the gases produced by its reaction and the
medical steps to be taken immediately. It was further stated
that apart from the design defects the UCC did not take any
adequate remedial action to prevent back flow of solution
from VGS into RVVH and PVH lines. There were various other
acts of criminal negligence alleged. The High Court passed
an order staying the operation of the order dated 17.12.87
directing the defendant-applicant to deposit Rs.3,500 mil-
lions within two months from the date of the said order. On
4th April, 1988 the judgment and order were passed by the
High Court modifying the order of the Distt. Judge, and
granting interim relief of Rs.250 crores. The High Court
held that under the substantive law of torts, the Court has
jurisdiction to grant interim relief under Section 9 of the
CPC. On 30th June, 1988 Judge Deo passed an order restrain-
ing the Union Carbide from settling with any individual gas
leak plaintiffs. On 6th September, 1988 special leave was
granted by this Court in the petition filed by UCC against
the grant of interim relief and Union of India was also
granted special leave in the petition challenging the reduc-
tion of quantum of compensation from Rs.350 crores to Rs.250
crores. Thereafter, these matters were heard in November-
December’88 by the bench presided over by the learned Chief
Justice Of India and hearing, continued also in January Feb-
ruary’89 and ultimately on 14-15th February, 1989 the order
culminating in the settlement was passed.
13. In judging the constitutional validity of the Act,
the subsequent events, namely, how the Act has worked itself
out, have to be looked into. It is, therefore, necessary to
refer to the two orders of this Court. The proof of the cake
is in its eating, it is said, and it is perhaps not possible
to ignore the terms of the settlement reached on 14th and
625
15th February, 1989 in considering the effect of the lan-
guage used in the Act. Is that valid’ or proper–or has the
Act been worked in any improper way? These questions do
arise.
14. On 14th February, 1989 an order was passed in C.A.
Nos. 3187-88/88 with S.L.P. (C) No. 13080/88. The parties
thereto were UCC and the Union of India as well as Jana
Swasthya Kendra, Bhopal, Zehraeli Gas Kand Sangharsh Morcha,
Bhopal. MP. That order recited that having considered all
the facts and the circumstances of the case placed before
the Court, the material relating to the proceedings in the
Courts in the United States of America, the offers and
counter-offers made between the parties at different stages
during the various proceedings, as well as the complex
issues of law and fact raised and the submissions made
thereon, and in particular the enormity of human suffering
occasioned by the Bhopal Gas disaster and the pressing
urgency to provide immediate and substantial relief to
victims of the disaster, the ‘Court found that the case was
preeminently fit for an overall settlement between the
parties covering all litigations, claims, rights and liabil-
ities relating to and arising out of the disaster and it was
found just, equitable and reasonable to pass, inter alia,
the following orders:
.lm
“(1) The Union Carbide Corporation shall pay a sum of U.S.
Dollars 470 million (Four hundred and seventy millions) to
the Union of India in full settlement of all claims, fights
and liabilities related to and arising out of Bhopal Gas
disaster.
(2) The aforesaid sum shall be paid by the Union Carbide
Corporation to the Union of India on or before 31st March,
1989.
(3) To enable the effectuation of the settlement, all civil
proceedings related to and arising out of the Bhopal Gas
disaster shall hereby stand transferred to this Court and
shall stand concluded in terms of the settlement, and all
criminal proceedings related to and arising out of the
disaster shall stand quashed wherever these may be pending
15. A written memorandum was filed thereafter and the
Court on 15th February, 1989 passed an order after giving
due consideration thereto. The terms of settlement were as
follows:
626
“1. The parties acknowledge that the order
dated February 14, 1989 disposes of in its
entirety all proceedings in Suit No. 1113 of
1986. This settlement shall finally dispose of
all past, present and future claims, causes of
action and civil and criminal proceedings (of
any nature whatsoever wherever pending) by all
Indian citizens and all public and private
entities with respect to all past, present or
future deaths, personal injuries, health
effects, compensation, losses, damages and
civil and criminal complaints of any nature
whatsoever against UCC, Union Carbide India
Limited, Union Carbide Eastern, and all of
their subsidiaries and affiliates as well as
each of their present and former directors,
officers, employees, agents, representatives,
attorneys, advocates and solicitors arising
out of, relating to or connected with the
Bhopal gas leak disaster, including past,
present and future claims, causes of action
and proceedings against each other. All such
claims and causes of action whether within or
outside India of Indian citizens, public or
private entities are hereby extinguished,
including without limitation each of the
claims filed or to be filed under the Bhopal
Gas Leak Disaster (Registration and Processing
of Claims) Scheme 1985, and all such civil
proceedings in India are hereby transferred to
this Court and are dismissed without preju-
dice, and all such criminal proceedings in-
cluding contempt proceedings stand quashed and
accused deemed to be acquitted.
2. Upon full payment in accordance with the
Court’s directions the undertaking given by
UCC pursuant to the order dated November 30,
1986 in the District Court, Bhopal stands
discharged, and all orders passed in Suit No.
1113 of 1986 and or in any Revision therefrom,
also stand discharged.”
16. It appears from the statement of objects & reasons
of the Act that the Parliament recognized that the gas leak
disaster involving the release, on 2nd and 3rd December,
1984 of highly noxious and abnormally dangerous gas from a
plant of UCIL, a subsidiary of UCC, was of an unprecedented
nature, which resulted in loss of life and damage to proper-
ty on an extensive scale, as mentioned before. It was stated
that the victims who had managed to survive were still
suffering from the adverse effects and the further complica-
tions which might arise in their cases, of course, could not
be fully visualised. It was asserted by
627
Ms. Indira Jaising that in case of some of the victims the
injuries were carcinogenic and ontogenic and these might
lead to further genetic complications and damages. The
Central Govt. and the Govt. of Madhya Pradesh and various
agencies had to incur expenditure on a large scale for
containing the disaster and mitigating or otherwise coping
with the effects thereto. Accordingly, the Bhopal Gas Leak
Disaster (Processing of Claims) Ordinance, 1985 was promul-
gated, which provided for the appointment of a Commissioner
for the welfare of the victims of the disaster and for the
formulation of the Scheme to provide for various matters
necessary for processing of the claims and for the utilisa-
tion by way of disbursal or otherwise of amounts received in
satisfaction of the claims.
17. Thereafter, the Act was passed which received the
assent of the President on 29th March, 1985. Section 2(b) of
the Act defines ‘claim’. It says that “claims” means–(i) a
claim, arising out of, or connected with, the disaster, for
compensation or damages for any loss of life or personal
injury which has been, or is likely to be suffered; (ii) a
claim, arising out of, or connected with, the disaster, for
any damage to property which has been, or is likely to be,
sustained; (iii) a claim for expenses incurred or required
to be incurred for containing the disaster or mitigating or
otherwise coping with the effects of the disaster; (iv) any
other claim (including any claim by way of loss of business
or employment) arising out of, or connected with, the disas-
ter. A “claimant” is defined as a person entitled to make a
claim. It has been provided in the Explanation to Section 2
that for the purpose of clauses (b) and (c), where the death
of a person has taken place as a result of the disaster, the
claim for compensation or damages for the death of such
person shall be for the benefit of the spouse, children
(including a child in the womb) and other heirs of the
deceased and they shall be deemed to be the claimants in
respect thereof.
18. Section 3 is headed “Power of Central Govt. to
represent claimants”. It provides as follows:
“3(1) Subject to the other provisions of this
Act, the Central Government shall, and shall
have the exclusive right to, represent, and
act in place of (whether within or outside
India) every person who has made, or is enti-
tled to make, a claim for all purposes con-
nected with such claim in the same manner and
to the same effect as such persons.
(2) In particular and without prejudice to the
generality of
628
the provisions of sub-section (1), the pur-
poses referred to therein include–
(a) Institution of any suit or other proceed-
ing in or before any court or other authority
(whether within or outside India) or withdraw-
al of any such suit or other proceeding, and
(b) entering into a compromise.
(3) The provisions of sub-section (1) shall
apply also in relation to claims in respect of
which suits or other proceedings have been
instituted in or before any court or other
authority (whether within or outside India)
before the commencement of this Act:
Provided that in the case of any such suit or
other proceeding with respect to any claim
pending immediately before the commencement of
this Act in or before any court or other
authority outside India, the Central Govt.
shall represent, and act in place of, or along
with, such claimant, if such court or other
authority so permits.”
19. Section 4 of the Act is headed as “Claimant’s right
to be represented by a legal practitioner”. It provides as
follows:
“Notwithstanding anything contained in section
3, in representing, and acting in place of,
any person in relation to any claim, the
Central Government shall have due regard to
any matters which such person may require to
be urged with respect to his claim and shall,
if such person so desires, permit at the
expense of such person, a legal practitioner
of his choice to be associated in the conduct
of any suit or other proceeding relating to
his claim.”
20. Section 5 deals with the powers of the Central Govt.
and enjoins that for the purpose of discharging its func-
tions under this Act, the Central Govt. shall have the
powers of a civil court while trying a suit under the Code
of Civil Procedure, 1908. Section 6 provides for the ap-
pointment of a Commissioner and other officers and employ-
ees. Section 7 deals with powers to delegate. Section 8
deals with limitation, while section 9 deals with the power
to frame Scheme. The Central Govt. was enjoined to frame a
scheme which was to take into account, inter alia, the
processing of the claims for securing their enforcement,
creation of a fund for meeting expenses in connection
629
with the administration of the Scheme and of the provisions
of this Act and the amounts which the Central Govt. might,
after due appropriation made by the Parliament by law in
that behalf, credit to the fund referred to in clauses above
and any other amounts which might be credited to such fund.
Such Scheme was enjoined, as soon as after it had been
framed, to be laid before each House of Parliament. Section
10 deals with removal of doubts. Section 11 deals with the
overriding effect and provides that the provisions of the
Act and of any Scheme framed thereunder shall have effect
notwithstanding anything inconsistent therewith contained in
any enactment other than the Act or any instrument having
effect by virtue of any enactment other than the Act.
21. A Scheme has been framed and was published on 24th
September, 1985. Clause 3 of the said Scheme provides that
the Deputy Commissioners appointed under Section 6 of the
Act shall be the authorities for registration of Claims
(including the receipt, scrutiny and proper categorisation
of such claims under paragraph 5 of the Scheme) arising
within the areas of their respective jurisdiction and they
shall be assisted by such other officers as may be appointed
by the Central Govt. under Section 6 of the Act for scrutiny
and verification of the claims and other related matters.
The Scheme also provides for the manner of filing claims. It
enjoins that the Dy. Commissioner shall provide the required
forms for filing the applications. It also provides for
categorisation and registration of claims. Sub-clause (2) of
Clause 5 enjoins that the claims received for registration
shall be placed under different heads.
22. Sub-clause (3) of clause 5 enjoins that on the
consideration of claims made under paragraph 4 of the
Scheme, if the Dy. Commissioner is of the opinion that the
claims fall in any category different from the category
mentioned by the claimant, he may decide the appropriate
category after giving an opportunity to the claimant to be
heard and also after taking into consideration any facts
made available to him in this behalf. Sub-clause (6) of
Clause 5 enjoins that if the claimant is not satisfied with
the order of the Dy. Commissioner, he may prefer an appeal
against such order to the Commissioner, who shall decide the
same.
23. Clause 9 of the Scheme provides for processing of
Claims Account Fund, which the Central Govt. may, after due
appropriation made by Parliament, credit to the said Fund.
It provides that there shall also be a Claims and Relief
Fund, which will include the amounts
630
received in satisfaction of the claims and any other amounts
made available to the Commissioner as donation or for relief
purposes. Subclause (3) of clause 10 provides that the
amount in the said Fund shall be applied by the Commissioner
for, disbursal of amounts in settlement of claims, or as
relief, or apportionment of part of the Fund for disbursal
of amounts in settlement of claims arising in future or for
disbursal of amounts to the Govt. of Madhya Pradesh for the
social and economic rehabilitation of the persons affected
by the Bhopal gas leak disaster.
24. Clause 11 of the Scheme deals with the disbursal,
apportionment of certain amounts, and sub-clause (2) thereof
enjoins that the Central Govt. may determine the total
amount of compensation to be apportioned for each category
of claims and the quantum of compensation payable, in gener-
al, in relation to each type of injury or loss. Sub-clause
(5) thereto provides that in case of a dispute as to disbur-
sal of the amounts received in satisfaction of claims, an
appeal shall lie against the order of the Dy. Commissioner
to the Additional Commissioner, who may decide the matter
and make such disbursal as he may, for reasons to be record-
ed in writing, think fit. The other clauses are not relevant
for our present purposes.
25. Counsel for different parties in all these matters
have canvassed their submissions before us for the gas
victims. Mr. R.K. Garg, Ms. Indira Jaising, and Mr. Kailash
Vasudev have made various submissions challenging the valid-
ity of the Act on various grounds. They all have submitted
that the Act should be read in the way they suggested and as
a whole. Mr. Shanti Bhushan, appearing for interveners on
behalf of Bhopal Gas Peedit Mahila Udyog Sangathan and
following him Mr. Prashant Bhushan have urged that the Act
should be read in the manner canvassed by them and if the
same is not so read then the same would be violative of the
fundamental rights of the victims, and as such unconstitu-
tional. The learned Attorney General assisted by Mr. Gopal
Subramanium has on the other hand urged that the Act is
valid and constitutional and that the settlement arrived at
on 14th/15th February is proper and valid.
26. In order to appreciate the background Ms. Indira
Jaising placed before us the proceedings of the Lok Sabha
wherein Mr. Veerendra Patil, the Hon’ble Minister, stated on
March 27, 1985 that the tragedy that had occurred in Bhopal
on 2nd and 3rd December, 1984 was unique and unprecedented
in character and magnitude not only for our country but for
the entire world. It was stated that one of
631
the options available was to settle the case in Indian
courts. The second one was to file the cases in American
courts. Mr. Patil reiterated that the Govt. wanted to pro-
ceed against the parent company and also to appoint a Com-
mission of Inquiry.
27. Mr. Garg in support of the proposition that the Act
was unconstitutional, submitted that the Act must be exam-
ined on the touchstone of the fundamental rights on the
basis of the test laid down by this court in state of Madras
v. V.G, Row, [1952] SCR 597, There at page 607 of the report
this Court has reiterated that in considering the reasona-
bleness of the law imposing restrictions on the fundamental
rights, both the substantive and the procedural aspects of
the impugned restrictive law should be examined from the
point of view of reasonableness. And the test of reasonable-
ness, wherever prescribed, should be applied to each indi-
vidual Statute impugned, and no abstract standard or general
pattern of reasonableness can be laid down as applicable to
all cases. The nature of the right alleged to have been
infringed, the underlying purpose of the restrictions im-
posed, the extent and urgency of the evil sought to be
remedied thereby, the disproportion of the imposition, the
prevailing conditions at the time, should all enter into the
judicial verdict. (The emphasis supplied). Chief Justice
Patanjali Sastri reiterated that in evaluating such elusive
factors and forming their own conception of what is reasona-
ble, in the circumstances of a given case, it is inevitable
that the social philosophy and the scale of values of the
judges participating in the decision would play an important
role.
28. Hence, whether by sections, 3, 4 & 11 the rights of
the victims and the citizens to fight for their own causes
and to assert their own grievances have been taken away
validly and properly, must be judged in the light of the
prevailing conditions at the time, the nature of the right
of the citizen, the purpose of the restrictions on their
rights to sue for enforcement in the courts of law or for
punishment for offences against his person or property, the
urgency and extent of the evils sought to be remedied by the
Act, and the proportion of the impairment of the rights of
the citizen with reference to the intended remedy pre-
scribed. According to Mr. Garg, the present position called
for a comprehensive appreciation of the national and inter-
national background in which precious rights to life and
liberty were enshrined as fundamental rights and remedy for
them was also guaranteed under Article 32 of the Constitu-
tion. He sought to urge that multinational corporations have
assumed powers or potencies to override the political and
economic independence of the sovereign nations which have
632
been used to take away in the last four decades, much wealth
out of the Third World. Now these are plundered much more
than what was done to the erstwhile colonies by imperialist
nations in the last three centuries of foreign rule. The
role of courts in cases of conflict between rights of citi-
zens and the vast economic powers claimed by multinational
corporations to deny moral and legal liabilities for their
corporate criminal activities should not be lost sight of.
He, in this background, urged that these considerations
assume immense importance to shape human fights jurispru-
dence under the Constitution, and for the Third World to
regulate and control the power and economic interests of
multinational corporations and the power of exploitation and
domination by developed nations without submitting to due
observance of the laws of the developing countries. It
therefore appears that the production of, or carrying on
trade in dangerous chemicals by multinational industries on
the soil of Third World countries call for strictest en-
forcement of constitutional guarantees for enjoying human
fights in free India, urged Mr. Garg. In this connection,
our attention was drawn to the Charter of Universal Declara-
tion of Human Rights. Article 1 of the Universal Declaration
of Human Rights, 1948 reiterates that all human-beings are
born free and equal in dignity and rights. Article 3 states
that everyone has right to life, liberty and security of
person. Article 6 of the Declaration states that everyone
has the right to recognition everywhere as a person before
the law. Article 7 states that all are equal before the law
and are entitled without any discrimination to equal protec-
tion of the law. All are entitled to equal protection
against any discrimination in violation of the Declaration
of Human Rights and against any incitement to such discrimi-
nation. Article 8 states that everyone has the right to an
effective remedy by competent National Tribunal for acts
violating fundamental rights guaranteed to him by the Con-
stitution or by the law. It is, therefore, necessary to bear
in mind that Indian citizens have a fight to live which
cannot be taken away by the Union of India or the Govt. of a
State, except by a procedure which is just, fair and reason-
able. The right to life includes the fight to protection of
limb against mutilation and physical injuries, and does not
mean merely the fight to breathe but also includes the fight
to livelihood. It was urged that this right is available in
all its dimension till the last breath against all injuries
to head, heart and mind or the lungs affecting the citizen
or his next generation or of genetic disorders. The enforce-
ment of the right to life or limb calls for adequate and
appropriate reliefs enforceable in courts of law and of
equity with sufficient power to offer adequate deterrence in
all cases of corporate criminal liability under strict
liability, absolute liability, punitive liability and crimi-
nal prosecution and
633
punishment to the delinquents. The damages awarded in civil
jurisdiction must be commensurate to meet well-defined
demands of evolved human rights jurisprudence in modern
world. It was, therefore, submitted that punishment in
criminal jurisdiction for serious offences is independent of
the claims enforced in civil jurisdiction and no immunity
against it can be granted as part of settlement in any civil
suit. If any Act authorises or permits doing of the same,
the same will be unwarranted by law and as such bad. The
Constitution of India does not permit the same.
29. Our attention was drawn to Article 21 of the Consti-
tution and the principles of international law. Right to
equality is guaranteed to every person under Art. 14 in all
matters like the laws of procedure for enforcement of any
legal or constitutional right in every jurisdiction, sub-
stantive law defining the rights expressly or by necessary
implications, denial of any of these rights to any class of
citizens in either field must have nexus with constitution-
ally permissible object and can never be arbitrary. Arbi-
trariness is, therefore, anti-thetical to the right of
equality. In this connection, reliance was placed on the
observations of this Court in E.P. Royappa v. State of Tamil
Nadu & Anr., [1974] 2 SCR 348 and Maneka Gandhi v. Union of
India, [1978] 2 SCR 621 where it was held that the view that
Articles 19 & 21 constitute watertight compartments has been
rightly overruled. Articles dealing with different fundamen-
tal rights contained in Part III of the Constitution do not
represent entirely separate streams of rights which do not
mingle at any point of time. They. are all parts of an
integrated scheme in the Constitution and must be preserved
and cannot be destroyed arbitrarily. Reliance was placed on
the observations in R.D. Shetty v. The I.A.A. of India &
Ors., [1979] 3 SCR 1014. Hence, the rights of the citizens
to fight for remedies and enforce their rights flowing from
the breach of obligation in respect of crime cannot be
obliterated. The Act and Sections 3, 4 & 11 of the Act in so
far as these purport to do so and have so operated, are
violative of Articles 14, 19(1)(g) and 21 of the Constitu-
tion. The procedure envisaged by the said Sections deprives
the just and legitimate rights of the victims to assert and
obtain their just dues. The rights cannot be so destroyed.
It was contended that under the law the victims had right to
ventilate their rights.
30. It was further contended that Union of India was a
joint tort-feasor along with UCC and UCIL. It had negligent-
ly permitted the establishment of such a factory without
proper safeguards exposing the victims and citizens to great
danger. Such a person or authority
634
cannot be entrusted to represent the victims by denying the
victims their rights to plead their own cases. It was sub-
mitted that the object of the Act was to fully protect
people against the disaster of highly obnoxious gas and
disaster of unprecedented nature. Such an object cannot be
achieved without enforcement of the criminal liability by
criminal prosecution. Entering into settlement without
reference to the victims was, therefore, bad and unconstitu-
tional, it was urged. If an Act, it was submitted, permits
such a settlement or deprivation of the rights of the vic-
tims, then the same is bad.
31. Before we deal with the various other contentions
raised in this case, it is necessary to deal with the appli-
cation for intervention and submission made on behalf of the
Coal India in Writ Petition No. 268/89 wherein Mr. L.N.
Sinha in his written submission had urged for the intervener
that Article 21 of the Constitution neither confers nor
creates nor determines the dimensions nor the permissible
limits of restrictions which appropriate legislation might
impose on the right to life or liberty. He submitted that
provisions for procedure are relevant in judicial or quasi
judicial proceedings for enforcement of rights or obliga-
tions. With regard to alteration of rights, procedure is
governed by the Constitution directly. He sought to inter-
vene on behalf of Coal India and wanted these submissions to
be taken into consideration. However, when this contention
was sought to be urged before this Court on 25th April,
1989, after hearing all the parties, it appeared that there
was no dispute between the parties in the instant writ
petitions between the victims and the Government of India
that the rights claimed in these cases are referrable to
Article 21 of the Constitution. Therefore, no dispute really
arises with regard to the contention of Coal India and we
need not consider the submissions urged by Shri Sinha on
behalf of the intervener in this case. It has been so re-
corded.
32. By the order dated 3rd March, 1989, Writ Petitions
Nos. 268/89 and 164/86 have been directed to be disposed of
by this Bench.’ We have heard these two writ petitions along
with the other writ petitions and other matters as indicated
hereinbefore. The contentions are common. These writ peti-
tions question the validity of the Act and the settlement
entered into pursuant to the Act. Writ Petition No. 164/86
is by one Shri Rakesh Shrouti who is an Indian citizen and
claims to be a practising advocate having his residence at
Bhopal. He says that he and his family members were at
Bhopal on 2nd/3rd December, 1984 and suffered immensely as a
result of the gas leak. He challenges the validity of the
Act on various grounds. He contends that the Union of India
should not have the exclusive right to represent the
635
victims in suits against the Union Carbide and thereby
deprive the victims of their right to sue and deny access to
justice. He further challenges the right of the Union of
India to represent the victims against Union Carbide because
of conflict of interests. The conduct of the Union of India
was also deprecated and it was further stated that such
conduct did not inspire confidence. In the premises, the
said petitioner sought a declaration under Article 32 of the
Constitution that the Act is void, inoperative and unen-
forceable as violative of Articles 14, 19 & 21 of the Con-
stitution- Similarly, the second writ petition, namely, writ
petition No. 268/89 which is filed by Sh. Charan Lal Sahu,
who is also a practising Advocate on behalf of the victims
and claims to have suffered damages as a result of the gas
leak. challenges the Act. He further challenges the settle-
ment entered into under the Act. He says that the said
settlement was violative of principles of natural justice
and the fundamental right of the said petitioner and other
victims. It is his case that in so far as the Act permits
such a course to be adopted, such a course was not permissi-
ble under the Constitution. He further asserts that the
Union of India was negligent and a joint tort-feasor. In the
premises, according to him, the Act is bad, the settlement
is bad and these should be set aside.
33. In order to determine the question whether the Act
in question is constitutionally valid or not in the light of
Articles 14, 19(l)(g) and 21 of the Constitution, it is
necessary to find out what does the Act actually mean and
provide for. The Act in question, as the Preamble to the Act
states, was passed in order to confer powers on the Central
Government to secure that the claims arising out of, or
connected with, the Bhopal gas leak disaster are dealt with
speedily, effectively, equitably and to the best advantage
of the claimants and for matters incidental thereto. There-
fore, securing the claims arising out of or connected with
the Bhopal gas leak disaster is the object and purpose of
the Act. We have noticed the proceedings of the Lok Sabha in
connection with the enactment of the Act. Our attention was
also drawn by the learned Attorney General to the proceed-
ings of the Rajya Sabha wherein the Hon’ble Minister, Shri
Virendra Patil explained that the bill enabled the Govern-
ment to assume exclusive right to represent and act, whether
within or outside India in place of every person who had
made or was entitled to make claim in relation to the disas-
ter and to institute any suit or other proceedings or enter
into any compromise as mentioned in the Act. The whole
object of the Bill was to make procedural changes to the
existing Indian law which would enable the Central Govern-
ment to take up the responsibility of fighting litigation on
behalf of these victims. The first point was that it
636
sought to create a locus standi in the Central Government to
file suits on behalf of the victims. The object of the
Statute. it was highlighted, was that because of the dimen-
sion of the tragedy covering thousands of people, large
number of whom being poor, would not be able to go to the
courts, it was necessary to create the locus standi in the
Central Government to start the litigation for payment of
compensation in the courts on their behalf. The second
aspect of the Bill was that by creating this locus standi in
the Central Government, the Central Government became compe-
tent to institute judicial proceedings for payment of com-
pensation on behalf of the victims. The next aspect of the
Bill was to make a distinction between those on whose behalf
suits had already been filed and those on whose behalf
proceedings had not yet then been instituted. One of the
Members emphasised that under Article 21 of the Constitu-
tion, the personal liberty of every citizen was guaranteed
and it has been widely interpreted as to what was the mean-
ing of the expression ‘personal liberty’. It was cmphasised
that one could not take away the right of a person, the
liberty of a person, to institute proceedings for his own
benefit and for his protection. It is from this point of
view that it was necessary, the member debated, to preserve
the right of a claimant to have his own lawyers to represent
him along with the Central Government in the proceedings
under Section 4 of the Act, this made the Bill constitution-
ally valid.
34. Before we deal with the question of constitutionali-
ty, it has to be emphasised that the Act in question deals
with the Bhopal gas leak disaster and it deals with the
claims meaning thereby claims arising out of or connected
with the disaster for compensation of damages for loss of
life or any personal injury which has been or is likely to
be caused and also claims arising out of or connected with
the disaster for any damages to property or claims for
expenses incurred or required to be incurred for containing
the disaster or making or otherwise coping with the impact
of the disaster and other incidental claims. The Act in
question does not purport to deal with the criminal liabili-
ty, if any, of the parties or persons concerned nor it deals
with any of the consequences flowing from those. This posi-
tion is clear from the provisions and the Preamble to the
Act. Learned Attorney General also says that the Act does
not cover criminal liability. The power that has been given
to the Central Government is to represent the ‘claims’,
meaning thereby the monetary claims. The monetary claims, as
was argued on behalf of the victims, are damages flowing
from the gas disaster. Such damages, Mr. Garg and Ms. Jais-
ing submitted, are based on strict liability, absolute
liability and punitive liability. The Act does not, either
expressly or impliedly, deal with the extent of the damages
or
637
liability. Neither section 3 nor any other section deals
with any consequences of criminal liability. The expression
“the Central Government shall, and shall have the exclusive
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 for all purposes connected with such claim in
the same manner and to the same effect as such person”, read
as it is, means that Central Government is substituted and
vested with the exclusive right to act in place of the
victims, i.e., eliminating the victims, their heirs and
their legal representatives, in respect of all such claims
arising out of or connected with the Bhopal gas leak disas-
ter. The right, therefore, embraces right to institute
proceedings within or outside India along with right to
institute any suit or other proceedings or to enter into
compromise. Sub-section 1 of section 3 of the Act, there-
fore, substitutes the Central Government in place of the
victims. The victims, or their heirs and legal representa-
tives, get their rights substituted in the Central Govern-
ment along with the concomitant right to institute such
proceedings, withdraw such proceedings or suit and also to
enter into compromise.The victims or the heirs or the legal
representatives of the victims, are substituted and their
rights are vested in the Central Government. This happens by
operation of section 3 which is the legislation in question.
Sub-section (3) of section 3 makes it clear that the provi-
sions of sub-section (1) of section 3 shall also apply in
relation to claims in respect of which suits or other pro-
ceedings have been instituted in or before any court or
other authority (whether within or outside India) before the
commencement of this Act, but makes a distinction in the
case of any such suit or other proceeding with respect to
any claim pending immediately before the commencement of
this Act in or before any court or other authority outside
India, and provides that the Central Government shall repre-
sent, and act in place of, or along with, such claimant, if
such court or other authority so permits. Therefore, in
cases where such suits or proceedings have been instituted
before the commencement of the Act in any court or before
any authority outside India, the section by its own force
will not come into force in substituting the Central Govern-
ment in place of the victims or the heirs or their legal
representatives, but the Central Government has been given
the right to act in place of, or along with, such claimant,
provided such court or other authority so permits. It is to
have adherence and conformity with the procedure of the
countries or places outside India, where suits or proceed-
ings are to be instituted or have been instituted. There-
fore, the Central Government is authorised to act along with
the claimants in respect of proceedings instituted outside
India subject to the orders of such courts or the authori-
ties. Is such a right valid and proper?
638
35. There is the concept known both in this country and
abroad, called “parens patriae. Dr. D.K. Mukherjea in his
“Hindu Law of Religious and Charitable Trusts”, Tagore Law
Lectures, Fifth Edition, at page 404, referring to the
concept of parens patriae, has noted that in English Law,
the Crown as parens patriae is the constitutional protector
of all property subject to charitable trusts, such trusts
being essentially matters of public concern. Thus the posi-
tion is that according to Indian concept parens patriae
doctrine recognized King as the protector of all citizens
and as parent. In Budhakaran Chankhani v. Thakur Prasad
Shah, AIR 1942 Cal. 311 the position was explained by the
Calcutta High Court at page 3 18 of the report. The same
position was reiterated by the said Court in Banku Behary
Mondal v. Banku Behary Hazra & Anr., AIR 1943 Cal. 203 at
page 205 of the report. The position was further elaborated
and explained by the Madras High Court in Medai Dalavoi T.
Kumaraswami Mudaliar v. Medai Dalavoi Rajammal, AIR 1957
Mad. 563 at page 567 of the report. This Court also recog-
nized the concept of parens patriae relying on the observa-
tions of Dr. Mukherjea aforesaid in Ram Saroop v. S.P. Sahi,
[1959] 2 Supp. SCR 583, at pages 598 and 599. In the “Words
and Phrases” Permanent edition, Vol. 35 at p. 99, it is
stated that parens patriae is the inherent power and author-
ity of a Legislature to provide protection to the person and
property of persons non suijuris, such as minor, insane, and
incompetent persons, but the words “parens patriae” meaning
thereby ‘the father of the country’, were applied originally
to the King and are used to designate the State referring to
its sovereign power of guardianship over persons under
disability, (Emphasis supplied). Parens patriae jurisdic-
tion, it has been explained, is the right of the sovereign
and imposes a duty on sovereign, in public interest, to
protect persons under disability who have no rightful pro-
tector. The connotation of the term “parens patriae” differs
from country to country, for instance, in England it is the
King, in America it is the people, etc. 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 the privileges of its citizens for discharging
its obligations. Our Constitution makes it imperative for
the State to secure to all its citizens the rights guaran-
teed by the Constitution 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 rights of
the citizens. The Preamble to the Constitution, read with
the Directive Principles, 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
funda-
639
mental rights in conjunction with the Directive Princi-
ples of State Policy to effectively discharge its obliga-
tion 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. Reference may be made to Alfred L. Snapp & Son,
Inc. v. Puerto Rico, 458 US 592, 73 L. Ed. 2d 995, 1028. Ct,
3260 in this connection. There it was held by the Supreme
Court of the United States of America that Commonwealth of
Puerto have standing to sue as parens patriae to enjoin
apple growers’ discrimination against Puerto Rico migrant
farm workers. This case illustrates in some aspect the scope
of ‘parens patriae’. The Commonwealth of Puerto Rico sued
in the United States District Court for the Western District
of Virginia, as parens patriae for Puerto Rican migrant farm
workers, and against Virginia apple growers, to enjoin
discrimination against Puerto Ricans in favour of Jamaican
workers in violation of the Wagner-Peyser Act, and the
Immigration and Nationality Act. The District Court dis-
missed the action on the ground that the Commonwealth
lacked standing to sue, but the Court of Appeal for the
Fourth Circuit reversed it. On certiorari, the United States
Supreme Court affirmed. In the opinion by White, J. joined
by Burger, Chief Justice and Brennan, Marshall, Blackman,
Rennquist, Stevens, and O’Connor, JJ., it was held that
Puerto Rico had a claim to represent its quasi sovereign
interests in federal court at least which was as strong as
that of any State, and that it had parens patriae standing
to sue to secure its residents from the harmful effects of
discrimination and to obtain full and equal participation
in the federal employment service scheme established pursu-
ant to the Wagner-Peyser Act and the Immigration and Nation-
ality Act of 1952. Justice White referred to the meaning of
the expression “parens patriae”. According to Black’s Law
Dictionary, 5th Edition 1979, page 1003, it means literally
‘parent of the country’ and refers traditionally to the role
of the State as a sovereign and guardian of persons under
legal disability. Justice White at page 1003 of the report
emphasised that the parens patriae action had its roots in
the common-law concept of the “royal prerogative”. The royal
prerogative included the right or responsibility to take
care of persons who were legally unable, on account of
mental incapacity, whether it proceeds from nonage, idiocy,
or lunacy to take proper care of themselves and their
property. This prerogative of parens patriae is inherent in
the supreme power of every state, whether that power is
lodged in a royal person or m the legislature and is a most
beneficent function. After discussing several cases Justice
White observed at page 1007 of the report that in order to
maintain an action, in parens patriae, the state must artic-
ulate an interest apart from the interests of
640
particular parties, i.e. the State must be more than a
nominal party. The State must express a quasi-sovereign
interest. Again an instructive insight can be obtained from
the observations of Justice Holmes of the American Supreme
Court in the case of Georgia v. Tennessee Copper Co., 206 US
230, 51 L.Ed. 1038, 27 S Ct 618, which was a case involving
air pollution in Georgia caused by the discharge of noxious
gases from the defendant’s plant in Tennessee. Justice
Holmes at page 1044 of the report described the State’s
interest as follows:
“This is a suit by a State for an injury to it
in its capacity of quasi-sovereign. In that
capacity the State has an interest independent
of and behind the titles of its citizens, in
all the earth and air within its domain. It
has the last word as to whether its mountains
shall be stripped of their forests and its
inhabitants shall breathe pure air. It might
have to pay individuals before it could utter
that word, but with it remains the final
power ……
….. When the States by their
union made the forcible abatement of outside
nuisances impossible to each, they did not
thereby agree to submit to whatever might be
done. They did not renounce the possibility of
making reasonable demands on the ground of
their still remaining quasi-sovereign inter-
ests”
36. Therefore, 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 Direc-
tive Principles, it was possible to authorise the Central
Government to take over the claims of the victims to tight
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. On its plain terms the
State has taken over the exclusive right to represent and
act in place of every person who has made or is entitled to
make a claim for all purposes connected with such claim in
the same manner and to the same effect as such person.
Whether such provision is valid or not in the background of
the requirement of the Constitution and the Code of Civil
Procedure, is another debate. But there is no prohibition or
inhibition, in our opinion, conceptually or jurisprudential-
ly 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. The actual meaning of what the Act has provided
and the validity thereof, however, will have to be examined
in the light of the specific submissions advanced in this
case.
641
37. Ms. Indira Jaising as mentioned hereinbefore on
behalf of some other victims drew out attention to the
background of the passing of the Act in question. She drew
our attention to the fact that the Act was to meet a specif-
ic situation that had arisen after the tragic disaster and
the advent of American lawyers seeking to represent the
victims in American courts. The Government’s view, according
to her, as was manifest from the Statement of Objects and
Reasons, debates of the Parliament, etc. was that the inter-
ests of the victims would be best served if the Central
Government was given the right to represent the victims in
the courts of United States as they would otherwise be
exploited by ‘ambulance-chasers’ working on contingency
fees. The Government also proceeded initially on the hypoth-
esis that US was the most convenient forum in which to sue
UCC. The Government however feared that it might not have
locus standi to represent the victims in the courts of the
United States of America unless a law was passed to enable
it to sue on behalf of the victims. The dominant object of
the Act, therefore, according to her, was to give to the
Government of India locus Standi to sue on behalf of the
victims in foreign jurisdiction, a standing which it other-
wise would not have had. According to her, the Act was never
intended to give exclusive rights to the Central Government
to sue on behalf of the victims in India or abroad. She drew
our attention to the parliamentary debates as mentioned
hereinbefore. She drew our attention to the expression
‘parens patriae’ as appearing in the Words and Phrases,
Volume 31 p. 99. She contends that the Act was passed to
provide locus standi only to represent in America. She drew
our attention to the “American Constitutional Law by Lau-
rence B. Trioe, 1978 Edition at paragraph 3.24, where it was
stated that in its capacity as proprietor, a state may
satisfy the requirement of injury to its own interests by an
assertion of harm to the state as such. It was further
stated by the learned author there that the State may sue
under the federal anti-trust laws to redress wrongs suffered
by it as the owner of a railroad and as the owner and opera-
tor of various public institutions. It was emphasised that
in its quasi-sovereign capacity, the state has an interest,
independent of and behind the titles of its citizens, in all
the earth and air within its domain. It was sought to be
suggested that in the instant Act no such right was either
asserted or mentioned. The State also in its quasi-sovereign
capacity is entitled to bring suit against a private indi-
vidual to enjoin a corporation not to discharge noxious
gases from its out of state plant into the suing state’s
territory. Finally, it was emphasised that as ‘parens patr-
iae’ on behalf of the citizens, where a state’s capacity as
parens patriae is not negated by the federal structure, the
protection of the general health, comfort, and welfare of
the state’s inhabitants has been held to give the state
itself a sufficient
642
interest. Ms. Jaising sought to contend that to the extent
that the Act was not confined to empowering the Government
to sue on behalf of those who were not sui generis but
extended also to representing those who are, this exercise
of the power cannot be referrable to the doctrine of ‘parens
patriae’. To the extent, it is not confined in enabling the
Government to represent its citizens in foreign jurisdiction
but empowered it to sue in local courts to the exclusion of
the victims it cannot be said to be in exercise of doctrine
of ‘parens patriae’, according to her. We are unable to
agree. As we have indicated before conceptually and juris-
prudentially there is no warrant in the background of the
present Act, in the light of circumstances of the Act in
question to confine the concept into such narrow field. The
concept can be varied to enable the Government to represent
the victims effectively in domestic forum if.the situation
so warrants. We also do not find any reason to confine the
‘parens patriae’ doctrine to only quasisovereign right of
the State independent of and behind the title of the citi-
zens, as we shall indicate later.
38. It was further contended that deprivation of the
rights of the victims and denial of the rights of the vic-
tims or the fights of the heirs of the victims to access to
justice was unwarranted and unconstitutional. She submitted
that it has been asserted by the Government that the Act was
passed pursuant to Entry 13 of the List I of the Seventh
Schedule to the Constitution. It was therefore submitted
that to the extent it was a law relating to civil procedure,
it sets up a different procedure for the Bhopal gas victims
and denies to them equality before law, violating Article 14
of the Constitution. Even assuming that due to the magnitude
of the disaster, the number of claimants and their disabili-
ty they constituted a separate class and that it was permis-
sible to enact a special legislation setting up a special
procedure for them, the reasonableness of the procedure has
still to be tested. Its reasonableness, according to her,
will have to be judged on the touchstone of the existing
Civil Procedure Code of 1908 and when so tested, it is found
wanting in several respects. It was also contended by the
Government that it was a legislation relating to “actionable
wrongs” under Entry 8 of the Concurrent List of the Seventh
Schedule. But so read, she said, it could only deal with the
procedural aspects and not the substantive aspect of ”ac-
tionable wrongs”. If it does, then the reasonableness of a
law must be judged with reference to the existing substan-
tive law of actionable wrongs and so judged it is in viola-
tion of many constitutional rights as it takes away from the
victims the right to sue for actionable wrongs according to
counsel for the victims. According to her, it fails to take
into account the law of strict liability for ultra
643
hazardous activity as clarified by this Court in M.C. Meh-
ta’s, case (supra). She further submitted that it is a bad
Act as it fails to provide for the right to punitive damages
and destruction of environment.
39. It was contended on behalf of the Central Government
that the Act was passed to give effect to the Directive
Principle as enshrined under Article 39-A of the Constitu-
tion of India. It was, on the other side, submitted that it
is not permissible for the State to grant legal aid on pain
of destroying rights that inhere in citizens or on pain of
demanding that the citizens surrender their rights to the
State. The Act in fact demands a surrender of rights of the
citizens to the State. On the interpretation of the Act, Ms.
Indira Jaising submitted that sections 3 and 4 as noted
above, give exclusive power to the Government to represent
the victims and there is deprivation of the victims’ right
to sue for the wrongs done to them which is uncanalised and
unguided and the expression “due regard” in section 4 of the
Act does not imply consent and as such violative of the
rights of the victims. The right to be associated with the
conduct of the suit is hedged in with so many conditions
that it is illusory. According to her, a combined reading of
sections 3 and 4 of the act lead to the conclusion that the
victims are displaced by the Central Government which has
constituted itself as the “surrogate” of the claimants, that
they have no control over the proceedings, that they have no
right to decide whether or not to compromise and if so on
what terms and they have no right to be heard by the court
before any such compromise is effected. Therefore, section 3
read with section 4, according to her, hands over to the
Government all effective rights of the victims to sue and is
a naked usurption of power. It was submitted that in any
event on a plain reading of the Act, section 3 read with
section 4 did not grant the Government immunity from being
sued as a joint tort-feasor.
40. It was further urged that section 9 makes the Gov-
ernment the total arbitor in the matter of the registration,
processing and recording of claims. Reference was made to
section 9(2)(a), (b) and (c) and disbursal of claims under
sections 9(2)(f) and 10. It was urged that the Deputy Com-
missioner and Commissioner appointed under the Act and the
Scheme are subordinates and agents of the Central Govern-
ment. They replace impartial and independent civil court by
officers and subordinates of the Central Government. Clause
11 of the Scheme makes the Central Government, according to
counsel, judge in its own cause inasmuch as the Central
Government could be and was in fact a joint tort-feasor. It
was submitted that sections 5 to 9 of the Act read with the
Scheme do not set up a machinery which is
644
constitutionally valid. The Act, it was urged, deprives the
victims of their rights out of all proportion to the object
sought to be achieved, namely, to sue in foreign jurisdic-
tion or to represent those incapable of representing them-
selves. The said object could be achieved, according to
counsel, by limiting the right to sue in foreign jurisdic-
tion alone and in any event representing only those victims
incapable of representing themselves. The victims who wish
to sue for and on their own behalf must have power to sue,
all proper and necessary parties including Government of
India, Government of Madhya Pradesh, UCIL and Shri Arjun
Singh to vindicate their right to life and liberty and their
rights cannot and should not be curtailed, it was submitted.
Hence, the Act goes well beyond its objects and imposes
excessive restriction amounting to destruction of the rights
of the victims, according to. counsel. In deciding whether
any rights are affected, it is not the object of the Act
that is relevant but its direct and inevitable effect on the
rights of the victims that is material. Hence no matter how
laudable the object of the Act is alleged to be by the
Government of India, namely, that it is an Act to give
effect to Directive Principles enshrined in Article 39-A of
the Constitution, the direct and inevitable effect of sec-
tion 3 according to counsel for the victims is to deprive
the victims of the right to sue for and on their own behalf
through counsel of their choice and instead empower the
Central Government to sue for them.
41. The Act is, it was contended, unconstitutional
because it deprives the victims of their right to life and
personal liberty guaranteed by Article 21. The right to life
and liberty includes the right to sue for violations of the
right, it was urged. The right to life guaranteed by Article
21 must be interpreted to mean all that makes life livable,
life in all its fullness. According to counsel, it includes
the right to livelihood. Reference was made to the decision
of Olga Tellis v. B.M.C., [1985] Supp. 2 SCR 51 at p. 78-83.
This right, it was contended, is inseparable from the reme-
dy. It was urged that personal liberty includes a wide range
of freedoms to decide how to order one’s affairs. Reference
was made to Maneka Gandhi v. Union of India, (supra), The
right to life and liberty also includes the right to healthy
environment free from hazardous pollutants. The right to
life and liberty, it was submitted, is inseparable from the
remedy to judicial vindication of the violation of that
right–the right of access to justice must be deemed to be
part of that right. Therefore, the importance is given to
the right to file a suit for an actionable wrong. See Ganga
Bai v. Vijay Kumar, [1974] 3 SCR 882 at 886. According to
counsel appearing for the victims, the Act read strictly
infringes the right to life and personal liberty because the
right to sue by the affected person
645
for damages flowing from infringement of their rights is
taken away. Thus, it was submitted that not just some inci-
dents of the right to life, but the right itself in all its
fullness is taken away. Such depravation, according to
counsel, of the right is not in accordance with procedure
established by law inasmuch as the law which takes away the
right, i.e., impugned Act is neither substantively nor
procedurally just, fair or reasonable. A law which divests
the victims of the right to sue to vindicate for life and
personal liberty and vests the said right in the Central
Government is not just, fair or reasonable. The victims are
sui generis and able to decide for themselves how to vindi-
cate their claims in accordance with law. There is, there-
fore, no reason shown to exist for divesting them of that
right and vesting that on the Central Government.
42. All the counsel for the victims have emphasised that
vesting of the right in Central Government is bad and unrea-
sonable because there is conflict of interests between the
Central Government and the victims. It was emphasised that
the conflict of interest has already prejudiced the victims
in the conduct of the case inasmuch as a compromise unac-
ceptable to the victims has been entered into in accordance
with the order of this Court of 14th/15th February, 1989
without heating the victims. This conflict of interest will
continue, it was emphasised, to adversely affect the victims
inasmuch as section 9 of the Act read with clauses 5, 10 and
11 of the Scheme empower the Central Government to process
claims, determine the category into which these fall, deter-
mine the basis on which damages will be payable to each
category and determine the amount of compensation payable to
each claimant. Learned counsel urged that the right to a
just, fair and reasonable procedure was itself a guaranteed
fundamental right under Article 14 of the Constitution. This
included right to natural justice. Reference was made to
Olga Tellis’s. case (supra) and S.L. Kapoor v. Jagmohan,
[1981] 1 SCR 746 at 753, 766. The right to natural justice
is included in Article 14 Tulsi Ram v. Union of India,
[1985] Supp. 2 SCR 131. Reference was also made to Maneka
Gandhi’s, case (supra). It was contended by counsel that the
right to natural justice is the right to be heard by Court
at the pre-decisional stage, i.e., before any compromise is
effected and accepted. Reference was made to the decision of
this Court in Swadeshi Cotton v. Union of India, [1981] 2
SCR 533. It was submitted that natural justice is a highly
effective tool devised by the Courts to ensure that a statu-
tory authority arrives at a just decision. It is calculated
to act as a healthy check on the abuse of power. Natural
justice is not dispensable nor is it an empty formality.
Denial of that right can and has led to the miscar-
646
riage of justice in this case. According to counsel, if the
victims had been given an opportunity to be heard, they
would, inter alia, have pointed out that the amount agreed
to be paid by UCC was hopelessly inadequate and that UCC,
its officer and agents ought not to be absolved of criminal
liability, that the Central Government itself was liable to
have been sued as a joint tort-feasor and, according to
counsel, had agreed to submit to a decree if found liable
under the order dated 31st December, 1985, that suits had
been filed against the State of Madhya Pradesh, Shri Arjun
Singh and UCIL which said suits cannot be deemed to have
been settled by the compromise/order of 14th/15th February,
1989. It was also pointed out that Union of India was under
a duty to sue UCIL, which it had failed and neglected to do.
It was submitted that to the extent that the statute does
not provide for a pre-decisional hearing on the fairness of
the proposed settlement or compromise by Court, it is void
as offending natural justice hence violative of Articles 14
and 21 of the Constitution. Alternatively, it was contended
by the counsel that since the statute neither expressly nor
by necessary implication bars the right to be heard by Court
before any compromise is effected such a right to a pre-
decisional hearing by Court must be read into section
3(2)(b) of the Act. Admittedly, it does not expressly ex-
clude the right to a hearing by Court prior to any settle-
ment being entered into. Far from excluding such a right by
necessary implication, having regard to the nature of the
rights affected, i.e., the right to life and personal liber-
ty, such a right to hearing must be read into the Act in
order to ensure that justice is done to the victims, accord-
ing to all the counsel. The Act sets up a procedure differ-
ent from the ordinary procedure established by law, namely,
Civil Procedure Code. But it was submitted that the Act
should be harmoniously read with the provisions of Civil
Procedure Code and if it is not so read, then the Act in
question would be unreasonable and unfair. In this connec-
tion, reliance was placed on the provisions of Order I, Rule
4, Order 23, Rule 1 proviso, Order 23, Rule 3-9 and Order
32, Rule 7 of CPC and it was submitted that these are not
inconsistent with the Act. On the contrary these are neces-
sary and complementary, intended to ensure that there is no
miscarriage of justice. Hence these must be held to apply to
the facts and circumstances of the case and the impugned Act
must be read along with these provisions. Assuming that the
said provisions do not directly apply then, provisions
analogous to the said provisions must be read with section
3(2)(b) to make the Act reasonable, it was submitted. It was
urged that if these are not so read then the absence of such
provisions would vest arbitrary and unguided powers in the
Central Government making section 3(2)(b) unconstitutional.
The said provisions are intended to ensure the machinery of
647
accountability to the victims and to provide to them, an
opportunity to be heard by court before any compromise is
arrived at. In this connection, reference was made to Rule
23(3) of the Federal Rules of Civil Procedure in America
which provides for a hearing to the victims before a compro-
mise is effected. The victims as plaintiffs in an Indian
court cannot be subjected to a procedure which is less fair
than that provided by a US forum initially chosen by the
Government of India, it was urged.
43. Counsel submitted that Section 6 of the Act is
unreasonable because it replaces an independent and impar-
tial Civil Court of competent jurisdiction by an Officer
known as the Commissioner to be appointed by the Central
Government. No qualification, according to counsel, had been
prescribed for the appointment of a Commissioner and clause
5 of the Scheme framed under the Act vests in the Commis-
sioner the judicial function of deciding appeals against the
order of the Deputy Commissioner registering or refusing to
register a claim. It was further submitted that clause 11(2)
of the Scheme is unreasonable because it replaces an inde-
pendent and impartial civil court of competent jurisdiction
with the Central Government, which is a joint tort-feasor
for the purpose of determining the total amount of compensa-
tion to be apportioned for each category of claims and the
quantum of compensation payable for each type of injury or
loss. It was submitted that the said function is a judicial
function and if there is any conflict of interest between
the victims and Central Government, vesting such a power in
the Central Government amounts to making it a judge in its
own cause. It was urged that having regard to the fact that
amount received in satisfaction of the claims is ostensibly
pre-determined, namely, 470 million dollars unless the order
of 14th/15th February is set aside which ought to be done,
according to counsel, the Central Government would have a
vested interest in ensuring that the amount of damages to be
disbursed does not exceed the said amount. Even otherwise,
according to counsel, the Government of India has been sued
as a joint tort-feasor, and as they would have a vested
interest in depressing the quantum of damages, payable to
the victims. This would, according to counsel, result in a
deliberate under-estimation of the extent of injuries and
compensation payable.
44. Clause 11(4) of the Scheme, according to counsel, is
unreasonable inasmuch as it does not take into account the
claims of the victims to punitive and exemplary damages and
damages for loss and destruction of environment. Counsel
submitted that in any event the expression ”claims” in
section 2(b) cannot be interpreted to mean
648
claims against the Central Government, the State of Madhya
Pradesh, UCIL, which was not sued in suit No. 1113/86 and
Shri Arjun Singh, all of whom have been sued as joint tort
feasors in relation to the liability arising out of the
disaster. Counsel submitted that if section 3 is to be held
to be intra vires, the word “exclusive” should be severed
from section 3 and on the other hand, if section 3 is held
ultra vires, then victims who have already filed suits or
those who had lodged claims should be entitled to continue
their own suits as well as Suit No. 1113/86 as plaintiffs
with leave under Order 1 Rule 8. Counsel submitted that
interim relief as decided by this Court can be paid to the
victims even otherwise also, according to counsel, under
clause 10(2)(b) of the Scheme.
45. Counsel submitted that the balance of $ 470 million
after deducting interim relief as determined by this Court
should be attached. In any event, it was submitted that, it
be declared that the word “claim” in section 2 does not
include claims against Central Govt. or State of Madhya
Pradesh or UCIL. Hence, it was urged that the rights of the
victims to sue the Government of India, the State of Madhya
Pradesh or UCIL would remain unaffected by the Act or by the
compromise effected under the Act. Machinery to decide suit
expeditiously has to be devised, it was submitted. Other
suits filed against UCC, UCIL, State of Madhya Pradesh and
Arjun Singh should to be transferred to the Supreme Court
for trial and disposal, according to counsel. It was submit-
ted that the Court should fix the basis of damages payable
to different categories, namely, death and disablement
mentioned under clause 5(2) of the scheme. 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. It was also
urged that this Court should quantify the amount of compen-
sation 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 trustees to administer the trust and trustees to
be accountable to this Court. An independent census should
be carried out of number of claimants, 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 impor-
tance
649
since the injuries are said to be. carcinogenic and ontogen-
ic 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 fights in the
State is violative of the rights of the victims and cannot.
be justified or warranted by the Constitution. Neither
section 3 nor section 4 of the Act gives any right to the
victims; on the other hand, it is a complete denial of
access to justice for the victims, according to him. This,
according to counsel, is arbitrary. He also submitted that
section 4 of the Act, as it stands, gives no right to the
victims and as such even assuming that in order to fight for
the rights of the victims, it was necessary to substitute
the victims even then in so far as the victims have been
denied the right of say, in the conduct of the proceedings,
this is disproportionate to the benefit conferred upon the
victims. Denial of rights to the victims is so great and
deprivation of the right to natural justice and access to
justice is so tremendous that judged by the well settled
principles by which yardsticks provisions like these should
be judged in the constitutional framework of this country,
the Act is violative of the fundamental rights of the vic-
tims. It was further submitted by him that all the rights of
the victims by the process of this Act, the right of the
victims to enforce full liability against the multinationals
as well as against the Indian Companies, absolute liability
and criminal liability have all been curtailed.
48. All the counsel submitted that in any event, the
criminal liability cannot be subject matter of this Act.
Therefore, the Government was not entitled to agree to any
settlement on the ground that criminal prosecution would be
withdrawn and this being a part of the consideration or
inducement for settling the civil liability, he submitted
that the settlement arrived at on the 14th/l5th February,
1989 as recorded in the order of this Court is wholly unwar-
ranted, unconstitutional and illegal.
49. Mr. Garg additionally further urged that by the
procedure of the Act, each individual claim had to be first
determined and the Government could only take over the
aggregate of all individual claims and that could only be
done by aggregating the individual claims of the victims.
That was not done, according to him. Read in that fashion,
according to Shri Garg, the conduct of the Government in
implementing the Act is wholly improper and unwarranted. It
was submitted by him that the enforcement of the fight of
the victims
650
without a just, fair and reasonable procedure which is
vitally necessary for representing the citizens or victims
was bad. It was further urged by him that the Bhopal gas
victims have been singled out for hostile discrimination
resulting in total denial of all procedures of approach to
competent courts and tribunals. It was submitted that the
Central Government was incompetent to represent the victims
in the litigations or for enforcement of the claims. It was
then submitted by him that the claims of the victims must be
enforced fully against the Union Carbide Corporation carry-
ing on commercial activities for profit resulting in unprec-
edented gas leak disaster responsible for a large number of
deaths and severe injuries to others. It was submitted that
the liability of each party responsible, including the
Government of India, which is a joint tort-feasor along with
the Union Carbide, has to be ascertained in appropriate
proceedings. It was submitted on behalf of the victims that
Union of India owned 22% of the shares in Union Carbide and
therefore, it was incompetent to represent the victims.
There was conflict of interest between the Union of India
and the Union Carbide and so Central Government was incompe-
tent. It is submitted that pecuniary interest howsoever
small disqualifies a person to be a judge in his own cause.
The settlement accepted by the Union of India, according to
various counsel is vitiated by the pecuniary bias as holders
of its shares to the extent of 22%.
50. It was submitted that the pleadings in the court of
the United States and in the Bhopal court considered in the
context of the settlement order of this Court accepted by
the Union of India establish that the victims’ individuality
were sacrificed wontedly and callously and, therefore, there
was violation, according to some of the victims, both in the
Act and in its implementation of Articles 14, 19(l)(g) and
21 of the Constitution.
51. The principles of the decision of this Court in M.C.
Mehta & Anr. v. Union of India, [1987] 1 SCR 819 must be so
interpreted that complete justice is done and it in no way
excludes the grant of punitive damages for wrongs justifying
deterrents to ensure the safety of citizens in free India.
No multinational corporation, according to Shri Garg, can
claim the privilege of the protection of Indian law to earn
profits without meeting fully the demands of civil and
criminal justice administered in India with this Court
functioning as the custodian. Shri Garg urged that the
liability for damages, in India and the Third World Coun-
tries, of the multinational companies cannot be less but
must be more because the persons affected are often without
remedy for
651
reasons of inadequate facilities for protection of health or
property. Therefore, the damages sustainable by Indian
victims against the multinationals dealing with dangerous
gases without proper security and other measures are far
greater than damages suffered by the citizens of other
advanced and developed countries. It is, therefore, neces-
sary to ensure by damages and deterrent remedies that these
multinationals are not tempted to shift dangerous manufac-
turing operations intended to advance their strategic objec-
tives of profit and war to the Third World Countries with
little respect for the right to life and dignity of the
people of sovereign third world countries. The strictest
enforcement of punitive liability also serves the interest
of the American people. The Act, therefore, according to
Shri Garg is clearly unconstitutional and therefore, void.
52. It was urged that the settlement is without juris-
diction. This Court was incompetent to grant immunity
against criminal liabilities in the manner it has purported
to do by its order dated 14th/l5th February, 1989, it was
strenuously suggested by counsel. It was further submitted
that to hold the Act to be valid, the victims must be heard
before the settlement and the Act can only be valid if it is
so interpreted. This is necessary further, according to Shri
Garg, to lay down the scope of heating. Shri Garg also drew
our attention to the scheme of disbursement of relief to the
victims. He submitted that the scheme of disbursement is
unreasonable and discriminatory because there is no proce-
dure which is just, fair and reasonable in accordance with
the provisions of Civil Procedure Code. He further submitted
that the Act does not lay down any guidelines for the con-
duct of the Union of India in advancing the claims of the
victims. There were no essential legislative guidelines for
determining the rights of the victims, the conduct of the
proceedings on behalf of the victims and for the relief-
claimed. Denial of access to justice to the victims through
an impartial judiciary is so great a denial that it can only
be consistent with the situation which calls for such a
drastic provision. The present circumstances were not such.
He drew our attention to the decision of this Court in
Basheshar v. Income Tax Commissioner, AIR 1959 SC 149; in Re
Special Courts Bill, [1979] 2 SCR 476; A.R. Antulay v. R.S.
Nayak & Anr., [1988] 2 SCC 602; Ram Krishna Dalmia v. Ten-
dulkar, [1955] SCR 279; Ambika Prasad Mishra etc. v. State
of U.P. & Ors. etc., [1960] 3 SCR 1159 and Bodhan Chowdhary
v. State of Bihar, [1955] 1 SCR 1045. Shri Garg further
submitted that Article 21 must be read with Article 51 of
the Constitution and other directive principles. He drew our
attention to Lakshmi Kant Pandey v. Union of India, [1984] 2
SCR 795; M/s Mackinnon Machkenzie & Co. Ltd. v. Audrey
D’Costa
652
and Anr., [1987] 2 SCC 469; Sheela Barse v. Secretary,
Children Aid Society & Ors., [1987] 1 SCR 870. Shri Garg
submitted that in india, the national dimensions of human
rights and the international dimensions are both congruent
and their enforcement is guaranteed under Articles 32 and
226 to the extent these are enforceable against the State,
these are also enforceable against transnational corpora-
tions inducted by the State on conditions of due observance
of the Constitution and all laws of the land. Shri Garg
submitted that in the background of an unprecedented disas-
ter resulting in extensive damage to life and property and
the destruction of the environment affecting large number of
people and for the full protection of the interest of the
victims and for complete satisfaction of all claims for
compensation, the Act was passed empowering the Government
of India to take necessary steps for processing of the
claims and for utilisation of disbursal of the amount re-
ceived in satisfaction of the claims. The Central Government
was given the exclusive right to represent the victims and
to act in place of, in United States or in india, every
citizen entitled to make a claim. Shri Garg urged that on a
proper reading of section 3(1) of the Act read with section
4 exclusion of all victims for all purpose is incomplete and
the Act is bad. He submitted that the decree for adjudica-
tion of the Court must ascertain the magnitude of the dam-
ages and should be able to grant reliefs required by law
under heads of strict liability, absolute liability and
punitive liability.
53. Shri Garg submitted that it is necessary to consider
that the Union of India is liable for the torts. In several
decisions to which Shri Garg grew our attention, it has been
clarified that Government is not liable only if the tortious
act complained has been committed by its servants in exer-
cise of its sovereign powers bY which it is meant powers
that can be lawfully exercised under sovereign rights only
vide Nandram Heeralal v. Union of India & Anr., AIR 1978
M.P. 209 at p. 212. There is a real and marked distinction
between the sovereign functions of the government and those
which are non-sovereign and some of the functions that fall
in the latter category are those connected with trade,
commerce, business and industrial undertakings. Sovereign
functions are such acts which are of such a nature as cannot
be performed by a private individual or association unless
powers are delegated by sovereign authority of state.
54. According to Shri Garg, the Union and the State
Governments under the Constitution and as per laws of the
Factories, Environment Control, etc. are bound to exercise
control on the factories in public interest and public
purpose. These functions are not sovereign func-
653
tions, according to Shri Garg, and the Government in this
case was guilty of negligence. In support of this, Shri Garg
submitted that the offence of negligence on the part of the
Govt. would be evident from the fact that–
(a) the Government allowed the Union Carbide
factory to be installed in the heart of the
city;
(b) the Government allowed habitation in the
front of the factory knowing that the most
dangerous and lethal gases were being used in
the manufacturing processes;
(c) the gas leakage from this factory was a
common affair and it was agitated continuously
by the people journalists and it was agitated
in the Vidhan Sabha right from 1980 to 1984.
These features firmly proved, according to
Shri Garg, the grossest negligence of the
governments. Shri Garg submitted that the gas
victims had legal and moral right to sue the
governments and so it had full right to im-
plead all the necessary and proper parties
like Union Carbide, UCIL, and also the then
Chief Minister Shri Arjun Singh of the State.
He drew our attention to Order 2, rule 3, of
the Civil Procedure Code. In suits on joint
torts, according to Shri Garg, each of the
joint tort feasors is responsible for the
injury sustained for the common acts and they
can all be sued together. Shri Garg’s main
criticism has been that the most crucial
question of corporate responsibility of the
people’s right to life and their right to
guard it as enshrined in Article 21 of the
Constitution were sought to be gagged by the
Act. Shri Garg tried to submit that this was
an enabling Act only but not an Act which
deprived the victims of their right to sue. He
submitted that in this Act, there is denial of
natural justice both in the institution under
section 3 and in the conduct of the suit under
section 4. It must be seen that justice is
done to all (R. Viswanathan v. Rukh-ul-Mulk
Syed Abdul Wajid, [1963] 3 SCR 22). It was
urged that it was necessary to give a reasona-
ble notice to the parties. He referred to M.
Narayanan Nambiar v. State of Kerala, [1963]
Supp. 2 SCR 724.
55. Shri Shanti Bhushan appearing for Bhopal Gas Peedit
Mahila Udyog Sangathan submitted that if the Act is to be
upheld, it has to be read down and construed in the manner
urged by him. It was submitted that when the Bhopal Gas
disaster took place, which was the worst industrial disaster
in the world which resulted in the deaths
654
of several thousands of people and caused serious injuries
to lakhs others, there arose a right to the victims to get
not merely damages under the law of the torts but also arose
clearly, by virtue of right to life guaranteed as fundamen-
tal right by Article 21 of the Constitution a right to get
full protection of life and limb. This fundamental right
also, according to Shri Shanti Bhushan, embodied within
itself a right to have the claim adjudicated by the estab-
lished courts of law. It is well settled that right of
access to courts in respect of violation of their fundamen-
tal rights itself is a fundamental right which cannot be
denied to the people. Shri Shanti Bhushan submitted that
there may be some justification for the Act being passed. He
said that the claim against the Union Carbide are covered by
the Act. The claims of the victims against the Central
Government or any other party who is also liable under tort
to the victims is not covered by the Act. The second point
that Shri Shanti Bhushan made was that the Act so far as it
empowered the Central Government to represent and act in
place of the victims is in respect of the civil liability
arising out of disaster and not in respect of any right in
respect of criminal liability. The Central Govt., according
to Shri Shanti Bhushan, cannot have any right or authority
in relation to any offences which arose out of the disaster
and which resulted in criminal liability. It was submitted
that there cannot be any settlement or compromise in rela-
tion to non-compoundable criminal cases and in respect of
compoundable criminal cases the legal right to compound
these could only be possessed by the victims alone and the
Central Government could not compound those offences on
their behalf. It was submitted by Shri Shanti Bhushan that
even this Court has no jurisdiction whatsoever to transfer
any criminal proceedings to itself either under any provi-
sion of the Constitution or under any provision of the
Criminal Procedure Code or under any other provision of law
and, therefore, if the settlement in question was to be
treated not as a compromise but as an order of the Court, it
would be without jurisdiction and liable to be declared so
on the principles laid down, according to Shri Bhushan, by
this Court in Antulay’s case (supra). Shri Shanti Bhushan
submitted that even if under the Act, the Central Government
is considered to be able to represent the victims and to
pursue the litigation on their behalf and even to enter into
compromise on their behalf, it would be a gross violation of
the constitutional rights of the victims to enter into a
settlement with the Union Carbide without giving the victims
opportunities to express their views about the fairness or
adequacy of the settlement before any court could permit
such a settlement to be made.
56. Mr. Shanti Bhushan submitted that the suit which may be
655
brought by the Central Government against Union Carbide
under section 3 of the Act would be a suit of the kind
contemplated by the Explanation to Order 23, rule 3 of the
Code of Civil Procedure since the victims are not parties
and yet the decree obtained in the suit would bind them. It
was, therefore, urged by Shri Shanti Bhushan that the provi-
sions of Section 3(1) of the Act merely empowers the Central
Government to enter into a compromise but did not lay down
the procedure which was to be followed for entering into any
compromise. Therefore, there is nothing which is inconsist-
ent with the provisions of Order 23 Rule 3-B of the CPC to
which the provisions Section 11 of the Act be applied. If,
however, by any stretch of argument the provisions of the
Act could be construed so as to override the provisions of
Order 23 Rule 3-B CPC, it was urged, the same would render
the provisions of the Act violative of the victims’ funda-
mental rights and the actions would be rendered unconstitu-
tional. If it empowered the Central Government to compromise
the victims’ rights, without even having to apply the prin-
ciples of natural justice, then it would be unconstitutional
and as such bad. Mr. Shanti Bhushan, Ms. Jaising and Mr.
Garg submitted that these procedures must be construed in
accordance with the provisions contained in Order 23 Rule
3-B CPC and an opportunity must be given to those whose
claims are being compromised to show to the court that the
compromise is not fair and should not accordingly be permit-
ted by the court. Such a hearing in terms, according to
counsel, of Order 23 Rule 3-B CPC has to be before the
compromise is entered into. It was then submitted that
section 3 of the Act only empowers the Central Government to
represent and act in place of the victims and to institute
suits on behalf of the victims or even to enter into compro-
mise on behalf of the victims.
57. The Act does not create new causes of action create
special courts. The jurisdiction of the civil court 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
themselves the suit would be filed by the Central Government
on their behalf.
58. Shri Shanti Bhushan then argued that the cause of
action of each victim is separate and entitled him to bring
a suit for separate amount according to the damages suffered
by him. He submitted that even where the Central Government
was empowered to file suits on behalf of all the victims it
could only ask for a decree of the same kind as could have
been asked for by the victims themselves, namely, a
656
decree awarding various specified amounts to different
victims whose names had to be disclosed. According to Shri
Shanti Bhushan, even if all the details were not available
at the time when the suit was filed, the details of the
victims’ damages had to be procured and specified in the
plaint before a proper decree could be passed in the suit.
even if the subject matter of the suit had to be compromised
between the Central Government and the Union Carbide the
compromise had to indicate as to what amount would be pay-
able to each victim, in addition to the total amount which
was payable by Union Carbide, submitted Shri Shanti Bhushan.
It was submitted that there was nothing in the Act which
permitted the Central Government to enter into any general
compromise with Union Carbide providing for the lumpsum
amount without disclosure as to how much amount is payable
to each victim.
59. If the Act in question had not been enacted, the
victims would have been entitled to not only sue Union
Carbide themselves but also to enter into any compromise or
settlement of their claims with the Union Carbide immediate-
ly. The provisions of the Act, according to Mr. Shanti
Bhushan, deprive the victims of their legal right and such
deprivation of their rights and creation of a corresponding
right in the Central Government can be treated as reasonable
only if the deprivation of their rights imposed a corre-
sponding liability on the Central Government to continue to
pay such interim relief to the victims as they might be
entitled to till the time that the Central Government is
able to obtain the whole amount of compensation from the
Union Carbide. He submitted that the deprivation of the
right of the victims to sue for their claims and denial of
access to justice and to assert their claims and the substi-
tution of the Central Government to carry on the litigation
for or on their behalf can only be justified, if and only if
the Central Government is enjoined to provide for such
interim relief or continue to provide in the words of Judge
Keenan, as a matter of fundamental human decency, such
interim relief, necessary to enable the victims to fight the
battle. Counsel submitted that the Act must be so read. Shri
Shanti Bhushan urged that if the Act is construed in such a
manner that it did not create such an obligation on the
Central Government, the Act cannot be upheld as a reasonable
provision when it deprived the victims of their normal legal
rights of immediately obtaining compensation from Union
Carbide. He referred to section 10(b) of the Act and clause
10 and 11(1) of the Scheme to show that the legislative
policy underlying the Bhopal Act clearly contemplated pay-
ment of interim relief to the victims from time to time till
such time as the Central Government was able to recover from
Union Carbide
657
full amount of compensation from which the interim reliefs
paid by the Central Government were to be deducted from the
amount payable to them by way of final disbursal of the
amounts recovered.
60. The settlement is bad, according to Shri Shanti
Bhushan if part of the bargain was giving up of the criminal
liability against UCIL and UCC. Shri Shanti Bhushan submit-
ted that this Court should not hesitate to declare that the
settlement is bad because the fight will go on and the
victims should be provided reliefs and interim compensation
by the Central Government to be reimbursed ultimately from
the amount to be realised by the Central Government. This
obligation was over and above the liability of the Central
Government as a joint tort-feasor, according to Shri Shanti
Bhushan.
61. Shri Kailash Vasdev, appearing for the petitioners
in Writ Petition No. 155 1/86 submitted that the Act dis-
placed the claimants in the matter of their right to seek
redressal and remedies of the actual injury and harm caused
individually to the claimants. The Act in question by re-
placing the Central Government in place of the victims. by
conferment of exclusive right to sue in place of victims,
according to him, contravened the procedure established by
law. The right to sue for the wrong done to an individual
was exclusive to the individual. It was submitted that under
the civil law of the country, individuals have rights to
enforce their claims and any deprivation would place them
into a different category from the other litigants. The
right to enter into compromise, it was further submitted,
without consultation of the victims, if that is the con-
struction of section 3 read with section 4 of the Act, then
it is violative of procedure established by law. The proce-
dure substituted, if that be the construction of the Act,
would be in violation of the principles of natural justice
and as such bad. It was submitted that the concept of
‘parens patriae’ would not be applicable in these cases. It
was submitted that traditionally, sovereigns can sue under
the doctrine of ‘parens patriae’ only for violations of
their “quasi-sovereign” interests. Such interests do not
include the claims of individual citizens. It was submitted
that the Act in question is different from the concept of
parens patriae because there was no special need to be
satisfied and a class action, according to Shri Vasdev,
would have served the same purpose as a suit brought under
the statute and ought to have been preferred because it
safeguarded claimants’ right to procedural due process. In
addition, a suit brought under the statute would threaten
the victims’ substantive due process rights. It was further
submitted that in order to sustain an action, it was neces-
sary for the Government of India to have standing
658
62. Counsel submitted that ‘parens patriae’ has received
no judicial recognition in this country as a basis for
recovery of money damages for injuries suffered by individu-
als. He may be right to that extent but the doctrine of
parens patriae has been used in India in varying contexts
and contingencies.
63. We are of the opinion that the Act in question was
passed in recognition of the right of the sovereign to act
as parens patriae as contended by the learned Attorney
General. 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. We have noted the several decisions re-
ferred to hereinbefore, namely, Bhudhkaran Chankhani v.
Thakur Prasad Shad, (supra); Banku Behary Mondal v. Banku
Behari Hazra, (supra); Medai Dalavoi T. Kumaraswami Mudaliar
v. Medai Dalavai Rajammal, (supra) and to the decision of
this Court in Mahant Ram Saroop Dasji v. S.P. Sahi, (supra)
and the decision of the American Supreme Court in Alfred
Schnapp v. Puerto Rico, (supra). 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. In our opinion, learned Attorney General was right in
contending that 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 grievances 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 because of its constitutional commitment is obliged to
take upon itself the claims of the victims and to protect
them in their hour of need. Learned Attorney General was
also right in submitting that the decisions of the Calcutta,
Madras and U.S. Supreme Court clearly indicate that parens
patriae doctrine can be invoked by sovereign state within
India, even if it be contended that it has not so far been
invoked inside India in respect of claims for damages of
victims suffered at the hands of the multinational. In our
opinion, conceptually and jurisprudentially, 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 us to be an expression of its sover-
eign power. This power is plenary and inherent in every
sovereign state to do all things which promote the health,
peace,
659
morals, education and good order of the people and tend to
increase the wealth and prosperity of the state. Sovereignty
is difficult to define. See in this connection, Weaver on
Constitional Law, p. 490. 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 what the law of necessity is to the individual. It is
comprehended in the maxim salus populi suprema lex–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 state, this
can only be measured by the legislative will of the people,
subject to the fundamental rights and constitutional limita-
tions. This is an emanation of sovereignty subject to as
aforesaid. Indeed, it is the obligation of the State to
assume such responsibility and protect its citizens. It has
to be borne in mind, as was stressed by the learned Attorney
General, that conferment of power and the manner of its
exercise are two different matters. It was submitted that
the power to conduct the suit and to compromise, if neces-
sary, was vested in the Central Government for the purpose
of the Act. 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 of invalidity. In this connection,
the observations of Viscount Simonds in Belfast Corporation
v. O.D. Commission, [1950] AC 490 at 520-21 are relevant
where it was emphasised that validity of a measure is not be
determined by its application to particular cases. This
Court in Collector of Customs, Madras v. Nathella Sampathu
Chetty, [1962] 3 SCR 786 at 825 emphasised that the consti-
tutional validity of the statute would have to be determined
on the basis of its provisions and on the ambit of its
operation as reasonably construed. It has to be borne in
mind that if upon so judged it passes the test of reasona-
bleness, then the possibility of the powers conferred being
improperly used is no ground for pronouncing the law itself
invalid. See in this connection also the observations in
P.J. Irani v. State of Madras, [1962] 2 SCR 169 at 178 to
181 and D.K. Trivedi v. State of Gujarat, [1986] Supp. SCC
20 at 60-61
64. Sections 3 and 4 of the Act should be read together
as contended by the learned Attorney General, along with
other provisions of the Act and in particular sections 9 and
11 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
660
disaster are 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 11. Section 4 of the Act opens with non-
obstante clause, vis-a-vis, section 3 and therefore, over-
rides section 3. Learned Attorney General submitted that the
right of the Central Government under section 3 of the Act
was to represent the victims exclusively and act in the
place of the victims. The Central Government, it was urged,
in other words, is substituted in the place of ‘the victims
and is the dominus litis. Learned Attorney General submitted
that the dominus litis carries with it the right to conduct
the suit in the best manner as it deems fit, including, the
right to withdraw and right to enter into compromise. The
right to withdraw and the right to compromise conferred by
section 3(2) of the Act cannot be exercised to defeat the
rights of the victims. As to how the rights should be exer-
cised is guided by the objects and the reasons contained in
the Preamble, namely, to speedily and effectively process
the claims of the victims and to protect their claims. The
Act was passed replacing the Ordinance at a time when many
private plaintiffs had instituted complaints/suits in the
American Courts. In such a situation, the Government of
India acting in place of the victims necessarily should have
right under the statute to act in all situations including
the position of withdrawing the suit or to enter into com-
promise. Learned Attorney General submitted that if the UCC
were to agree to pay a lump sum amount which would be just,
fair and equitable, but insists on a condition that the
proceedings should be completely withdrawn, then necessarily
there should be power under the Act to so withdraw. Accord-
ing to him, therefore, the Act engrafted a provision empow-
ring the Government to compromise. The provisions under
section 3(2)(b) of the Act to enter into compromise was
consistent with the powers of dominus litis. In this connec-
tion, our attention was drawn to the definition of ‘Dominus
Litis’ in Black’s Law Dictionary, Fifth Edition, P. 437,
which states as follows:
“‘Dominus litis’. The master of the suit; i.e.
the person who was really and directly inter-
ested in the suit as a party, as distinguished
from his attorney or advocate. But the term is
also applied to one who, though not originally
a party, has made himself such, by interven-
tion or otherwise, and has assumed entire
control and responsibility for one side and is
treated by the Court as liable for costs. Vir-
ginia Electric & Power Co, v. Bowers, ISI Va.,
542, 25 S.E. 2d 361,263″.
661
65. Learned Attorney General sought to contend that the
victims had not been excluded entirely either in the conduct
of proceedings or in entering into compromise, and he re-
ferred to the proceedings in detail emphasising the partici-
pation of some of the victims at some stage. He drew our
attention to the fact that the victims had filed separate
consolidated complaints in addition to the complaint filed
by the Government of India. Judge Keenan of the Distt. Court
of America had passed orders permitting the victims to be
represented not only ‘by the private Attorneys but also by
the Govt. of India. Hence, it was submitted that it could
not be contended that the victims had been excluded. Learned
Attorney General further contended that pursuant to the
orders passed by Judge Keenan imposing certain conditions
against the Union Carbide and allowing the motion for forum
non convenience of the UCC that the suit came back to India
and was instituted before the Distt. Court of Bhopal. In
those circumstances, it was urged by the learned Attorney
General that the private plaintiffs who went to America and
who were represented by the contingency lawyers fully knew
that they could also have joined in the said suit as they
were before the American Court along with the Govt. of
India. It was contended that in the proceedings at any point
of time or stage including when the compromise was entered
into, these private plaintiffs could have participated in
the court proceedings and could have made their representa-
tion, if they so desired. Even in the Indian suits, these
private parties have been permitted to continue as parties
represented by separate counsel even though the Act empowers
the Union to be the sole plaintiff. Learned Attorney General
submitted that Section 4 of the Act clearly enabled the
victims to exercise their right of participation in the
proceedings. The Central Govt. was enjoined to have due
regard to any matter which such person might require to be
urged. Indeed, the learned Attorney General urged very
strenuously that in the instant case, Zehreeli Gas Kand
Sangharsh Morcha and Jana Swasthya Kendra (Bhopal) had filed
before the Distt. Judge, Bhopal, an application under Order
I Rule 8 read with Order I Rule 10 and Section 15 1 of the
CPC for their-intervention on behalf of the victims. They
had participated in the hearing before the learned Distt.
Judge, who referred to their intervention in the order. It
was further emphasised that when the UCC went up in revision
to the High Court of Madhya Pradesh at Jabalpur against the
interim compensation ordered to be paid by the Distt. Court,
the intervener through its Advocate, Mr. Vibhuti Jha had
participated in the proceedings. The aforesaid Association
had also intervened in the civil appeals preferred pursuant
to the special leave granted by this Court to the Union of
India and Union Carbide against the judgment of the
662
High Court for interim compensation. In those circumstances,
it was submitted that there did not exist any other gas
victim intervening in the proceedings, claiming participa-
tion under Section 4. Hence, the right to compromise provid-
ed for by the Act, could not be held to be violative of the
principles of natural justice. According to the learned
Attorney General, this Court first proposed the order to
counsel in court and after they agreed thereto, dictated the
order on 14th February, 1989. On 15th February, 1989 after
the Memorandum of Settlement was filed pursuant to the
orders of the court, further orders were passed. The said
Association, namely, Zehreeli Gas Kand Sangharsh Morcha was
present, according to the records, in the Court on both the
dates and did not apparently object to the compromise. Mr.
Charanlal Sahu, one of the petitioners in the writ petition,
had watched the proceedings and after the Court had passed
the order on 15th February, 1989 mentioned that he had filed
a suit for Rs. 100 crores. Learned Attorney General submit-
ted that Mr. Sahu neither protested against the settlement
nor did he make any prayer to be heard. Shri Charan Lal
Sahu, in the petition of opposition in one of these matters
have prayed that a sum of Rs. 100 million should be paid
over to him for himself as well as on behalf of those vic-
tims whom he claimed to represent. In the aforesaid back-
ground on the construction of the Section, it was urged by
the learned Attorney General that Section 3 of the Act
cannot be held to be unconstitutional. The same provided a
just, fair and reasonable procedure and enabled the victims
to participate in the proceedings at all stages–those who
were capable and willing to do so. Our attention was drawn
to the fact that Section 11 of the Act provides that the
provisions of the Act shall have effect notwithstanding
anything inconsistent therewith contained in any other
enactment other than the Act. It was, therefore, urged that
the provisions of the Civil Procedure Code stood overridden
in respect of the areas covered by the Act, namely, (a)
representation, (b) powers of representation; and (c) com-
promise.
66. According to the learned Attorney General, the Act
did not violate the principles of natural justice. The
provisions of the CPC could not be read into the Act for
Section 11 of the Act provides that the application of the
provision of the Civil Procedure Code in so far as those
were inconsistent with the Act should be construed as over-
ridden in respect of areas covered by it. Furthermore,
inasmuch as Section 4 had given a qualified right of partic-
ipation 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. According to him,
the
663
extension of the principles of natural justice beyond what
is provided by the Act in Sections 3 & 4, was unwarranted
and would deprive the provisions of the Statute of their
efficacy in relation to the achievement of ‘speedy relief’,
which is the object intended to be achieved. He emphasised
that the process of notice, consultation and exchange of
information, informed decision-making process, the modali-
ties of assessing a consensus of opinion would involve such
time that the Govt. would be totally unable to act in the
matter efficiently, effectively and purposefully on behalf
of the victims for realisation of the just dues of the
victims. He further urged that the Civil Procedure Code
before its amendment in 1976 did not have the provisions of
Order l Rules 8(4), (5) & (6) and Explanations etc. nor
Order XXIII Rules 3A and 3B. Before the amendment the High
Court had taken a view against the requirement of hearing
the parties represented in the suit under Order 1, Rule 8
before it before settling or disposing of the suit. Our
attention was drawn to the decision of the Calcutta High
Court in Chintaharan Ghose & Ors. v. Gujaraddi Sheik & Ors.,
AIR 1951 Cal. 456 at 457-459, wherein it was held by the
learned Single Judge that the plaintiff in a representative
suit had right to compromise subject to the conditions that
the suit was properly filed in terms of the provisions of
that Rule and the settlement was agreed bona fide. Learned
Attorney General in that context contended that when the
suit was validly instituted, the plaintiff had a right to
compromise the suit and there need not be any provision for
notice to the parties represented before entering into any
compromise. Reliance was placed on the decision of the
Allahabad High Court in Ram Sarup v. Nanak Ram, AIR 1952
Allahabad 275, where it was held that a compromise entered
into in a suit filed under Order 1 Rule 8 of the CPC was
binding on all persons as the plaintiffs who had instituted
the suit in representative capacity had the authority to
compromise. He further submitted that most, if not all, of
the victims had given their powers of attorney which were
duly filed in favour of the Union of India. These powers or
attorney have neither been impeached nor revoked or with-
drawn. By virtue of the powers of attorney the Union of
India, it was stated, had the authority to file the suits
and to compromise the interests of the victims if so re-
quired. The Act in question itself contemplates settlement
as we have noted, and a settlement would need a common
spokesman.
67. It was submitted that the Govt. of India as the
statutory representative discharged its duty and is in a
centralised position of assessing the merits and demerits of
any proposed course of action. So far as the act of compro-
mise, abridging or curtailing the ambit of the
664
rights of the victims, it was submitted that in respect of
liabilities of UCC & UCIL, be it corporate, criminal or
tortious, it was open to an individual to take a decision of
enforcing the liability to its logical extent or stopping
short of it and acceding to a compromise. Just as an indi-
vidual can make an election in the matter of adjudication of
liability so can a statutory representative make an elec-
tion. Therefore, it is wholly wrong to contend, it was
urged, that Section 3(ii)(b) is inconsistent with individu-
al’s right of election and at the same time it provides the
centralised decision-making processes to effectively adjudge
and secure the common good. It was only a central agency
like the Govt. of India, who could have a perspective of the
totality of the claims and a vision of the problems of
individual plaintiffs in enforcing these, it was urged. It
was emphasised that it has to be borne in mind that a com-
promise is a legal act. In the present case, it is a part of
the conduct of the suit. It is, therefore, imperative that
the choice of compromise is made carefully, cautiously and
with a measure of discretion, it was submitted. But if any
claimant wished to be associated with the conduct of the
suit, he would necessarily have been afforded an opportunity
for that purpose, according to the learned Attorney General.
In this connection, reference was made to Section 4 of the
Act. On the other hand, an individual who did not partici-
pate in the conduct of the suit and who is unaware of the
various intricacies of the case, could hardly be expected to
meaningfully partake in the legal act of settlement either
in conducting the proceedings or entering into compromise,
it was urged. In those circumstances, the learned Attorney
General submitted that the orders of 14-15th February, 1989
and the Memorandum of Settlement were justified both under
the Act and the Constitution. According to him, the terms of
Settlement might be envisaged as pursuant to Section
3(ii)(b) of the Act, which was filed according to him pursu-
ant to judical direction. He sought more than once to empha-
sise, that the order was passed by the highest Court of the
land in exercise of extraordinary jurisdiction vested in it
under the Constitution.
68. Our attention was drawn to several decisions for the
power of this Court under Articles 136 and 142 of the Con-
stitution. Looked closely at the provisions of the Act, it
was contended that taking into consideration all the
factors, namely, possibilities of champerty, exploita-
tion, unconscionable agreements and the need to represent
the dead and the disabled, the course of events would reveal
a methodical and systematic protection and vindication of
rights to the largest possible extent. It was observed that
the rights are indispensably valuable possessions, but the
rights is something which a
665
man can stand on, something which must be demanded or in-
sisted upon without embarrassment or shame. When rights are
curtailed, permissibility of such a measure can be examined
only upon the strength, urgency and the preeminence of
rights and the largest good of the largest number sought to
b,e served by curtailment. Under the circumstances which
were faced by the victims of Bhopal gas tragedy, the justi-
fying basis, according to the learned Attorney General, or
ground of human rights is that every person morally ought to
have something to which he or she is entitled. It was empha-
sised that the Statute aimed at it. The Act provides for
assumption of rights to sue with the aim of securing speedy,
effective and equitable results to the best advantage of the
claimants. The Act and the scheme, according to the learned
Attorney General, sought to translate that profession into a
system of faith and possible association when in doubt.
Unless such a profession is shown to be unconscionable under
the circumstances or strikes judicial conscience as a sub-
version of the objects of the Act, a declaredly fair, just
and equitable exercise of a valid power would not be open to
challenge. He disputed the submission that the right to
represent victims postulated as contended mainly by the
counsel on behalf of the petitioners, a pre-determination of
each individual claim as a sine qua non for proceeding with
the action. Such a construction would deplete the case of
its vigour, urgency and sense of purpose, he urged. In this
case, with the first of the cases having been filed in U.S.
Federal Court on December 7, 1984 a settlement would have
been reached for a much smaller sum to the detriment of the
victims. Learned Attorney General emphasised that this
background has to be kept in mind while adjudging the valid-
ity of the Act and the appropriateness of the conduct of the
suit in the settlement entered into.
69. He submitted that it has to be borne in mind that if
the contentions of the petitioners are entertained, the
rights theoretically might be upheld but the ends of justice
would stand sacrificed. It is in those circumstances that it
was emphasised that the claimant is an individual and is the
best person to speak about his injury. The knowledge in
relation to his injury is relevant for the purpose of com-
pensation, whose distribution and disbursement is the sec-
ondary stage. It is fallacious to suggest that the plaint
was not based upon necessary data. He insisted that the
figures mentioned in the plaint although tentative were not
mentioned without examination or analysis.
70. It was further submitted by the learned Attorney General
666
that while the Govt. of India had proceeded against the UCC,
it had to represent the victims as a class and it was not
possible to define each individual’s right after careful
scrutiny, nor was it necessary or possible to do so in a
mass disaster case. The settlement was a substitute for
adjudication since it involved a process of reparation and
relief. The relief and reparation cannot be said to be
irrelevant for the purpose of the Act. It was stated that
the alleged liability of the Govt. of India or any claim
asserted against the alleged joint tort-feasor should not be
allowed to be a constraint on the Govt. of India to protect
the interests of its own citizens. Any counter-claim by UCC
or any claim by a citizen against the Govt. cannot vitiate
the action of the State in the collective interest of the
victims, who are the citizens. Learned Attorney General
submitted that any industrial activity, normally, has to be
licensed. The mere regulation of any activity does not carry
with it legally a presumption of liability for injury caused
by the activity in the event of a mishap occurring in the
course of such an activity. In any event, the learned Attor-
ney General submitted the Govt. of India enjoys sovereign
immunity in accordance with settled law. If this were not
the case, the Sovereign will have to abandon all regulatory
functions including the licensing of drivers of automobiles.
Hence, we have to examine the question whether even on the
assumption that there was negligence on the part of the
Govt. of India in permitting/licensing of the industry set
up by the Union Carbide in Bhopal or permitting the factory
to grow up, such permission or conduct of the Union of India
was responsible for the damage which has been suffered as a
result of Bhopal gas leakage. It is further to be examined
whether such conduct was in discharge of the sovereign
functions of the Govt., and as such damages, if any, result-
ing therefrom are liable to be proceeded against the Govt.
as a joint tort-feasor or not. In those circumstances, it
was further asserted on behalf of the Union of India that
though calculation of damages in a precise manner is a
logical consequence of a suit in progress it cannot be said
to be a condition precedent for the purpose of settling the
matter. Learned Attorney General urged that the accountabil-
ity to the victims should be through the court. He urged
that the allegation that a large number of victims did not
give consent to the settlement entered into, is really of no
relevance in the matter of a compromise in a mass tort
action. It was highlighted that it is possible that those
who do not need urgent relief or are uninformed of the
issues in the case, may choose to deny consent and may place
the flow of relief in jeopardy. Thus, consent based upon
individual subjective opinion can never be correlated to the
proposal of an overall settlement in an urgent matter.
Learned Attorney General urged further that if indeed con-
sent were to be insisted upon as a mandatory
667
requirement of a Statute, it would not necessarily lead to
an accurate reflection of the victims’ opinion as opinions
may be diverse. No individual would be in a position to
relate himself to a lump sum figure and would not be able to
define his expectations on a global criteria. In such cir-
cumstances the value of consent is very much diminished. It
was urged that if at all consent was to be insisted it
should not be an expression of the mind without supporting
information and response. To make consent meaningful it is
necessary that it must be assertion of a fight to be exer-
cised in a meaningful manner based on information and com-
prehension of collective welfare and individual good. In a
matter of such dimensions the insistence upon consent will
lead to a process of enquiry which might make effective
consideration of any proposal impossible. For the purpose of
affording consent, it would also be necessary that each
individual not only assesses the damages to himself objec-
tively and places his opinion in the realm of fair expecta-
tion, but would also have to do so in respect of others. The
learned Attorney General advanced various reasons why it is
difficult now or impossible to have the concurrence of all.
71. In answer to the criticism by the petitioners, it
was explained on behalf of the Union of India that UCIL was
not impleaded as a party in the suit because it would have
militated against the plea of multinational enterprise
liability and the entire theory of the case in the plaint.
It was highlighted that the power to represent under the Act
was exclusive, the power to compromise for the Govt. of
India is without reference to the victims, yet it is a power
guided by the sole object of the welfare of the victims. The
presence and ultimately the careful imprimatur of the judi-
cial process is the best safeguard to the victims. Learned
Attorney General insisted that hearing the parties after the
settlement would also not serve any purpose. He urged that
it can never be ascertained with certainty whether the
victims or groups have authorised what was being allegedly
spoken on their behalf; and that the victims would be unable
to judge a proposal of this nature. A method of consensus
need not be evolved like in America where every settlement
made by contingency fee lawyers who are anxious to obtain
their share automatically become adversaries of the victims
and the court should therefore be satisfied. Here the Court
arrived at the figure and directed the parties to file a
settlement on the basis of its order of February 14, 1985
and the interveners were heard, it was urged. It was also
urged that notice to the victims individually would have
been a difficult exercise and analysis of their response
time consuming.
668
72. The learned Attorney General urged that neither the
Central Govt. nor the State Govt. of Madhya Pradesh is
liable for the claim of the victims. He asserted that, on
the facts of the present case, there is and can be no li-
ability on their part as joint tort-feasors. For the welfare
of the community several socio-economic activities will have
to be permitted by the Govt. Many of these activities may
have to be regulated by licensing provisions contained in
Statutes made either by Parliament or by State Legislatures.
Any injury caused to a person, to his life or liberty in the
conduct of a licensed authority so as to make the said
licensing authority or the Govt. liable to damages would not
be in conformity with jurisprudential principle. If in such
circumstances it was urged on behalf of the Govt., the
public exchequer is made liable, it will cause great public
injury and may result in drainage of the treasury. It would
terrorise the welfare state from acting for development of
the people, and will affect the sovereign governmental
activities which are beneficial to the community not being
adequately licensed and would thereby lead to public injury.
In any event, it was urged on behalf of the Govt., that such
licensing authorities even assuming without admitting could
be held to be liable as joint tort feasors, it could be so
held only on adequate allegations of negligence with full
particulars and details of the alleged act or omission of
the licensing authority alleged and its direct nexus to the
injury caused to the victims. It had to be proved by cogent
and adequate evidence. On some conjecture or surmise without
any foundation on facts, Govt’s right to represent the
victims cannot be challenged. It was asserted that even if
the Govt. is considered to be liable as a joint tort feasor,
it will be entitled to claim sovereign immunity on the law
as it now stands.
73. Reference was made to the decision of this Court in
Kasturilal Kalia Ram Jain v. The State of U.P., [1965] 1 SCR
375 where the conduct of some police officers in seizing
gold in exercise of their statutory powers was held to be in
discharge of the sovereign functions of the State and such
activities enjoyed sovereign immunities. The liability of
the Govt. of India under the Constitution has to be referred
to Article 300, which takes us to Sections 15 & 18 of the
Indian Independence Act, 1947, and Section 176(1) of the
Govt. of India Act, 1935. Reference was also made to the
observations of this Court in The State of Rajasthan v. Mst.
Vidhyawati, & Anr., [1962] 2 Supp. SCR 989.
74. We have noted the shareholding of UCC. The circum-
stances that financial institutions held shares in the UCIL
would not disqualify
669
the Govt. of India from acting as patens patriae and in
discharging of 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 Govt. 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 Govt. of
India had instituted a suit against UCIL to a certain extent
it would have weakened its case against UCC in view of the
judgment of this Court in M.C. Mehta’s case (supra). Accord-
ing to learned Attorney General, the Union of India in the
present case was not proceeding on the basis of lesser
liability of UCC predicated in Mehta’s case but on a differ-
ent jurisprudential principle to make UCC strictly and
absolutely liable for the entire damages.
75. The learned Attorney General submitted that even
assuming for the purpose of argument without conceding that
any objection can be raised for the Govt. of India repre-
senting the victims, to the present situation the doctrine
of necessity applied. 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 principle analogous
thereto. After having statutorily armed itself in recogni-
tion of such parens patraie 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 the victims before the
American courts. Private plaintiffs were also represented by
their attorneys. A Committee of three attorneys was formed
before the case proceeded before Judge Keenan. It was high-
lighted that 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. Reference may be made to Halsbury’s Laws of
England, Vol. 1, 4th Edn., page 89, para 73, where it was
pointed that that if all the members of the only tribunal
competent to determine a matter are subject to disqualifica-
tion, 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–Natural Justice, [1879] pages 138-141.
Reference was also made to the observations of this Court in
J. Mohapatra & Co.
670
& 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 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 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 circum-
stances 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 doc-
trine of de facto representation envisages that acts per-
formed 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 rounded
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 end-
less 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 M/s. 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 Sing, v. Director of Small Industries Services &
Ors., AIR 1980 SC 1888; N.K. Mohammad Sulaiman v. N.C.
Mohammad Ismail & Ors., [1966] 1 SCR 937 and Malkarjun Bin
Shigramappa Pasara v. Narhari Bin Shivappa & Anr., 27 IA 2
16.
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 quashing of the criminal proceedings
and it was not representing the victims in respect of the
criminal liability of
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 U.P. v. Poosu & Anr., [1976] 3 SCR 1005; K.M.
Nanavati v. The State of Bombay, [1961] 1 SCR 497. 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 of Bihar & 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 in addition to 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 49
1. During the course of heating of the petitions, he in-
formed 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 disas-
ter, 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 out-
side the purview of the Act and such claims, if any, are not
extinguished by reason of the orders dated 14th & 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 disas-
ter. The Govt. of India would not seek any reimbursement 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 notifica-
tion 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. Commis-
sioner any additional evidence that they 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
672
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 settle-
ment 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 arrive 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 pro-
nounce 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 multina-
tional companies operating with inherently
dangerous technologies in the developing
countries of the third world? These questions
were said to be of great contemporary rele-
vance 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 prejudge this issue one
way or the other.
81. The basic consideration, the Court recorded, moti-
vating the conclusion of the settlement was the compelling
need for urgent relief, and the Court set out the law’s
delays duly considering that there was a compelling duty
both judicial and humane, 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 suggested to learned counsel to reach a just and fair
settlement. And when counsel met for re-scheduling of the
hearings the suggestion was reiterated. The Court recorded
that the response of learned counsel was positive in at-
tempting a settlement but they expressed a certain degree of
uneasiness and skepticism at the prospects of success in
view of their past experience of such negotiations when, as
they stated, there had been uninformed and even irresponsi-
ble criticism of the attempts at settlement.
673
82. Learned Attorney General had 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 exclu-
sive 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 straightaway 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 relegat-
ed to their original positions. The Court reiterated that
the reasonableness of the sum was based not only on inde-
pendent 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 reasona-
ble it was as a settlement, which would avoid delay, uncer-
tainties 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
674
assessment and procedure to examine the task of assessing
the quantum of interim compensation. 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. 1 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 com-
pensation 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 indi-
cated 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. 1 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 reiter-
ated that loss of precious human lives is irreparable. The
law can only 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 compen-
sation 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 depend-
ants, 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 considerations gener-
ally guiding the idea of reasonableness of the overall basis
of
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, name-
ly, 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 multi-
nationals 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. environmen-
tology, 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 immedi-
ate 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 proceedings; 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 uncer-
tain promises of the law, and when the assessment of fair-
ness of the amount was based on certain factors and assump-
tions 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 peti-
tions 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 (Process-
ing 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
matters? The aforesaid order specifically states that these
matters were placed before this Bench on the “sole question”
whether the Act is ulta vires.
676
Hence, these matters are not before this Bench for disposal
of these writ petitions. If as a result of the determina-
tion, 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 in-
valid 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 sug-
gests that these matters have been placed before this Bench
‘on the sole question’ whether the Bhopal Act is ultra vires
or not, 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 appli-
cations.
89. The provisions of the Act have been noted and the
rival contentions of the parties have been set out before.
It is, however, necessary to reiterate that the Act does not
in any way circumscribe 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
subject-matter 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 Attor-
ney 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 General, if that be so, then
can non-prosecution in criminal liability be a consideration
or valid consideration for settlement of claims under the
Act?
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 pur-
pose 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 liabil-
ity. This aspect is necessary to be reiterated on the ques-
tion 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 disaster 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
business 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 settle-
ment 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 fur-
ther 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 what-
ever claims arise out of the
678
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 communi-
cated 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 As 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 occa-
sioned to his neighbour, he will not be liable in damages.
But if he brings upon his land any thing which would not
naturally 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 high-
lighted 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 Ry-
lands 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 things 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
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 modern industrial society with highly de-
veloped scientific knowledge and technology 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 of an enterprise engaged in hazardous and
dangerous activity. This Court noted that law has to grow in
order to satisfy the needs of the fast changing 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 situa-
tion 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 absolute-
ly 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 excep-
tions which operate vis-a-vis the tortious principle of
strict liability under the rule in Rylands v. Fletcher. If
the enterprise is permitted to carry on a hazardous or
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 activity
as an appropriate item of its overheads. The enterprise
alone has the resources to discover and guard against haz-
ards or dangers and ‘to provide warning against potential
hazards.
680
This Court reiterated that the measure of compensation in
these kinds of cases must be correlated to the magnitude and
capacity of the enterprise because such compensation must
have a deterrent effect. The larger and more prosperous the
enterprise, the greater must be the amount of compensation
payable by it for the harm caused on account of an accident
in the carrying on of the hazardous or inherently dangerous
activity by the enterprise. The determination of actual
damages payable would depend upon various facts and circum-
stances of the particular case.
92. It was urged before us that there was an absolute
and strict liability for an enterprise which was carrying on
dangerous operations with gases in this country. It was
further submitted that there was evidence on record that
sufficient care and attention had not been given to safe-
guard against the dangers of leakage and protection in case
of leakage. Indeed, the criminal prosecution that was
launched against the Chairman of Union Carbide Shri Warren
Anderson and others, as indicated before, charged them along
with the defendants in the suit with delinquency in these
matters and criminal negligence in conducting the toxic gas
operations in Bhopal. As in the instant adjudication, this
Court is not concerned with the determination of the actual
extent of liability, we will proceed on the basis that the
law enunciated by this Court in M.C. Mehta’s case (supra) is
the decision upon the basis of which damages will be payable
to the victims in this case. But then the practical question
arises: what is the extent of actual damages payable, and
how would the quantum of damages be computed? Indeed, in
this connection, it may be appropriate to refer to the order
passed by this Court on 3rd May, 1989 giving reasons why the
settlement was arrived at at the figure indicated. This
Court had reiterated that it had proceeded on certain prima
facie undisputed figures of death and substantially compen-
sating personal injury. This Court has referred to the fact
that the High Court had proceeded on the broader principle
in M.C. Mehta’s case (supra) and on the basis of the capaci-
ty of the enterprise because the compensation must have
deterrent effect. On that basis the High Court had proceeded
to estimate the damages on the basis of Rs.2 lakhs for each
case of death and of total permanent disability, Rs. 1 lakh
for each case of partial permanent disability and Rs.50,000
for each case or’ temporary partial disability. In this
connection, the controversy as to what would have been the
damages if the action had proceeded, is another matter.
Normally, in measuring civil liability, the law has attached
more importance to the principle of compensation than that
of punishment. Penal redress, however, involve both compen-
sation to the person injured and punish-
681
ment as deference. These problems were highlighted by the
House of Lords in England in Rookes v. Barnard, [1964]AC
1129, which indicate the difference between aggravated and
exemplary damages. Salmond on the Law of Torts, 15th Edition
at p. 30 emphasises that the function of damages is compen-
sation rather than punishment, but punishment cannot always
be ignored. There are views which are against exemplary
damages on the ground that these infringe in principle the
object of law of torts, namely, compensation and not punish-
ment and these tend to impose something equivalent to fine
in criminal law without the safeguards provided by the
criminal law. In Rookes v. Barnard (supra), the House of
Lords in England recognised three classes of cases in which
the award of exemplary damages was considered to be justi-
fiable. Awards must not only, it is said, compensate the
parties but also deter the wrong doers and others from
similar conduct in future. The question of awarding exem-
plary or deterrent damages is said to have often confused
civil and criminal functions of law. Though it is considered
by many that it is a legitimate. encroachment of punishment
in the realm of civil liability, as it operates as a re-
straint on the transgression of law which is for the ulti-
mate benefit of the society. Perhaps, in this case, had the
action proceeded, one would have realised that the fall out
of this gas disaster might have been formulation of a con-
cept of damages, blending both civil and criminal liabili-
ties. There are, however, serious difficulties in evolving
such an actual concept of punitive damages in respect of a
civil action which can be integrated and enforced by the
judicial process. It would have raised serious problems of
pleading, proof and discovery, and interesting and challeng-
ing as the task might have been, it is still very uncertain
how far decision based on such a concept would have been a
decision according to ‘due process’ of law acceptable by
international standards. There were difficulties in that
attempt. But as the provisions stand these considerations do
not make the Act constitutionally invalid. These are matters
on the validity of settlement. The Act, as such does not
abridges or curtail damages 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.
93. Mr. Garg tried to canvass before us the expanding of
horizons of human rights. He contended that the conduct of
the multinational corporations dealing with dangerous gases
for the purpose of development specially in the conditions
prevailing under the Third world countries requires closer
scrutiny and vigilance on the part of emerging nations. He
submitted that unless courts are alert and active
682
in preserving the rights of the individuals and in enforcing
criminal and strict liability and in setting up norms com-
pelling the Govt. to be more vigilant and enforcing the
sovereign will of the people of India to oversee that such
criminal activities which endanger even for the sake of
developmental work, economy and progress of the country, the
health and happiness of the people and damage the future
prospects of health, growth and affect and pollute the
environment, should be curbed and, according to him, these
could only be curbed by insisting through the legal adjudi-
cation, punitive and deterrent punishment in the form of
damages. He also pleaded that norms should be set up indi-
cating how these kinds of dangerous operations are to be
permitted under conditions of vigilance and survillence.
While we appreciate the force of these arguments, and en-
dorse his plea that norms and deterrence should be aspired
for, it is difficult to correlate that aspect with the
present problem in this decision.
94. We do reiterate, as mentioned in the Universal
Declaration of Human Rights that people are born free and
the dignity of the persons must be recognised and an effec-
tive remedy by competent tribunal is one of the surest
method of effective remedy. If, therefore, as a result of
this tragedy new consciousness and awareness on the part of
the people of this country to be more vigilant about meas-
ures 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.
95. The main question, however, canvassed by all learned
counsel for the victims was that so far as the Act takes
away the right of the victims to fight or establish their
own rights, it is a denial of access to justice, and it was
contended that such denial is so great a deprivation of both
human dignity and right to equality that it cannot be justi-
fied because it would be affecting right to life, which
again cannot be deprived without a procedure established by
law which is just, fair and reasonable.
96. On this aspect, Shri Shanti Bhushan tried to urge
before us that sections 3 & 4 of the Act. in so far as these
enjoin and empower the Central Govt. to institute or prose-
cute proceedings was only an enabling provision for the
Central Govt. and not depriving or disabling provisions for
the victim. Ms. Jaising sought to urge in addition, that in
order to make the provisions constitutionally valid, we
should eliminate the concept of exclusiveness to the Central
Govt. and give the victims right to sue along with the
Central Govt. We are unable to accept these submissions.
683
97. In our opinion, Sections 3 & 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 to the Central Government an exclusive 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 exclusivily cannot be
whittled down or watered down as suggested by counsel. The
said expression must be given its full 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 Govt. along with 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, effec-
tive or equitable and would not be the best or more advanta-
geous procedure for securing the claims arising out of the
leakage. In that view of the matter and in view of the
language used and the purpose intended to be achieved, we
are unable to accept this aspect of the arguments advanced
on behalf of the victims. It was then contended that by the
procedure envisaged by the Act, the victims have been de-
prived and denied.their rights and property to fight for
compensation. The victims, it has been asserted, have been
denied access to justice. It is a great deprivation, it was
urged. It was contended that the procedure evolved under the
Act for the victims is peculiar and having good deal of
disadvantages for the victims. Such special disadvantageous
procedure and treatment is unequal treatment, it was sug-
gested. It was, therefore, violative of Article 14 of the
Constitution, that is the argument advanced.
98. The Act does provide a special procedure in respect
of the rights of the victims and to that extent the Central
Government 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 multinational and a big Indian
corporation and in view of the presence of foreign contin-
gency lawyers to whom the victims were exposed, the claim-
ants and victims can legitimately be described as a class by
themselves different and distinct, sufficiently separate and
indentifiable to be entitled to special treatment for effec-
tive, 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 differen-
tiation. The disaster being unique in its character and in
the recorded history of industrial disasters situated as the
victims were against a mighty multinational with
684
the presence of foreign contingency lawyers. looming on the
scene, in our opinion, there were sufficient grounds for
such differentiation and different treatment. In treating
the victims of the gas leak disaster differently and provid-
ing them a procedure, which was just, fair, reasonable and
which was not unwarranted or unauthorised by the Constitu-
tion, Article 14 is not breached. We are, therefore, unable
to accept this criticism of the. Act.
99. The second aspect canvassed on behalf of the victims
is that the procedure envisaged is unreasonable and as such
not warranted by the situation and cannot be treated as a
procedure which is just, fair and reasonable. The argument
has to be judged by the yardstick, as mentioned hereinbe-
fore, enunciated by this Court in State of Madras v. V.G.
Rao, (supra). Hence, both the restrictions or limitations on
the substantive and procedural rights in the impugned legis-
lation will have to be judged from the point of view of the
particular Statute in question. 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 back-
ground, 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 for 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.
100. In this connection, the concept of ‘parens patriae’
in jurisprudence may be examined. It was contended by the
learned Attorney General that the State had taken upon
itself this onus to effectively come in as parens patriae,
we have noted the long line of Indian decisions where,
though in different contexts, the concept of State as the
parent of people who are not quite able to or competent to
fight for their rights or assert their rights, have been
utilised. It was contended that the doctrine of parens
patriae cannot be applicable to the victims. How the concept
has been understood in this country as well as in America
has been noted. Legal dictionaries have been referred to as
noted before. It was asserted on behalf of the victims by
learned counsel that the concept of ‘parens patriae’ can
never be invoked for the purpose of suits in domestic juris-
diction of any country. This can only be applied in respect
of the claims out of the
685
country in foreign jurisdiction. It was further contended
that this concept of ‘parens patraie’ can only be applied in
case of persons who are under disability and would not be
applicable in respect of those who are able to assert their
own rights. It is true that victims or their representatives
are sui generis and cannot as such due to age, mental capac-
ity or other reason not legally incapable for suing or
pursuing the remedies for the rights yet they are at a
tremendous disadvantage in the broader and comprehensive
sense of the term. These victims cannot be considered to be
any match to the multinational companies or the Govt. with
whom in the conditions that the victims or their representa-
tives were after the disaster physically, mentally, finan-
cially, economically and also because of the position of
litigation 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 interests 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 of parens patriae doctrine to the victims. But
quite apart from that, it has to be borne in mind that in
this case the State is acting on the basis of the Statute
itself. For the authority of the Central Govt. 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 substi-
tutes the Central Govt. It displaces the victims by opera-
tion of Section 3 of the Act and substitutes the Central
Govt. in its place. The victims have been divested of their
rights to sue and such claims and such rights have been
vested in the Central Govt. 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. If that is the position then, in our
opinion, 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 in the changed circum-
stances. 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 sovereignty of the
Indian people. As we have noted 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. We must recognize and accept it as such.
686
101. But this right and obligation of the State has
another aspect. Shri Shanti Bhushan has argued and this
argument has also been adopted by other learned counsel
appearing for the victims that with the assumption by the
State of the jurisdiction and power as a parent to fight for
the victims in the situation there is an imcumbent obliga-
tion on the State, in the words of Judge Keenan, ‘as a
matter of fundamental human decency’ to maintain the victims
until the claims are established and realised from the
foreign multinationals. 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 prose-
cuted the State must protect and preserve 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 assump-
tion of the power and temporary deprivation of the rights of
the victims and divestiture of the rights of the victims to
fight for their own rights. This is the only reasonable
interpretation which is just, fair and proper. Indeed, in
the language of the Act there is support for this interpre-
tation. Section 9 of the Act gives power to the Central
Govt. to frame by notification, a scheme for carrying into
effect the purposes of the Act. Sub-section (2) of Section 9
provides for the matters for which the scheme may provide.
Amongst others, clause (d) of Section 9(2) provides for
creation of a fund for meeting expenses in connection with
the administration of the Scheme and of the provisions of
the Act; and clause (e) of Section 9(2) covers the amounts
which the Central Govt. “may after due appropriation made by
Parliament by law in that behalf, credit to the fund re-
ferred to in clause (d) and any other amounts which may be
credited to such fund”. Clause (f) of Section 9(2) speaks of
the utilisation, by way of disbursal (including apportion-
ment) or otherwise, of any amounts received in satisfaction
of the claims. These provisions are suggestive but not
explicit. Clause (b) of Section 10 which provides that in
disbursing under the scheme the amount received by way of
compensation or damages in satisfaction of a claim as a
result of the adjudication or settlement of the claim by a
court or other authority, deduction shall be made from such
amount of the sums, if any, paid to the claimant by the
Govt. before the disbursal of such amount. The Scheme framed
is also significant. Clause 10 of the Scheme provides for
the claims and relief funds and includes disbursal of
amounts as relief including interim relief to persons af-
fected by the Bhopal gas leak disaster and Clause 11(1)
stipulates that disbursal of any amounts under the scheme
shall be made by the Deputy Commissioner to each claimant
through credit in a bank or postal saving account, stressing
that the legislative policy underlined
687
the Bhopal Act contemplated payment of interim relief till
such time as the’ Central Govt. was able to recover from the
Union Carbide full amount of compensation from which the
interim reliefs already paid were to be deducted from the
amount payable to them for the final disbursal. The Act
should be construed as creating an obligation oh the Central
Govt. to pay interim relief as the Act deprives the victims
of normal and immediate right of obtaining compensation from
the Union Carbide. Had the Act not been enacted, the victims
could have and perhaps would have been entitled not only to
sue the Union Carbide themselves, but also to enter into
settlement or compromise of some sort with them. The provi-
sions of the Act deprived the victims of that legal right
and opportunity, and that deprivation is substantial depri-
vation because upon immediate relief depends often the
survival of these victims. In that background, it is just
and proper that this deprivation is only to be justified if
the Act is read with the obligation of granting interim
relief or maintenance by the Central Government until the
full amount of the dues of the victims is realised from the
Union Carbide after adjudication or settlement and then
deducting therefrom the interim relief paid to the victims.
As submitted by learned Attorney General, it is true that
there is no actual expression used in the Act itself which
expressly postulates or indicates such a duty or obligation
under the Act. Such an obligation is, however, inherent and
must be the basis of properly construing the spirit of the
Act. In our opinion, this is the true basis and will be in
consonance with the spirit of the Act. It must be, to use
the well-known phrase ‘the major inarticulate premise’ upon
which though not expressly stated, the Act proceeds. It is
on this promise or premise that the State would be justified
in taking upon itself the right and obligation to proceed
and prosecute the claim and deny access to the courts of law
to the victims on their own. If it is only so read, it can
only be held to be constitutionally valid. It has to be
borne in mind that the language of the Act does not militate
against this construction but on the contrary, Sections 9,
10 and the scheme of the Act suggest that the Act contains
such an obligation. If it is so read, then only meat can be
put into the skeleton of the Act making it meaningful and
purposeful. The Act must, therefore, be so read. This ap-
proach to the interpretation of the Act can legitimately be
called the ‘constructive intuition’ which, in our opinion,
is a permissible mode of viewing the Acts of Parliament. The
freedom to search for ‘the spirit of the Act’ or the quanti-
ty 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
688
opportunity though never to be misused and challenge for the
Judges to adopt and give meaning to the Act, articulate and
inarticulate, and thus translate the intention of the Par-
liament 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. it is common knowledge that the victims were
poor and impoverished. How could they survive the long
ordeal of litigation and ultimate execution of the decree or
the orders unless provisions be made for their sustenance
and maintenance, especially when they have been deprived of
the fight to fight for these claims themselves? We, there-
fore, read the Act accordingly.
102. It was, then, contended that the Central Govt. was
not competent to represent the victims. This argument has
been canvassed on various grounds. It has been urged that
the Central Govt. owns 22% share in UCIL and as such there
is a conflict of interest between the Central Govt. and the
victims, and on that ground the former is disentitled to
represent the latter in their battle against UCC and UCIL. A
large number of authorities on this aspect were cited.
However, it is not necessary in the view we have taken to
deal with these because factually the Central Govt. does not
own any share in UCIL. These are the statutory independent
organisations, namely, Unit Trust of India and Life Insur-
ance Corporation, who own 20 to 22% share in UCIL. The Govt.
has certain amount of say and control in LIC and UTI. Hence,
it cannot be said, in our opinion, that there is any con-
flict of interest in the real sense of the matter in respect
of the claims of Bhopal gas leak disaster between the Cen-
tral Govt. and the victims. Secondly, in a situation of this
nature, the Central Govt. is the only authority which can
pursue and effectively represent the victims. There is no
other organisation or Unit which can effectively represent
the victims. Perhaps, theoretically, it might have been
possible to constitute another independent statutory body by
the Govt. under its control and supervision in whom the
claim of the victims might have been vested and substituted
and that Body could have been entrusted with the task of
agitating or establishing the same claims in the same manner
as the Central Govt. has done under the Act. But the fact
that that has not been done, in our opinion, does not in any
way affect the position. Apart from that, lastly, in our
opinion, this concept that where there is a conflict of
interest, the person having the conflict should not be
entrusted with the task of this nature, does not apply in
the instant situation. In the instant case, no question of
violation of the principle of natural justice arises, and
there is no scope for the application of the principle that
no man should be a Judge in his own cause. The Central
689
Govt. was not judging any claim, but was fighting and ad-
vancing the claims-of the victims. In those circumstances,
it cannot be said that there was any violation of the prin-
ciples of natural justice and such entrustment to the Cen-
tral Govt. of the right to ventilate for the victims was
improper or bad. The adjudication would be done by the
courts, and therefore there is no scope of the violation of
any principle of natural justice.
103. Along with this submission, the argument was that
the power and the right given to the Central Govt. to fight
for the claims of the victims, is unguided and uncanalised.
This submission cannot be accepted. Learned Attorney General
is right that the power conferred on the Central Govt. is
not uncanalised. The power is circumscribed by the purpose
of the Act. If there is any improper exercise or transgres-
sion of the power then the exercise of that power can be
called in question and set aside, but the Act cannot be said
to be violative of the rights of the victims on that score.
We have noted the relevant authorities on the question that
how power should be exercised is different and separate from
the question whether the power is valid or not. The next
argument on behalf of the victims was that there was con-
flict of interest between the victims and the Govt. viewed
from another aspect of the matter. It has been urged that
the Central Govt. as well as the Govt. of Madhya Pradesh
along with the erstwhile Chief Minister of the State of
Madhya Pradesh Shri Arjun Singh were guilty of negligence,
malfeasance and non-feasance, and as such were liable for
damages along with Union Carbide and UCIL. In other words,
it has been said that the Govt. of India and the Govt. of
Madhya Pradesh along with Mr. Arjun Singh are joint tort-
feasors and joint wrong doers. Therefore. it was urged that
there is conflict of interest in respect of the claims
arising out of the the gas leak disaster between the Govt.
of India and the victims and in such a conflict, it is
improper, rather illegal and unjust to vest in the Govt. of
India the rights and claims of the victims. As noted before,
the Act was passed in a particular background and, in our
opinion, if read in that background, only covers claims
against Union Carbide or UCIL. “Bhopal gas leak disaster” or
“disaster” has been defined in clause (a) of Section (2) as
the occurrence on the 2nd and 3rd days of December, 1984
which involved the release of highly noxious and abnormally
dangerous gas from a plant in Bhopal (being a plant of the
UCIL, a subsidiary of the UCC of U.S.A.) and which resulted
in loss of life and damage to property on an extensive
scale.
690
104. In this context, the Act has to be understood that
it is in respect of the person responsible, being the person
in-charge-of the UCIL and the parent company UCC. This
interpretation of the Act is further strengthened by the
fact that a “claimant” has been defined in clause (c) of
Section 2 as a person who is entitled to make a claim and
the expression “person” in Section 2(e) includes the Govt.
Therefore, the Act proceeded on the assumption that the
Govt. could be a claimant being a person as such. Further-
more, this construction and the perspective of the Act is
strengthened if a reference is made to the debate both in
the Lok Sabha and Rajya Sabha to which references have been
made.
105. The question whether there is scope for the Union
of India being responsible or liable as a joint tort feasor
is a difficult and different question. But even assuming
that it was possible that the Central Government might be
liable in a case of this nature, the learned Attorney Gener-
al was right in contending that it was only proper that the
Central Government should be able and authorised to repre-
sent the victims. In such a situation, there will be no
scope of the violation of the principles of natural justice.
The doctrine of necessity would be applicable in a situation
of this nature. The doctrine has been elaborated, in Hals-
bury’s Laws of England, 4th Edition, p, 89, paragraph 73,
where it was reiterated that even if all the members of the
Tribunal competent to determine a matter were subject to
disqualification, they might be authorised and obliged to
hear that matter, by virtue of the operation of the common
law doctrine of necessity,, An adjudicator who is subject to
disqualification on the ground of bias or interest in the
matter which he has to decide may in certain circumstances
be required to adjudicate if there is no other person who is
competent or authorised to be adjudicator or if a quorum
cannot be formed without him or if no other competent tribu-
nal can be constituted. In the circumstances of the case, as
mentioned hereinbefore, the Government of India is only
capable to represent the victims as a party. The adjudica-
tion, however, of the claims would be done by the Court. In
those circumstances, we are unable to accept the challenge
on the ground of the violation of principles of natural
justice on this score. The learned Attorney General, howev-
er, sought to advance, as we have indicated before, his
contention on the ground of de facto validity. He referred
to certain decisions. We are of the opinion that this prin-
ciple will not be applicable. We are also not impressed by
the plea of the doctrine of bona fide representation of the
interests of victims in all these proceedings. We are of the
opinion that the doctrine of bonafide representation would
not be quite relevant and as
691
such the decisions cited by the learned Attorney General
need not be considered.
106. There is, however, one other aspect of the matter
which requires consideration. The victims can be divested of
their rights i.e. these can be taken away from them provided
those rights of the victims are ensured to be established
and agitated by the Central Govt. following the procedure
which would be just, fair and reasonable. Civil Procedure
Code is the guide which guides civil proceedings in this
country and in other countries procedure akin to Civil
Procedure Code. Hence, these have been recognised and ac-
cepted as being in consonance with the fairness of the
proceedings and in conformity with the principles of natural
justice. Therefore, the procedure envisaged under the Act
has to be judged whether it is so consistent. The Act, as
indicated before. has provided the procedure under sections
3 and 4. Section 11 provides that the provisions of the Act
and of any Scheme flamed thereunder shall have effect not-
withstanding anything inconsistent therewith contained in
any enactment other than the Act or any instrument having
effect by virtue of any enactment other than the Act. Hence,
if anything is inconsistent with the Act for the time being,
it will not have force and the Act will override those
provisions to the extent it does. The Act has not specifi-
cally contemplated any procedure to be followed in the
action to be taken pursuant to the powers conferred under
section 3 except to the extent indicated in section 4 of the
Act. Section 5, however, authorises the Central Government
to have the powers of a civil court for the purpose of
discharging the functions pursuant to the authority vested
under sections 3 and 4 of the Act. There is no question of
Central Government acting as a court in respect of the
claims which it should enforce for or on behalf or instead
of the victims of the Bhopal gas leak disaster. In this
connection, it is necessary to note that it was submitted
that the Act, so far as it deals with the claims of the
victims, should be read in conformity with Civil Procedure
Code and/or with the principles of natural justice; and
unless the provisions of/the Act are so read it would be
violative of Articles 14 and 21 of the Constitution in the
sense that there will be deprivation of rights to/fife and
liberty without following a procedure which is just, fair
and reasonable. That is the main submission and contention
of the different counsel for the victims who have appeared.
The different view points from which this contention has
been canvassed have been noted before. On the other hand, on
behalf of the Government, the learned Attorney General has
canvassed before us that there were sufficient safeguards
consistent with the principles of natural justice within
this Act and beyond what has been provided for
692
in a situation for which the Act was enacted, nothing more
could be provided and further reading down the provisions of
the Act in the manner suggested would defeat the purpose of
the Act. The aforesaid section 3 provides for the substitu-
tion 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 con-
stitutional provisions, no question of giving a hearing to
the parties for taking over these fights by the State
arises. For legislation by the Parliament, no principle of
natural justice is attracted provided such legislation is
within the competence of the legislature, which indeed the
present Act is within the competence of the Parliament. We
are in agreement with the submission of the learned Attorney
General that 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.
107. The next aspect is that section 4 of the Act,
which, according to the learned Attorney General gives
limited rights to the victims in the sense that it obliges
the Central Government to have due regard to any matters
which such person may require to be urged with respect to
his claim and shall, if such person so desires, permit at
the expense of such person, a legal practitioner of his
choice to be associated in the conduct of any suit or other
proceeding relating to his claim”. Therefore, it obliges the
Central Government to have ‘due regard’ to any matters, and
it was urged on behalf of the victims that this should be
read in order to make the provisions constitutionally valid
as providing that the victims will have a say in the conduct
of the proceedings and as such must have an opportunity of
knowing what is happening either by instructing or giving
Opinions to the Central Government and/or providing for such
directions as to settlement and other matters. In other
words, it was contended on behalf of the victims that the
victims should be given notice of the proceedings and there-
by an opportunity, if they so wanted, to advance their view:
and that to make the provisions of s. 4 meaningful and
effective unless notice was given to the victim, disabled as
he is, the assumption upon which the Act has been enacted,
could not come and make suggestion in the proceedings. If
the victims are not informed and given no opportunity, the
purpose of s. 4 cannot be attained.
693
108. On the other hand, the learned Attorney General
suggested that s. 4 has been complied with, and contended
that the victims had notice of the proceedings. They had
knowledge of the suit in America, and of the order passed by
Judge Keenan. The private plaintiffs who had gone to America
were represented by foreign contingency lawyers who knew
fully well what they were doing and they had also joined the
said suit along with the Government of India. Learned Attor-
ney General submitted that s. 4 of the Act clearly.enabled
the victims to exercise their right of participation in the
proceedings. According to him, there was exclusion of vic-
tims from the process of adjudication but a limited partici-
pation was provided and beyond that participation no further
participation was warranted and no further notice was just-
fied either by the provisions of the Act as read with the
constitutional requirements or under the general principles
of natural justice. He submitted that the principles of
natural justice cannot be put into strait jacket and their
application would depend upon the particular facts and the
circumstances of a situation. According to the learned
Attorney General, in the instant case, the legislature had
formulated the area where natural justice could be applied,
and upto what area or stage there would be association of
the victims with the suit, beyond that no further applica-
tion of any principle of natural justice was contemplated.
109. The fact that the provisions of the principles of
natural justice have to be complied with, is undisputed.
This is well-settled by the various decisions of the Court.
The Indian Constitution mandates that clearly, otherwise the
Act and the actions would be violative of Article 14 of the
Constitution and would also be destructive of Article
19(1)(g) and negate Article 21 of the Constitution by deny-
ing a procedure which is just, fair and reasonable. See in
this connection, the observations of this Court in Maneka
Gandhi’s case (supra) and Olga Tellis’s case (supra). Some
of these aspects were noticed in the decision of this Court
in Swadeshi Cotton Mills v. Union of India (supra). That was
a decision which dealt with the question of taking over of
the industries under the Industries (Development and Regula-
tion) Act, 1951. The question that arose was whether it was
necessary to observe the rules of natural justice before
issuing a notification under section 18A(1) of the Act. It
was held by the majority of Judges that in the facts of that
case there had been non-compliance with the implied require-
ment of the audi alteram partem rule of natural justice at
the pre-decisional stage. The order in that case could be
struck down as invalid on that score but the court found
that in view of the concession a heating would be afforded
to the company, the case was remitted
694
to the Central Government to give a full, fair and effective
hearing. It was held that the phrase ‘natural justice’ is
not capable of static and precise definition. It could not
be imprisoned in the straight-jacket or a cast-iron formula.
Rules of natural justice are not embodied rules. Hence, it
was not possible to make an exhaustive catalogue of such
rules. This Court reiterated that audi ateram partem is a
highly effective rule devised by the Courts to ensure that a
statutory authority arrives at a just decision and it is
calculated to act as a healthy check on the abuse or misuse
of power. The rules of natural justice can operate only in
areas not covered by any law validly made. The general
principle as distinguished from an absolute rule of uniform
application seems to be that where a statute does not in
terms exclude this rule of prior hearing but contemplates a
post-decisional hearing amounting to a full review of the
original order on merits then such a statute would be con-
strued as excluding the audi alteram partem rule at the
pre-decisional stage. If the statute conferring the power is
silent with regard to the giving of a pre-decisional hearing
to the person affected the administrative decision after
post-decisional hearing was good.
110. The principles of natural justice have been exam-
ined by this Court in Union of India & Anr. v. Tulsi Ram
Patel & Ors., (supra). It was reiterated, that the princi-
ples of natural justice are not the creation of Article 14
of the Constitution. Art. 14 is not the begetter of the
principles of natural justice but their constitutional
guardian. The principles of natural justice consist, inter
alia, of the requirement that no man should be condemned
unheard. If, however, a legislation or a Statute expressly
or by necessary implication excludes the application of any
particular principle of natural justice then it requires
close Scrutiny of the Court.
111. It has been canvassed on behalf of the victims that
the Code of Civil Procedure is an instant example of what is
a just, fair and reasonable procedure, at least the princi-
ples embodied therein and the Act would be unreasonable if
there is exclusion of the victims to vindicate properly
their views and rights. This exclusion may amount to denial
of justice. In any case, it has been suggested and in our
opinion, there is good deal of force in this contention,
that if a part of the claim, for good reasons or bad, is
sought to be compromised or adjusted without at least con-
sidering the views of the victims that would be unreasonable
deprivation of the rights of the victims. After all, it has
to be borne in mind that injustice consists in the sense in
the minds of the people affected by any act or inaction a
feeling that their grievances. views or claims have gone
‘unheeded or not considered. Such a
695
feeling is in itself an injustice or a wrong. The law
must,be so construed and implemented that such a feeling
does not generate among the people for whose benefit the law
is made. Right to a hearing or representation before enter-
ing into a compromise seems to be embodied in the due proc-
ess of law understood in the sense the term has been used in
the constitutional jargon of this country though perhaps not
originally intended. In this connection, reference may be
made to the decision of this Court in Sangram Singh v.
Election Tribunal, Kotah, [1955] 2 SCR 1. The Representation
of the People Act, 1951 contains section 90 and the proce-
dure of Election Tribunals under the Act was governed by the
said provision. Sub-section (2) of section 90 provides that
“Subject to the provisions of this Act and of any rules made
thereunder, every election petition shall be tried by the
Tribunal, as nearly as may be, in accordance with the proce-
dure applicable under the Code of Civil Procedure, 1908 to
the trial of suits”. Justice Bose speaking for the court
said that it is procedure, something designed to facilitate
justice and further its ends, and cannot be considered as a
penal enactment for punishment or penalties; not a thing
designed to trip people up rather then help them. It was
reiterated that our laws of procedure are grounded on the
principle of natural justice which requires that men should
not be condemned unheard, that decisions should not be
reached behind their backs, that proceedings that affect
their lives and property should not continue in their ab-
sence and that they should not be precluded from participat-
ing in them. Of course, there may be exceptions and where
they are clearly defined these must be given effect to. But
taking by and large, and subject to that proviso, our laws
of procedure should be construed, wherever that is reasona-
bly possible, in the light of that principle. At page 9 of
the report, Justice Bose observed as under:
“But that a law of natural justice exists in
the sense that a party must be heard in a
Court of laW, or at any rate be afforded an
opportunity to appear and defend himself,
unless there is express provision to the
contrary, is, we think, beyond dispute. See
the observations of the Privy Council in
Balakrishna Udayar v. Vasudeva Ayyar, (ILR 40
Mad. 793, 800) and especially in T.M. Barter
v. African Products Ltd., (AIR 1928 PC 261)
where Lord Buckmaster said “no forms or proce-
dure should ever be permitted to exclude the
presentation of a litigant’s defence”. Also
Hari Vishnu’s case which we have just quoted.
In our opinion, Wallace J. was right in Venka-
tasubbiah v.
696
Lakshminarasimham, (AIR 1925 Mad. 1274) in
holding that “One cardinal principle to be
observed in trials by a Court obviously is
that a party has a right to appear and plead
his cause on all occasions when that cause
comes on for hearing”, and that ”It follows
that a party should not be deprived of that
right and in fact the Court has no option to
refuse that right, unless the Code of Civil
Procedure deprives him of it”.
112. All civilised countries accept the right to be
heard as part of the due process of law where questions
affecting their rights, privileges or claims are considered
or adjudicated.
113. In S.L. Kapoor v. Jagmohan & Ors., [1981] 1 SCR 746
at 765, Chinnappa Reddy, J. speaking for this Court observed
that the concept that justice must not only be done but must
manifestly be seen to be done, is basic to our system. It
has been reiterated that the principles of natural justice
know of no exclusionary rule dependent on whether it would
have made any difference if natural justice had been ob-
served. The non-observance of natural justice is itself
prejudice to any man and proof of prejudice independently of
proof of denial of natural justice is unnecessary and it has
been said that it will come from a person who has denied
justice that the person who has been denied justice, is not
prejudiced. Principles of natural justice must, therefore,
be followed. That is the normal requirement:
114. In view of the principles settled by this Court and
accepted all over the world, we are of the opinion that in
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 opportunity 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. There are instances and some of these were also
placed before us during the hearing of these matters indi-
cating how the courts regulate giving of the notice in
respect of a mass action where large number of people’s
views have to be ascertained. Such procedure should be
evolved by the court when faced with such a situation.
115. The Act does not expressly exclude the application of
the
697
Code of Civil Procedure. Section 11 of the Act provides the
overriding effect indicating that anything inconsistent with
the provisions of the Act in other law including the Civil
Procedure Code should be ignored and the Act should prevail.
Our attention was drawn to the provisions of Order 1 Rule
8(4) of the Code. Strictly speaking, Order 1 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 Govt. has replaced and divested the
victims.
116. Learned Attorney General submitted that as the
provisions of the Code stood before 1976 Amendment, the High
Courts had taken the view that hearing of the parties repre-
sented in the suit, was not necessary, before compromise.
Further reference was made to proviso to Order XXIII Rule 1.
As in this case there is no question, in our opinion, of
abandonment as such of the suit or part of the suit, the
provisions of this Rule would also not strictly apply.
However, Order XXIII Rule 3B of the Code is an important and
significant pointer and the principles behind the said
provision would apply to this case. The said rule 3B pro-
vides that no agreement or 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 granting such leave the court
shall give notice in such manner as it may think fit in a
representative action. Representative suit, again, has been
defined under Explanation to the said rule vide clause (d)
as any other suit in which the decree passed may, by virtue
of the provisions of this Code or of any other law for the
time being in force, bind any person who is not named as
party to the suit. In this case, indubitably the victims
would be bound by the settlement though 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 3B of Order XXIII of the Code. If the prin-
ciples of this rule are the principles of natural justice
then we are of the opinion that the principles behind it
would be applicable; and also that section 4 should be so
construed in spite of the difficulties of the process of
notice and other difficulties of making “informed decision
making process cumbersome”, as canvassed by the learned
Attorney General.
117. In our opinion, the constitutional requirements,
the language of the Section, the purpose of the Act and the
principles of natural justice lead us to this interpretation
of Section 4 of the Act that in case of a proposed or con-
templated settlement, notice should be given to the victims
who are affected or whose rights are to be affected to
ascertain their views. Section 4 is significant. It enjoins
the Central
698
Govt. only to have “due regard to any matters which such
person may require to be urged”. So, the obligation is on
the Central Govt. in the situation contemplated by Section 4
to have due regard to the views of the victims and that
obligation cannot be discharged by the Central Govt. unless
the victims are told that a settlement is proposed, intended
or contemplated. It is not necessary that such views would
require consent of all the victims. The Central Govt. as the
representative of the victims must have the views of the
victims and place such views before the court in such manner
it considers necessary 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, opportuni-
ties must be given to the victims. Individual notices may
not be necessary. The Court can, and in our opinion, should
in such situation formulate modalities of giving notice and
public notice can also be given inviting views of the vic-
tims by the help of mass media.
118. Our attention was drawn to similar situations in other
lands , where in mass disaster actions of the present type
or mass calamity actions affecting large number of people,
notices have been given in different forms and it may be
possible to invite the views of the victims by announcement
in the media, Press, Radro, and TV etc. intimating the
victims that a certain settlement is proposed or contemplat-
ed and inviting views of the victims within a stipulated
period. And having regard to the views, the Central Govt.
may proceed with the settlement of the action. Consent of
all is not a pre-condition as we read the Act under Section
4. Hence, the difficulties suggested by the learned Attorney
General in having the consent of all and unanimity, do not
really arise and should not deter us from construing the
section as we have.
119. The next aspect of the matter is, whether in the
aforesaid light Section 4 has been complied with. The fact
that there was no
Learned Attorney General, however, sought to canvas the view
that the victims had notice and some of them had participat-
ed in the proceedings. We are, however, unable to accept the
position that the victims had notice of the nature contem-
plated under the Act upon the underling principle of Order
XXIII Rule 3B of the Code. It is not enough to say that the
victims must keep vigil and watch the proceeding. One as-
sumption under which the Act is justified is that the vic-
tims 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
699
and informed to be able to have comprehended or contemplated
the settlement. In the aforesaid view of the matter, in our
opinion, notice was necessary. The victims at large did not
have the notice.
120. The question, however, is that the settlement had
been arrived at after great deal of efforts to give immedi-
ate relief to the victims. We have noticed the order dated
4th May, 1989 passed by this Court indicating the reasons
which impelled the Court to pass the orders on 14/15th
February, 1989 in terms and manner as it did. It has been
urged before us on behalf of some of the victims that jus-
tice has not been done to their views and claims in respect
of the damages suffered by them. It appears to us by reading
the reasons given by this Court on 4th May, 1989 that jus-
tice perhaps has been done but the question is, has justice
appeared to have been done and more precisely, the question
before this Court is: does the Act envisage a procedure or
contemplate a procedure which ensures not only that justice
is done but justice appears to have been done. If the proce-
dure does not ensure that justice appears to have been done,
is it valid? Therefore, in our opinion, in the background of
this question we must hold that 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; we need not now
spell out the actual notice and the manner of its giving to
be consistent with the mandate and purpose of section 4 of
the Act.
121. This Court in its order dated 4th May, 1989 had
stated that in passing orders on 14th/15th February, 1989,
this Court was impelled by the necessity of urgent relief to
the victims rather than to depend upon the uncertain promise
of law. The Act, as we have construed, requires notice to be
given in what form and in what manner, it need not be
spelled out, before entering into any settlement of the type
with which we are concerned. It further appears that that
type of notice which is required to be given had not been
given. The question, therefore, is what is to be done and
what is the consequence? The Act would be bad if it is not
construed in the light that notice before any settlement
under S. 4 of the Act was required to be given. Then arises
the question of consequences of not giving the notice. In
this adjudication, we are not strictly concerned with the
validity or otherwise of the settlement, as we have indicat-
ed hereinbefore. But constitutional adjudication cannot be
divorced from the reality of a situation, or the impact of
an adjudication. Constitutional deductions are never made in
the vacuum. These deal with life’s problems in the reality
of a given situation. And no constitutional adjudication is
also possible unless
700
one is aware of the consequences of such an adjudication.
One hesitates in matters of this type where large conse-
quences follow one way or the other to put as under what
others have put together. It is well to remember, as did
Justice Holmes, that time has upset many fighting faiths and
one must always wagar one’s salvation upon some prophecy
based upon imperfect knowledge. Our knowledge changes; our
perception of truth also changes. It is true that notice was
required to be given and notice has not been given. The
notice which we have contemplated is a notice before the
settlement or what is known in legal terminology as ‘pre-
decisional notice’. But having regard to the urgency of the
situation and having regard to the need for the victims for
relief and help and having regard to the fact that so much
effort has gone in finding a basis for the settlement, we,
at one point of time, thought that a post-decisional hearing
in the facts and circumstances of this case might be consid-
ered to be sufficient compliance with the requirements of
principles of natural justice as embodied under s. 4 of the
Act. The reasons that impelled this Court to pass the orders
of 14th/15th February, 1989 are significant and compelling.
If notice was given, then what would have happened? It has
been suggested on behalf of the victims by counsel that if
the victims had been given an opportunity to be heard, then
they would have perhaps pointed out, inter alia, that the
amount agreed to be paid through the settlement was hope-
lessly inadequate. We have noted the evidence available to
this Court which this Court has recorded in its order dated
4th May, 1989 to be the basis for the figure at which the
settlement was arrived at. It is further suggested that if
an opportunity had been given before the settlement, then
the victims would have perhaps again pointed out that crimi-
nal liability could not be absolved in the manner in which
this Court has done on the 14th/l5th February, 1989. It was
then contended that the Central Government was itself sued
as a joint tort feasor. The Central Government would still
be liable to be proceeded in respect of any liability to the
victims if such a liability is established; that liability
is in no way abridged or affected by the Act or the settle-
ment entered into. It was submitted on behalf of the victims
that if an opportunity had been given, they would have
perhaps pointed out that the suit against the Central Gov-
ernment, Government of Madhya Pradesh and UCIL could not
have been settled by the compromise. It is further-suggested
that if given an opportunity, it would have been pointed out
that the UCIL should have also been sued. One of the impor-
tant 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 appli-
cations were heard and they were heard after utmost publici-
ty and they would have further
701
opportunity when review application against the settlement
would be heard.
122. On behalf of the victims, it was suggested that the
basis of damages in view of the observations made by this
Court in M.C. Mehta’s case (supra) against the victims of
UCC or UCIL would be much more than normal damages suffered
in similar case against any other company or party which is
financially not so solvent or capable. It was urged that it
is time in order to make damages deterrent the damages must
be computed on the basis of the capacity of a delinquent
made liable to pay such damages and on the monitory capacity
of the delinquent the quantum of the damages awarded would
vary and not on the basis of actual consequences suffered by
the victims. This is an uncertain promise of law. On the
basis of evidence available and on the basis of the princi-
ples so far established, it is difficult to foresee any
reasonable possibility of acceptance of this yardstick. And
even if it is accepted, there are numerous difficulties of
getting that view accepted internationally as a just basis
in accordance with law. These, however, are within the realm
of possibility.
123. It was contended further by Shri Garg, Shri Shanti
Bhushan and Ms. Jaising that all the further particulars
upon which the settlement had been entered into should have
been given in the’ notice which was required to be given
before a settlement was sanctified or accepted. We are
unable to accept this position. It is not necessary that all
other particulars for the basis of the proposed settlement
should be disclosed in a suit of this nature before the
final decision. Whatever data was already there have been
disclosed, that, in our opinion, would have been sufficient
for the victims to be able to give their views, if they want
to. Disclosure of further particulars are not warranted by
the requirement of principles of natural justice. Indeed,
such disclosure in this case before finality might jeopar-
dise luther action, if any, necessary so consistent with
justice of the case.
124. So on the materials available, the victims would
have to express their views. 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. Therefore, in our
opinion, though settlement without notice is not quite
proper, on the materials so far available, we are of the
opinion that justice has been done to the victims but jus-
tice has not appeared to have been done. In view of the
magnitude of the misery involved and the problems in this
case, we are also of the opinion that the setting aside of
the settlement on this ground in view of the facts
702
and the circumstances of this case keeping the settlement in
abeyance and giving notice to the victims for a post-deci-
sional 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. We are also conscious that justice is a psycho-
logical yearning, in which men seek acceptance of their view
point by having an opportunity of vindication of their view
point before the forum or the authority enjoined or obliged
to take a decision affecting their right. Yet, in the par-
ticular situations, one has to bear in mind how an infrac-
tion of that should be sought to be removed is accordance
with justice. In the facts and the circumstances of this
case where sufficient opportunity is available when review
application is heard on notice, as directed by Court, no
further opportunity is necessary and it cannot be said that
injustice has been done. “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. Though entering into a settlement without
the required notice is wrong, in the facts and the circum-
stances of this case, therefore, we are of the opinion, to
direct that notice should be given now, would not result in
dain justice in the situation. In the premises, no further
consequential order is necessary by this Court. Had it been
necessary for this Bench to have passed such a consequential
order, we would not have passed any such consequential order
in respect of the same.
125. The sections and the scheme dealing with the deter-
mination of damages and distribution of the amount have also
been assailed as indicated before. Our attention was drawn
to the provisions of the Act dealing with the payment of
compensation and the scheme framed therefore. It was submit-
ted that section 6 of the Act enjoins appointment by the
Central Government of an officer known as the Commissioner
for the welfare of the victims. It was submitted that this
does not give sufficient judicial authority to the officer
and would be really leaving the adjudication under the
scheme by an officer of the executive nature. Learned Attor-
ney General has, however, submitted that for disbursement of
the compensation contemplated under the Act or under the
orders of this Court, a notification would be issued under
section 6(3) of the Act authorising the Commissioner or
other officers to exercise all or any of the powers which
the Central Government may exercise under section 6 to
enable the victims to place before the Commissioner or
Deputy Commissioner any additional evidence that they would
like to adduce. We direct so, and such appropriate notifica-
703
tion be issued. We further direct that in the scheme of
categorisation to be done by the Deputy Commissioner should
be appealable to an appropriate judicial authority and the
Scheme should be modified accordingly. We reiterate that the
basis of categorisation and the actual categorisation should
be justifiable and judicially reviewable-the provisions in
the Act and the Scheme should be so read. There were large
number of submissions made on behalf of the victims about
amending the scheme. Apart from and to the extent indicated
above, in our opinion, it would be unsafe to tinker with the
scheme piecemeal. The scheme is an integrated whole and it
would not be proper to amend it piecemeal. We, however, make
it clear that in respect of categorisation and claim, the
authorites must act on principles of natural justice and act
quasi-judicially.
126. As mentioned hereinbefore, good deal of arguments
were advanced before us as to whether the clause in the
settlement that criminal proceedings would not be proceeded
with and the same will remain quashed is valid or invalid.
We have held that these are not part of the proceedings
under the Act. So the orders on this aspect in the order of
14th/15th February, 1989 are not orders under the Act.
Therefore, on the question of the validity of the Act, this
aspect does not arise whether the settlement of criminal
proceedings or quashing the criminal proceedings could be a
valid consideration for settlement or whether if it was such
a consideration or not is a matter which the court reviewing
the settlement has to decide.
127. In the premise, we hold that the Act is constitu-
tionally valid in the manner we read it. It proceeds on the
hypothesis 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 this 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 set-
tlement and further having regard to the fact that the
victims had their say or on
704
their behalf their views had been agitated in these proceed-
ings and will have further opportunity in the pending review
proceedings. No further order on this aspect is necessary.
The sections dealing with the payment of compensation and
categorisation should be implemented in the manner indicated
before.
128. The Act was conceived on the noble promise of
giving relief and succour to the dumb, pale, meek and
impoverished victims of a tragic industrial gas leak disas-
ter, a concomitant evil in this industrial age of technolog-
ical advancement and development. The Act had kindled high
hopes in the hearts of the. weak and worn, wary and forlorn.
The Act generated hope of humanity. The implementation of
the Act must be with justice. Justice perhaps has been done
to the victims situated as they were, but it is also true
that justice has not appeared to have been done. That is a
great infirmity. That is due partly to the fact that proce-
dure was not strictly followed as we have understood it and
also partly because of the atmosphere that was created in
the country, attempts were made to shake the confidence of
the people in the judicial process and also to undermine the
credibility of this Court. This was unfortunate. This was
perhaps due to misinformed public opinion and also due to
the fact that victims were not initially taken into confi-
dence in reaching the settlement. This is a factor which
emphasises the need for adherence to the principles of
natural justice. The credibility of judiciary is as impor-
tant as the alleviation of the suffering of the victims,
great as these were. We hope these adjudications will re-
store that credibility. Principles of natural justice are
integrally embedded in our constitutional framework and
their pristine glory and primacy cannot and should not be
allowed to be submerged by the exigencies of particular
situations or cases. This Court must always assert primacy
of adherence to the principles of natural justice in all
adjudications. But at the same time, these must be applied
in a particular manner in particular cases having regard to
the particular circumstances. It is, therefore, necessary to
reiterate that 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 as indicated above. That would be a redemption to a
certain extent. It will also be necessary to reiterate that
attempts should be made to formulate the principles of law
guiding the Government and the authorities to permit carry-
ing on of trade dealing with materials and things which have
dengerous consequences within sufficient specific safeguards
especially in case of multinational corporations trading in
India. An awareness on these lines has dawned. Let
705
action follow that awareness. It is also necessary to reit-
erate that the law relating to damages and payment of inter-
im damages or compensation to the victims of this nature
should be seriously and scientifically examined by the
appropriate agencies.
129. The Bhopal Gas Leak disaster and its aftermath of
that emphasise the need for laying down certain norms and
standards the Government to follow before granting permis-
sions or licences for the running of industries dealing with
materials which are of dangerous potentialities. The Govern-
ment should, therefore, examine or have the problem examined
by an expert committee as to what should be the conditions
on 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 permissions, creation of a fund in
anticipation by the industries to be available for payment
of damages out of the said found in case of leakages or
damages in case of accident or disaster flowing from negli-
gent 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 damages by procedure sepa-
rately evolved for computation and payment of damages with-
out 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 in-
flicted, the consequences thereof and the ability and capac-
ity of the parties to pay. Such should also provide for
deterrent or punitive damages, the basis for which should be
formulated by a proper expert committee or by the Govern-
ment. 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.
130. This case has taken some time. It was argued exten-
sively. We are grateful to counsel who have assisted in all
these matters. We have reflected. We have taken some time in
pronouncing our decision. We wanted time to lapse so that
the heat of the moment may calm down and proper atmosphere
restored. Justice, it has been said, is the constant and
perpetual disposition to render every man his due. But what
706
is a man’s due in a particular situation and in a particular
circumstances is a matter for appraisement and adjustment.
It has been said that justice is balancing. The balances
have always been the symbol of even-handed justice. But as
said Lord Denning in Jones v. National Coal Board Ltd.,
[1957] 2 QB 55, at 64-let the advocates one after the other
put the weights into the scales–the ‘nicely calculated less
or more’–but the judge at the end decides which way the
balance tilts, be it ever so slightly. This is so in every
case and every situation.
13 1. The applications are disposed of in the manner and
with the direction, we have indicated above.
SINGH, J. 1 have gone through the proposed judgment of
my learned brother, Sabyasachi Mukharji, CJI. I agree with
the same but I consider it necessary to express my opinion
on certain aspects.
Five years ago between the night of December 2-3, 1984
one of the most tragic industrial disasters in the recorded
history of mankind occurred in the city of Bhopal, in the
State of Madhya Pradesh, as a result of which several per-
sons died and thousands were disabled and physically inca-
pacitated for life. The ecology in and around Bhopal was
adversely affected and air, water and the atmosphere waspol-
luted, its full extent has yet to be determined. UnionCar-
bide India Limited (UCIL) a subsidiary of Union Carbide
Corporation (a Transnational Corporation of United States)
has been manufacturing pesticides at its plant located in
the city of Bhopal. In the process of manufacture of pesti-
cide the UCIL had stored stock of Methyl Isocyanate commonly
known as MlC a highly toxic gas. On the night of the trage-
dy, the MIC leaked from the plant in substantial quantity
causing death and misery to the people working in the plant
and those residing around it. The unprecedented catastrophe
demonstrated the dangers inherent in the production of haz-
ardous chemicals even though for the purpose of industrial
development. A number of civil suits for damages against the
UCC were filed in the United States of America and also in
this Country. The cases filed in USA were referred back to
the Indian courts by Judge Keenan details of which are
contained in the judgment of my learned brother Mukharji,
CJI. Since those who suffered in the catastrophe were mostly
poor, ignorant, illiterate and ill-equipped to pursue their
claims for damages either before the courts in USA or in
Indian courts, the Parliament enacted the Bhopal Gas Leak
Disaster (Processing of Claims) Act 1985 (hereinafter re-
ferred to as ‘the Act’) conferring power on the Union of
India to take over the conduct of litigation in this regard
in place of the
707
individual claimants. The facts and circumstances which led
to the settlement of the claims before this Court have
already been stated in detail in the judgment of Mukharji,
CJI, and therefore, I need not refer to those facts and
circumstances. The constitutional validity of the Act has
been assailed before us in the present petitions. If the Act
is declared unconstitutional, the settlement which was
recorded in this Court, under which the UCC has already
deposited a sum of Rs.750 crores for meeting the claims of
Bhopal Gas victims, would fall and the amount of money which
is already in deposit with the Registry of this Court would
not be available for relief to the victims. Long and de-
tailed arguments were advanced before us for a number of
days and on an anxious consideration and having regard to
the legal and constitutional aspects and especially the need
for immediate help and relief to the victims of the gas
disaster, which is already delayed, we have upheld the
constitutional validity of the Act. Mukharji, CJI has ren-
dered a detailed and elaborate judgment with which I re-
spectfully agree. However, I consider it necessary to say
few words with regard to the steps which should be taken by
the Executive and the Legislature to prevent such tragedy in
future and to avoid the prolonged misery of victims of in
industrial disaster.
We are a developing country, our national resources are
to be developed in the field of science, technology, indus-
try and agriculture. The need for industrial development has
led to the establishment of a number of plants and factories
by the domestic companies and under 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 regu-
lated by a number of laws of our country, i.e. the Factories
Act, Industrial Development and Regulation Act and Workmen’s
Compensation Act etc. there is no special legislation pro-
viding for compensation and damages to outsiders who may
suffer on account of any industrial accident. As the law
stands to-day, 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 as the liability of the enterprise has been
bound by the shackles of conservative principles laid down
by the House of Lords in Ryland v. Herchief, [1868] LR 3 HL
page 330. The principles laid therein made it difficult to
obtain adequate damages from the enterprise and that too
only after the negligence of the enterprise was proved. This
continued to be the position of law, till a Constitution
Bench of this Court in M.C. Mehta
708
v. Union of India, [1987] 1 SCC 420, commonly known as
Sriram Oleum Gas Leak case evolved principles and laid down
new norms to deal adequately with the new problems arising
in a highly industrialised economy. This Court made judicial
innovation in laying down principles with regard to liabili-
ty of enterprises carrying hazardous or inherently dangerous
activities departing from the rule laid down in Ryland v.
Fletcher. The Court held as under:
“We are of the view that an enterprise which
is engaged in a hazardous or inherently dan-
gerous 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-
delegiable duty to the community to ensure
that no harm results to any one on account of
hazardous or inherently dangerous nature of
the activity which it has undertaken. The
enterprise must be held to be under an obliga-
tion to provide that the hazardous or inher-
ently dangerous activity in which it is en-
gaged must be conducted with the highest
standards of safety and if any harm results on
account of such activity, the enterprise must
be absolutely liable to compensate for such
harm and it should be no answer to the enter-
prise 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 inher-
ently dangerous activity carried on by the
enterprise would not be in 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 must be 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 an hazardous or inher-
ently 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 activi-
ty as an appropriate item of its overheads.
Such hazardous or inherently dangerous activi-
ty 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 inherent-
ly dangerous activity regardless of whether it
is carried on carefully or not. This
709
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 therefore hold that where an
enterprise is engaged in a hazardous or inher-
ently dangerous activity and harm results to
anyone on account of an accident in the opera-
tion 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 liabili-
ty is not subject to any of the exceptions
which operate vis-a-vis the tortious principle
of strict liability under the rule in Rylands
v. Fletcher.”
The law so laid down made a land-mark departure from the
conservative principles with regard to the liability of an
enterprise carrying on hazardous or inherently dangerous
activities.
In the instant cases there is no dispute that UCIL a
subsidiary of UCC was carrying on activity of manufacturing
pesticide and in that process it had stored MIC a highly
toxic and dangerous gas which leaked causing vast damage not
only to human life but also to the flora and fauna and
ecology in and around Bhopal. In view of this Court’s deci-
sion in M.C. Mehta’s 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. While
entering into the settlement the UCC has accepted its li-
ability and for that reason it has deposited a sum of Rs.750
crores in this Court. The inadequacy of the amount of com-
pensation under the settlement was assailed by the counsel
for the petitioners but it is not necessary for us to ex-
press any opinion on that question as review petitions are
pending before another Constitution Bench and more so as in
the present cases we are concerned only with the constitu-
tional validity of the Act.
The Bhopal Gas tragedy has raised several important
questions regarding the functioning of multi-nationals in
third world countries.After the Second world war colonial
rule came to end in several parts of the globe, as a number
of natives secured independence from foreign rule. The
political domination was over but the newly born nations
were beset with various problems on account of lack of
finances and development. A number of multi-nationals and
transnational corporations offered their services to the
under-developed and developing countries to provide finances
and technical know-how by
710
setting up their own industries in those countries on their
own terms that brought problems with regard to the control
over the functioning of the transnational corporations.
Multi-national companies in many cases exploited the under-
developed nations and in some cases they influenced politi-
cal and economic policies of host countries which subverted
the sovereignty of those countries. There has been com-
plaints against the multi-nationals for adopting unfair and
corrupt means to advance their interests in the host coun-
tries. Since this was a worldwide phenomena the United
Nations took up the matter for consideration. The Economic
and Social Council of the United Nations established a
Commission on Transnational Corporations to conduct research
on various political, economic and social aspects relating
to transnational corporations. On a careful and detailed
study the Commission submitted its Report in 1985 for evolv-
ing a Code of Conduct for Transnational Corporations. The
Code was adopted in 1986 to which large number of countries
of the world are signatories. Although it has not been fully
finalised as yet, the Code presents a comprehensive instru-
ment formulating the principles of Code of Conduct for
transnational corporations carrying on their enterprises in
under developed and developing countries. The Code contains
provisions regarding ownership and control designed to
strike balance between the competing interests of the Trans-
national Corporation and the host countries. It extensively
deals with the political, economic, financial, social and
legal questions. The Code provides for disclosure of infor-
mation to the host countries and it also provides guidelines
for nationalisation and compensation, obligations to inter-
national law and jurisdiction of courts. The Code lays down
provisions for settlement of disputes between the host
States and an affiliate of a Transnational Corporation. It
suggests that such disputes should be submitted to the
national courts or authorities of host countries unless
amicably settled between the parties. It provides for the
choice of law and means for dispute settlement arising out
of contracts. The Code has also laid down guidelines for the
determination of settlement of disputes arising out of
accident and disaster and also for liability of Transnation-
al Corporations and the jurisdiction of the courts. The Code
is binding on the countries which formally accept it. It was
stated before us that India has accepted the Code. If that
be so, it is necessary that the Government should take
effective measures to translate the provisions of the Code
into specific actions and policies backed by appropriate
legislation and enforcing machinery to prevent any accident
or disaster and to secure the welfare of the victims of any
industrial disaster.
In the context of our national dimensions of human rights,
right
711
to life, liberty, pollution free air and water is guaranteed
by the Constitution under Articles 21, 48A and 5l(g), it is
the duty of the State to take effective steps to protect the
guaranteed constitutional rights. These rights must be
integrated and illumined by the 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. The evolving standards of
international obligations need to be respected, maintaining
dignity and sovereignty of our people, the State must take
effective steps to safeguard the constitutional rights of
citizens by enacting laws. The laws so made may provide for
conditions for granting licence to Transnational Corpora-
tions, prescribing norms and standards for running indus-
tries on Indian soil ensuring the constitutional rights of
our people relating to life, liberty, as well as safety to
environment and ecology to enable the people to lead a
healthy and clean life. 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 corporation should also be made liable
for any damage caused to the human being 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. Under the existing civil law damages
are determined by the Civil Courts, after a long drawn
litigation, which destroys the very purpose of awarding
damages. In order to meet the situation, to avoid delay and
to ensure immediate relief to the victims we would suggest
that the law made by the Parliament should 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
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.
There is yet another aspect which needs consideration
by the Government and the Parliament. Industrial development
in our country and the hazards involved therein, pose a
mandatory need to constitute a statutory “Industrial Disas-
ter Fund”, contributions to which may be made by, the Gov-
ernment, 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 be permanent in nature, so
that money is
712
readily available for providing immediate effective relief
to the victims. This may avoid delay, as has happened in the
instant case in providing effective relief to the victims.
The Government and the Parliament should therefore take
immediate steps for enacting laws, having regard to these
suggestions, consistent with the international norms and
guidelines as contained in the United Nations Code of Con-
duct on Transnational Corporations.
With these observations, I agree with the order proposed
by my learned brother, Sabyasachi Mukharji, CJI.
RANGANATHAN, J. Five years ago, this country was shaken
to its core by a national catastrophe, second in magnitude
and disastrous effects only to the havoc wrought by the
atomic explosions in Hiroshima and Nagasaki. Multitudes of
illiterate and poverty-stricken people in and around Bhopal
suffered damage to life and limb due to the escape of poi-
sonous Methyl Isocyanate (MIC) gas from one of the storage
tanks at the factory of the Union Carbide (India) Limited
(UCIL) in Bhopal, a wholly owned subsidiary of the multina-
tional giant, the Union Carbide Corporation (UCC). A number
of civil suits claiming damages from the UCC were filed in
the United States of America and similar litigation also
followed in Indian courts. Fearing the possibilities of the
exploitation of the situation by vested interests, the
Government of India enacted, the Bhopal Gas Leak Disaster
(Processing of Claims) Act, 1985 (‘the Act’) to regulate the
course of such litigation. Briefly speaking, it empowered
the Union of India to take over the conduct of all litiga-
tion in this regard and conduct it in place of, or in asso-
ciation with, the individual claimants. It also enabled the
Union to enter into a compromise with the UCC and UCIL and
arrive at a settlement. The writ petitions before us have
been filed challenging the constitutional validity of this
statute on the ground that the divestiture of the claimants’
individual rights to legal remedy against the multinational
for the consequences of carrying on dangerous and hazardous
activities on our soil violates the fundamental rights
guaranteed under article 14, 19 and 21 of the Constitution.
In consequence of certain proceedings before Judge
Keenan of the U.S. District Courts, the venue of the litiga-
tion shifted to India. In the principal suit filed in India
by the Union (Civil Suit No. 1113/86) orders were passed by
the trial court in Bhopal directing the UCC to deposit
Rs.370 crores (reduced to Rs.250 crores by the Madhya Pra-
desh High Court) as interim payment to the gas victims
pending disposal of the suit. There were appeals to this
Court in which the
713
UCC contested the Court’s jurisdiction to pass an order for
an interim payment in a suit for money, while the Union
pleaded that a much higher interim payment should have been
granted. When the matter was being argued in this Court, a
settlement was arrived at between the Union and the UCC
under which a sum of Rs.750 crores has been received by the
Union in full settlement of all the claims of all victims of
the gas leak against the UCC. The Union also agreed to
withdraw certain prosecutions that had been initiated
against the officials of the UCC and UCIL in this connec-
tion. This settlement received the imprimatur of this Court
in its orders dated 14th & 15th February, 1989.
It is unfortunate that, though the writ petitions before
us were pending in this Court at that time, neither their
contents nor the need for considering first the issue of the
validity of the Act before thinking of a settlement in
pursuance of its provisions seem to have been effectively
brought to the notice of the Bench which put an end to all
the litigation on this topic in terms of the settlement. The
settlement thus stood approved while the issue of validity
of the Act under which it was effected stood undecided. When
this was brought to the notice of the above Bench, it di-
rected these writ petitions to be listed before a different
Bench ‘to avoid any possible feeling that the same Bench may
be coloured in its views on the issue by reason of the
approval it had given to the fait accompli viz. the settle-
ment. That is now these matters came before us.
The petitioners, claiming to represent a section of the
victims are, firstly, against any settlement at all being
arrived at with the UCC. According to them, it is more
important to ensure by penal action that multinational
corporations do not play with the lives of people in de-
veloping and under developed countries than to be satisfied
with mere compensation for injury and that the criminal
prosecutions initiated in this case should have been pur-
sued. Secondly, they are of the view that the amount for
which the claims have been settled is a pittance, far below
the amount of damages they would have been entitled to, on
the principles of strict, absolute and punitive liability
enunciated by this Court in Mehta’s case [1987] 1 S.C.R.
819. Thirdly, their grievance is that no publicity at all
was given, before this court passed its order, to enable
individual claimants or groups of them to put forward their
suggestions or objections to the settlement proposed. Their
interests were sealed, they say, without complying with
elementary principles of natural justice. They contend that
the provisions of an Act which has made such a settlement
possible cannot be constitutionally valid.
714
The arguments before us ranged over a very wide ground,
covered several issues and extended to several days. This
Bench has been placed in somewhat of a predicament as it has
to pronounce on the validity of the provisions of the Act in
the context of an implementation of its provisions in a
particular manner and, though we cannot (and do not) express
any views regarding the merits of the settlement, we are
asked to consider whether such settlement can be consistent
with a correct and proper interpretation of the Act tested
on the touchstone of the fundamental rights guaranteed under
the Constitution. Mukharji, C.J., has outlined the issues,
dealt elaborately with the contentions urged, and given
expression to his conclusions in a learned, elaborate and
detailed judgment which we have had the advantage of perus-
ing in draft. Our learned brother K.N. Singh, J., has also
highlighted certain aspects in his separate judgment. We
are, in large measure, in agreement with them, but should
like to say a few words on some of the issues in this case,
particularly those in regard to which our approach has been
somewhat different:
1. The issue regarding the validity of the Act turns
principally on the construction of sections 3 and 4 of the
Act. We are inclined to hold that the fact that a settlement
has been effected, or the circumstances in which or the
amount for which the claims of the victims have been set-
tled, do not have a bearing on this question of interpreta-
tion and have to be left out of account altogether except as
providing a contextual background in which the question
arises. Turning therefore to the statute and its implica-
tions, the position is this. Every person who suffered as a
consequence of the gas leak had a right to claim compensa-
tion from the persons who, according to him, were liable in
law for the injury caused to him and also a fight to insti-
tute a suit or proceeding before any court or authority with
a view to enforce his right to claim damages. In the normal
course of events, such a claimant who institute a suit or
proceeding would have been at complete liberty to withdraw
the said suit or proceeding or enter into any compromise he
may choose in that regard. Section 3 undoubtedly takes away
this fight of the claimant altogether: (a) except to the
limited extent specified in the proviso to S. 3(3) and (b)
subject to the provisions of S. 4, for this section clearly
states that it is the Central Government and the Central
Government alone which has the right to represent and act in
place of the claimants, whether within or outside India, for
all purposes in
715
connection with the enforcement of his claims. We may first
consider how far the main provision in S. 3 (leaving out of
account the proviso as well as section 4) is compatible with
the Constitution
The first question that arises is whether the legisla-
ture is justified in depriving the claimants of the right
and privilege of enforcing their claims and prosecuting them
in such manner as they deem fit and in compulsorily inter-
posing or substituting the Government in their place. We
think that, to this question, there can be only one answer.
As pointed out by our learned brother, the situation was
such that the victims of the tragedy needed to be protected
against themselves as their adversery was a mighty multi-
national corporation and proceedings to a considerable
extent had been initiated in a foreign country, where the
conduct of the cases was entrusted to foreign lawyers under
a system of litigation which is unfamiliar to us here. In
the stark reality of the situation, it cannot even be plau-
sibly contended that the large number of victims of the gas
leak disaster should have been left to fend for itself and
merely provided with some legal aid of one type or another.
It is necessary to remember that, having regard to the
identity of the principal ground of claim of all the vic-
tims, even if a single victim was not diligent in conducting
his suit or entered into a compromise or submitted to a
decree judging the issues purely from his individual point
of view, such a decision or decree could adversely affect
the interests of the innumerable other victims as well. In
fact, it appears that a settlement between one set of claim-
ants and the adversary corporation was almost imminent and
would perhaps have been through out for the timely interven-
tion of the Government of India. The battle for the enforce-
ment of one’s rights was bound to be not only prolonged but
also very arduous and expensive and the decision of the
legislature that the fight against the adversary should be
consolidated and its conduct handed over to the Government
of India–it may perhaps have been better if it had been
handed over to an autonomous body independent of the Govern-
ment but, as pointed out by our learned brother, the course
adopted was also not objectionable–was perhaps the only
decision that could have been taken in the circumstances.
This is indeed a unique situation in which the victims, in
order to realise to the best advantage their rights against
UCC, had to be helped out by transposing that right to be
enforced by the Government.
We did not indeed understand any learned counsel before
us to say that the legislature erred in entrusting the
Government of India
716
with the responsibility of fighting for the victims. The
only grievance is that in the process their right to take
legal proceedings should not have been completely taken away
and that they should also have had the liberty of partici-
pating in the proceedings right through. In fact, though the
Act contemplates the Central Government to completely act in
place of the victims, the Government of India has not in
fact displaced them altogether. In all the proceedings
pending in this country, as well as those before Judge
Keenan, the Government of India has conducted the proceed-
ings but the other victims or such of them as chose to
associate themselves in these proceedings by becoming par-
ties were not shut out from taking part in the proceedings.
In fact, as the learned Attorney General pointed out, one of
the groups of litigants did give great assistance to the
trial judge at Bhopal. But 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, we do not think that the result would have
been fatal to the interests of the litigants. On the con-
trary, it enabled the litigants to obtain the benefit of all
legal expertise at the command of the Government of India in
exercising their rights against the Union Carbide Corpora-
tion. 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 satisfactory ’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 litiga-
tion 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 the present type one should not be con-
founded 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 of
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 situa-
tion, 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
717
for all purposes connected with the claims. Even if the Act
had provided for a total substitution of the Government of
India in place of the victims and had completely precluded
them from exercising their rights in any manner, it could
perhaps have still been contended that such deprivation was
necessary in larger public interest.
But the Act is not so draconian in its content. Actual-
ly, as we have said a little earlier, the grievance of the
petitioners is not so much that the Government was entrusted
with the functions. of a dominus litis in this litigation.
Their contention is that the whole object and purpose of the
litigation is to promote the interests of the claimants, to
enable them to fight the UCC with greater strength and
determination, to help them overcome limitations of time,
money and legal assistance and to realise the best compensa-
tion possible consistent not only with the damage suffered
by them but also consistent with national honour and pres-
tige. It is suggested that the power conferred on the Gov-
ernment should be construed as one hedged in by this domi-
nant object. A divestiture of the claimant’s right in this
situation would be reasonable, it is said, only if the
claimant’s rights are supplemented by the Government and not
supplanted by it.
Assuming the correctness of the argument, the provisions
of the proviso to S. 3(3) and of section 4 furnish an answer
to this contention. While the provision contained in the
main part of section 3 may be sufficient to enable the
Government of India to claim to represent the claimants and
initiate and conduct suits or proceeding on their behalf,
the locus standi of the Government of India in suits filed
by other claimants before the commencement of the Act out-
side India would naturally depend upon the discretion of the
court enquiring into the matter. That is why the proviso to
section 3 makes the right of the Government of India to
represent and act in place of the victims in such proceed-
ings subject to the permission of the court or authority
where the proceedings are pending. It is of course open to
such court to permit the Central Government even to displace
the claimants if it is satisfied that the authority of the
Act is sufficient to enable it to do so. In the present case
it is common ground that the proceedings before Judge Keenan
were being prosecuted by the Central Government along with
various individual claimants. Not only did Judge Keenan
permit the association of the Government of India in these
proceedings but the Government of India did have a substan-
tial voice in the course of those proceedings as well.
Again section 4 mandates that, notwithstanding anything
718
contained in section 3, the Central Government, in repre-
senting and acting in place of any person in relation to any
claim, shall have due regard to any matters which such
person may require to be urged with respect to his claim. It
also stipulates that if such person so desires, the Central
Government shall permit, at the expense of such person, a
legal practitioner of his choice to be associated in the
conduct of any suit or other proceeding relating to his
claim. In other words, though, perhaps, strictly speaking,
under section 3 the Central Government can totally exclude
the victim himself or his legal practitioner from taking
part in the proceedings (except in pending suits outside
India), section 4 keeps the substance of the rights of the
victims in tact. It enables, and indeed obliges, the Govern-
ment to receive assistance from individual claimants to the
extent they are able to offer the same. If any of the vic-
tims or their legal advisers have any specific aspect which
they would like to urge, the Central Government shall take
it into account. Again if any individual claimant at his own
expense retains a legal practitioner of his own choice, such
legal practitioner will have to be associated with the
Government in the conduct of any suit or proceeding relating
to his claim. Sections 3 and 4 thus combine together the
interests of the weak, illiterate, helpless and poor victims
as well as the interests 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, in
our opinion, therefore show that there has been no real
total deprivation of the right of the claimants to enforce
their claim for damages in appropriate proceedings before
any appropriate forum. There is only a restriction of this
right which, in the circumstances, is totally reasonable and
justified. The validity of the Act is, therefore, not liable
to be challenged on this ground.
The next angle from which the validity of the provision
is attacked is that the provision enabling the Government to
enter into a compromise is bad. The argument runs thus: The
object of the legislation can be furthered only if it per-
mits the Government to prosecute the litigation more effec-
tively and not if it enables the Government to
719
withdraw it or enter into a compromise. According to them,
the Act fails the impecunious victims in this vital aspect.
The authority conferred by the Act on the Government to
enter into a settlement or compromise, it is said, amounts
to an absolute negation of the rights of the claimants to
compensation and is capable of being so exercised to render
such rights totally valueless, as in fact, it is said, has
happened.
It appears to us that this contention proceeds on a
misapprehension. It is common knowledge that any authority
given to conduct a litigation cannot be effective unless it
is accompanied by an authority to withdraw or settle the
same if the circumstances call for it. The vagaries of a
litigation of this magnitude and intricacy could not be
fully anticipated. There were possibilities that the litiga-
tion may have to be fought out to the bitter finish. There
were possibilities that the UCC might be willing to ade-
quately compensate the victims either on their own’ or at
the insistence of the Government concerned. There was also
the possibility, which had already been in evidence before
Judge Keenan, that the proceedings might ultimately have to
end in a negotiated settlement. One notices that in most of
the mass disaster cases reported, proceedings finally end in
a compromise if only to avoid an indefinite prolongation of
the agonies caused by such litigation. The legislation,
therefore, cannot be considered to be unreasonable merely
because in addition to the right to institute a suit or
other proceedings it also empowers the Government to with-
draw the proceedings or enter into a compromise.
Some misgivings were expressed, in the course of the
hearing, of the legislative wisdom (and, hence the validity)
of entrusting the carriage of these proceedings and, in
particular, the power of settling it out of Court, to the
Union of India. It was contended that the union is itself a
joint tort-feasor (sued as such by some of the victims) with
an interest (adverse to the victims) in keeping down the
amount of compensation payable to the minimum so as to
reduce its own liability as a joint tort-feasor. It seems to
us that this contention in misconceived. As pointed out by
Mukharji, C.J., the Union of India itself is one of the
entities affected by the gas leak and has a claim for com-
pensation from the UCC quite independent of the other vic-
tims. From this point of view, it is in the same position as
the other victims and, in the litigation with the UCC, it
has every interest in securing the maximum amount of compen-
sation possible for itself and the other victims. It is,
therefore, the best agency in the circumstances that could
be looked up to for fighting the UCC on its own as well as
on behalf of the victims. The suggestion that the Union is a
joint tort-lessor has been
720
stoutly resisted by the learned Attorney General. But, even
assuming that the Union has some liability in the matter, we
fail to see-how it can derive any benefit or advantage by
entering into a low settlement with the UCC. as is pointed
out later in this judgment and by Mukharji, C.J., the Act
and Scheme thereunder have provided for an objective and
quasi-judicial determination of the amount of damages pay-
able to the victims of the tragedy. There is no basis for
the fear expressed during the hearing that the officers of
the Government may not be objective and may try to cut down
the amounts of compensation, so as not to exceed the amount
received from the UCC. It is common ground and, indeed, the
learned Attorney General fairly conceded, that the settle-
ment with the UCC only puts an end to the claims against the
UCC and UCIL and does not in any way affect the victims’
rights, if any, to proceed against the Union, the State of
Madhya Pradesh or the ministers and officers thereof, if so
advised. If the Union and these officers are joint tort-
lessors, as alleged, the Union will not stand to gain by
allowing the claims against the UCC to be settled for a low
figure. On the contrary it will be interested in settling
the claims against the UCC at as high a figure as possible
so that its own liability as a joint tort-feasor (if made
out) can be correspondingly reduced. We are, therefore,
unable to see any vitiating element in the legislation
insofar as it has entrusted the responsibility not only of
carrying on but also of entering into a settlement, if
thought fit.
Nor is there basis for the contention that the Act
enables a settlement to be arrived at without a proper
opportunity to the claimants to express their views on any
proposals for settlement that may be mooted. The right of
the claimant under section 4 to put forward his suggestions
or to be represented by a legal practitioner to put forth
his own views in the conduct of the suit or other proceeding
certainly extends to everything connected with the suit or
other proceeding. If, in the course of the proceedings there
should arise any question of compromise or settlement, it is
open to the claimants to oppose the same and to urge the
Central Government to have regard to specific aspects m
arriving at a settlement. Equally it is open to any claimant
to employ a legal practitioner to ventilate his opinions in
regard to such proposals for settlement. The provisions of
the Act, read by themselves, therefore, 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
properly read, in our opinion, completely vindicate the
objects and reasons which compelled Parliament to enact this
piece of legislation.
721
Far from abridging the rights of the claimants in any man-
ner, these provisions are so worded as to enable the Govern-
ment 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 rule in the litigations
But then, it is contended, the victims have had no
opportunity of considering the settlement proposals mooted
in this case before they were approved by the Court. This
aspect is dealt with later.
2. One of the contentions before us was that the UCC and
UCIL are accountable to the public for the damages caused by
their industrial activities not only on a basis of strict
liability but also on the basis that the damages to be
awarded against them should include an element of punitive
liability and that this has been lost sight of while approv-
ing of the proposed settlement. Reference was made in this
context to M.C. Mehta’s case (supra). Whether the settlement
should have taken into account this factor is, in the first
place, a moot question. Mukharji, C.J. has pointed out–and
we are inclined to agree-that this is an “uncertain province
of the law” and it is premature to say whether this yard-
stick has been, or will be, accepted in this country, not to
speak of its international acceptance which may be necessary
should occasion arise for executing a decree based on such a
yardstick in another country. Secondly, whether the settle-
ment took this into account and, if not, whether it is bad
for not having kept this basis in view are questions that
touch the merits of the settlement with which we are not
concerned. So we feel we should express no opinion here on
this issue. It is too far-fetched, it seems to us, to con-
tend that the provisions of the Act permitting the Union of
India to enter into a compromise should be struck down as
unconstitutional because they have been construed by the
Union of India as enabling it to arrive at such a settle-
ment.
The argument is that the Act confers a discretionary and
enabling power in the Union to arrive at a settlement but
lays down no guidelines or indications as to the stage at
which, or circumstances in which, a settlement can be
reached or the type of settlement that can be arrived at;
the power conferred should, therefore, be struck down as
unguided, arbitrary and uncanalised. It is difficult to
accept this contention. The power to conduct a litigation,
particularly in a case of this type, must, to be effective,
necessarily carry with it a power to settle it at any stage.
It is impossible to provide statutorily any detailed
722
catalogue of the situations that would justify a settlement
or the basis or terms on which a settlement can be arrived
at. The Act. moreover, cannot be said to have conferred any
unguided or arbitrary discretion to the Union in conducting
proceedings under the Act. Sufficient guidelines emerge from
the Statement of Objects and Reasons of the Act which makes
it clear that the aim and purpose of the Act is to secure
speedy and effective redress to the victims of the gas leak
and that all steps taken in pursuance of the Act should be
for the implementation of the object. Whether this object
has been achieved by a particular settlement will be a
different question but it is altogether impossible to say
that the Act itself is bad for the reason alleged. We,
therefore, think it necessary to clarify, for our part, that
we are not called upon to express any view on the observa-
tions in Mehta’s case and should not be understood as having
done so.
3. Shri Shanti Bhushan, who supported the Union’s stand
as to the validity of the Act, however, made his support
conditional on reading into its provisions an obligation on
the part of the Union to make interim payments towards their
maintenance and other needs consequent on the tragedy, until
the suits filed on their behalf ultimately yield tangible
results. That a modern welfare State is under an obligation
to give succour and all kinds of assistance to people in
distress cannot at all be gainsaid. In point of fact also,
as pointed out by the learned Chief Justice, the provisions
of the Act and scheme thereunder envisage interim payments
to the victims; so, there is nothing objectionable in this
Act on this aspect. However, our learned brother has accept-
ed the argument addressed by Shri Shanti Bhushan which goes
one step further viz. that the Act would be unconstitutional
unless this is read as “a major inarticulate promise” under-
lying the Act. We doubt whether this extension would be
justified for the hypothesis underlying the argument is, in
the words of Sri Shanti Bhushan, that had the victims been
left to fend for themselves, they would have had an “immedi-
ate and normal right of obtaining compensation from the
Union Carbide” and, as the legislation has vested their
rights in this regard in the Union, the Act should be con-
strued as creating an obligation on the Central Government
to provide interim relief. Though we would emphatically
reiterate that grant of interim relief to ameliorate the
plight of its subjects in such a situation is a matter of
imperative obligation on the part of the State and not
merely ’a matter of fundamental human decency’ as Judge
Keenan put it, we think that such obligation flows from its
character as a welfare State and would exist irrespective of
what the statute may or may not provide. In our view the
validity of the Act does not depend upon its
723
explicitly or implicitly providing for interim payments. We
say this for two reasons. In the first place, it was, and
perhaps still is, a moot question whether a plaintiff suing
for damages in tort would be entitled to advance or interim
payments in anticipation of a decree. That was, indeed, the
main point on which the interim orders in this case were
challenged before this Court and, in the context of the
events that took place, remains undecided. It may be men-
tioned here that no decided case was brought to our notice
in which interim payment was ordered pending disposal of an
action in tort in this country. May be there is a strong
case for ordering interim payments in such a case but, in
the absence of full and detailed consideration, it cannot be
assumed that, left to themselves, the victims would have
been entitled to a “normal and immediate” right to such
payment. Secondly, even assuming such right exists, all that
can be said is that the State, which put itself in the place
of the victims, should have raised in the suit a demand for
such interim compensation–which it did–and that it should
distribute among the victims such interim compensation as it
may receive from the defendants. To say that the Act would
be bad if it does not provide for payment of such compensa-
tion by the Government irrespective of what may happen in
the suit is to impose on the State an obligation higher than
what flows from its being subrogated to the rights of the
victims. As we agree that the Act and the scheme thereunder
envisage interim relief to the victims, the point is perhaps
only academic. But we felt that we should mention this as we
are not in full agreement with Mukharji, C.J., on this
aspect on the case.
4. The next important aspect on which much debate took
place before us was regarding the validity of the Act qua
the procedure envisaged by it for a compromise or settle-
ment. It was argued that if the suit is considered as a
representative suit no compromise or settlement would be
possible without notice in some appropriate manner to all
the victims of the proposed settlement and an opportunity to
them to ventilate their views thereon (vide Order XXIII, r.
3B, C.P.C.). The argument runs thus: S. 4 of the Act either
incorporates the safeguards of these provisions in which
event any settlement effected without compliance with the
spirit, if not the letter, of these provisions would be
ultra vires the Act. Or it does not, in which event, the
provisions of S. 4 would be bad as making possible an arbi-
trary deprivation of the victims’ rights being inconsistent
with, and derogatory of, the basic rules established by the
ordinary Law of the land viz. the Code of Civil Procedure.
We are inclined to take the view that 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
724
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 suits 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 defined at
the stage of filing the plaint nor do they need to be de-
fined at the stage of a settlement. The litigation is car-
ried on by the State in its capacity, not exactly the same
as but somewhat analogous to that of a “parens patriae”. In
the case of a litigation by karta of a Hindu Undivided
Family or by a guardian on behalf of a ward, who is non-sui
juris, for example, the junior members of the family or the
wards, are not to be consulted before entering into a set-
tlement. In such cases, the Court acts as guardian of such
persons to scrutinise the settlement and satisfy itself that
it is in the best interest of all concerned. It is later
discovered that there has been any fraud or collusion, it
may be open to the junior members of the family or the wards
to call the karta or guardian to account but, barring such a
contingency, the settlement would be effective and binding.
In the same way, the Union as “parens patriae” would have
been at liberty to enter into such settlement as it consid-
ered best on its own and seek the Court’s approval there-
fore.
However, realising that the litigation is truly fought
on behalf and for the benefit of innumerable, though not
fully identified victims the Act has considered it necessary
to assign a definite role to the individual claimants and
this is spelt out in S. 4. This section directs:
(i) that the union shall have due regard to
any matters which such person may require to
be urged with respect to his claim; and
(ii) that the Union shaH, if such person so
desires, permit at the expense of such person,
a legal practitioner of his choice to be
associated in the conduct of any suit or other
proceeding relating to his claim.
This provision adequately safeguards the interests of indi-
vidual 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 respect of any matter and if
any such features are brought to its notice the Union is
obliged to take it into account. Again, the individual
claimants are also at liberty to engage their own counsel to
associate with the State counsel in conducting the proceed-
ings. If the suits in this
725
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 or any of them who chose to do so.
Advisedly, the statute has provided that though the Union of
India will be the dominus litis in the suit, the interests
of all the victims and their claims should be safeguarded by
giving them a voice in the proceedings to the extent indi-
cated above. This provision of the statute is an adaptation
of the principle of O.I.r. 8 and of Or. XXIII r. 3 of the
Code of Civil Procedure in its application to the suits
governed by it and, though the extent of participation
allowed to 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 fault-
ed, as has been pointed out earlier also, 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 the matter of settling the suit by way
of compromise.
The difficulty in this case has arisen, as we see it,
because of a fortuitous circumstance viz. that the talks of
compromise were mooted and approved in the course of the
hearing of an appeal from an order for interim payments.
Though compromise talks had been in the air right from the
beginning of this episode, it is said that there was an
element of surprise when they were put forward in Court in
February, 1989. This is not quite correct. It has been
pointed out that even when the issue regarding the interim
relief was debated in the courts below, attempts were made
to settle the whole litigation. The claimants were aware of
this and they could–perhaps should–have anticipated that
similar attempts would be made in this Court also. Though
certain parties had been associated with the conduct of the
proceedings in the trial court–and the trial judge did
handsomely acknowledge their contribution to the proceed-
ings–they were apparently not alert enough to keep a watch-
ing brief in the Supreme Court, may be under the impression
that the appeal here was concerned only with the quantum of
interim relief. One set of parties was present in the Court
but, apart from praying that he should be forthwith paid a
share in the amount that would be deposited in Court by the
UCC in pursuance of the settlement, no attempt appears to
have been made to put forward a contention that the amount
of settlement was inade-
726
quate or had not taken into account certain relevant consid-
erations. The Union also appears to have been acting on the
view that it could proceed ahead on its own both in its
capacity as “parens patraie” as well as in view of the
powers of attorney held by it from a very large number of
the victims though the genuineness of this claim is now
contested before us. There was a day’s interval between the
enunciation of the terms of the settlement and their approv-
al by the Court. Perhaps the Court could have given some
more publicity to the proposed settlement in the newspapers,
radio and television and also permitted some time to lapse
before approving it, if only to see whether there were any
other points of view likely to emerge. Basically speaking,
however, the Act has provided an adequate opportunity to the
victims to speak out and if they or the counsel engaged by
some of them in the trial court had kept in touch with the
proceedings in this court, they could have most certainly
made themselves heard. If a feeling has gained ground that
their voice has not been fully heard, the fault was not with
the statute but was rather due to the developments leading
to the finalisation of the settlement when the appeal
against the interim order was being heard in this Court.
One of the points of view on which considerable emphasis
was laid in the course of the arguments was that in a case
of this type the offending parties should be dealt with
strictly under the criminal law of the Land and that the
inclusion, as part of the settlement, of a term requiring
the withdrawal of the criminal prosecutions launched was
totally unwarranted and vitiates the settlement. It has been
pointed out by Mukharji, C.J. ,–and we agree–that the Act
talks only of the civil liability of, and the proceedings
against, the UCC or UCIL or others for damages caused by the
gas leak. It has nothing to say about the criminal liability
of any of the parties involved. Clearly, therefore, this
part of the settlement comprises a term which is outside the
purview of the Act. The validity of the Act cannot, there-
fore, be impugned on the ground that it permits–and should
not have permitted-the withdrawal of criminal proceedings
against the delinquents. Whether in arriving at the settle-
ment, this aspect could also have been taken into account
and this term included in it, is a question concerning the
validity of the settlement. This is a question outside the
terms of reference to us and we, therefore, express no
opinion in regard thereto.
5. A question was mooted before us as to whether the
actual settlement–if not the statutory provision–is liable
to be set aside on the grounds that the principles of natu-
ral justice have been flagrantly
727
violated. The merits of the settlement as such are not in
issue before us and nothing we say can or should fetter the
hands of the Bench hearing a review petition which has
already been filed, from passing such orders thereon as it
considers appropriate.
Our learned brother, however, has, while observing that
the question referred to us is limited to the validity of
the Act alone and not the settlement, incidentally discussed
this aspect of the case too. He has pointed out that justice
has in fact been done and that all facts and aspects rele-
vant for a settlement have been considered. He has pointed
out that the grievance of the petitioners that the order of
this Court did not give any basis for the settlement has
since been sought to be met by the order passed on 4th May,
1989 giving detailed reasons, This shows that the Court had
applied its mind fully to the terms of the settlement in the
light of the data as well as all the circumstances placed
before it and had been satisfied that the settlement pro-
posed was a fair and reasonable one that could be approved.
In actions of this type, the Court’s approval is the true
safety valve to prevent unfair settlements and the fact is
that the highest Court of the land has given thought to the
matter and seen it fit to place its seal of approval to the
settlement. He has also pointed out that a post-decisional
hearing in a matter like this will not be of much avail. He
has further pointed out that a review petition has already
been filed in the case and is listed for hearing. The Court
has already given an assurance in its order of May 4, 1989,
that it will only be too glad to consider any aspects that
may have been overlooked in considering the terms of the
settlement. Can it be said, in the circumstances, that there
has been a failure of justice which compels us to set aside
the settlement as totally violative of fundamental rights?
Mukharji, C.J., has pointed out that the answer to this
question should be in the negative. It was urged that there
is a feeling that the maxim: “Justice must not only be done
but must also appear to be done” has not been fully complied
with and that perhaps, if greater publicity had attended the
hearing, many other facts and aspects could have been high-
lighted resulting in a higher settlement or no settlement at
all. That feeling can be fully ventilated and that deficien-
cy can be adequately repaired, it has been pointed out by
Mukharji, C.J., in the hearing on the review petition pend-
ing before this Court. Though we are prima facie inclined to
agree with him that there are good reasons why the settle-
ment should not be set aside on the ground that the princi-
ples of natural justice have been violated, quite apart from
the practical complications that may arise as the result of
such an order, we would not express any final opinion on the
validity of the settlement but would leave it open to be
agitated, to the
728
extent permissible in law, in the review petition pending
before this Court.
There is one more aspect which we may perhaps usefully
refer to in this context. The scheme of the Act is that on
the one hand the Union of India pursues the litigiation
against the UCC and the UCIL; on the other all the victims
of the tragedy are expected to file their claims before the
prescribed authority and have their claims for compensation
determined by such authority. Certain infirmities were
pointed out on behalf of the petitioners in the statutory
provisions enacted in this regard. Our learned brother has
dealt with these aspects and given appropriate directions to
ensure that the claims will be gone into by a quasi judicial
authority (unfettered by executive prescriptions of the
amounts of compensation by categorising the nature of in-
juries) with an appeal to an officer who has judicial quali-
fications. In this manner the scheme under the Act provides
for a proper determination of the compensation payable to
the various claimants. Claims have already been filed and
these are being scrutinised and processed. A correct picture
as to whether the amount of compensation for which the
claims have ben settled is meagre, adequate or excessive
will emerge only at that stage when all the claims have been
processed and their aggregate is determined. In these cir-
cumstances, we feel that no useful purpose will be served by
a post-decisional hearing on the quantum of compensation to
be considered adequate for settlement.
For these reasons, it would seem more correct and proper
not to disturb the orders of 14-15 February, 1989 on the
ground that the rules of natural justice have not been
complied with, particularly in view of the pendency of the
review petition.
6. Before we conclude, we would like to add a few words
on the state of the law of torts in this country. Before we
gained independence, on account of our close association
with Great Britain, we were governed by the common law
principles. In the field of torts, under the common law of
England, no action could be laid by the dependants or heirs
of a person whose death was brought about by the tortious
act of another on the maxim actio personalis moritur cum
persona, although a person injured by a similar act could
claim damages for the wrong done to him. In England this
situation was remedied by the passing of the Fatal Accidents
Act, 1846, popularly known as Lord Campell’s Act. Soon
thereafter the Indian Legislature enacted the Fatal acci-
dents Act, 1855. This Act is fashioned on the lines of the
English Act
729
of 1846. Even though the English Act has undergone a sub-
stantial change, our law has remained static and seems a
trifle archaic. The magnitude of the gas leak disaster in
which hundreds lost their lives and thousands were maimed,
not to speak of the damage to livestock, flora and fauna,
business and property, is an eye opener. The nation must
learn a lesson from this traumatic experience and evolve
safeguards atleast for the future. We are of the view that
the time is ripe to take a fresh look at the outdated cen-
tury old legislation which is out of tune with modern con-
cepts.
While it may be a matter for scientists and technicians
to find solutions to avoid such large scale disasters, the
law must provide an effective and speedy remedy to the
victims of such torts. The Fatal Accidents Act, on account
of its limited and restrictive application, is hardly suited
to meet such a challenge. We are, therefore, of the opinion
that the old antiquated Act should be drastically amended or
fresh legislation should be enacted which should, inter
alia, contain appropriate provisions in regard to the fol-
lowing matters:
(i) The payment of a fixed minimum compensa-
tion on a “no-fault liability” basis (as under
the Motor Vehicles Act), pending final adjudi-
cation of the claims by a prescribed forum;
(ii) The creation of a special forum with
specific power to grant interim relief in
appropriate cases;
(iii) The evolution of a procedure to be
followed by such forum which will be conducive
to the expeditious determination of claims and
avoid the high degree of formalism that at-
taches to proceedings in regular courts; and
(iv) A provision requiring industries and
concerns engaged in hazardous activities to
take out compulsory insurance against third
party risks.
In addition to what we have said above, we should like
to say that the suggestion made by our learned brother, K.N.
Singh J., for the creation of an Industrial Disaster Fund
(by whatever name called) deserves serious consideration. We
would also endorse his suggestion that the Central Govern-
ment will be well advised if, in future, it insists on
certain safeguards before permitting a transnational company
to do business in this country. The necessity of such safe-
guards, atleast in the following two directions, is high-
lighted in the present case:
730
(a) Shri Garg has alleged that the processes
in the Bhopal Gas Plant were so much shrouded
in secrecy that neither the composition of the
deadly gas that escaped nor the proper anti-
dote therefore were known to anyone in this
country with the result that the steps taken
to combat its effects were not only delayed
but also totally inadequate and ineffective.
It is necessary that this type of situation
should be avoided. The Government should
therefore insist, when granting licence to a
transnational company to establish its indus-
try here, on a right to be informed of the
nature of the processes involved so as to be
able to take prompt action in the event of an
accident.
(b) We have seen how the victims in this case
have been considerably handicapped on account
of the fact that the immediate tort-feasor was
the subsidiary of a multi-national with its
Indian assets totally inadequate to satisfy
the claims arising out of the disaster. It is,
therefore, necessary to evolve, either by
international consensus or by unilateral
legislation, steps to overcome these handicaps
and to ensure (i) that foreign corporations
seeking to establish an industry here, agree
to submit to the jurisdiction of the Courts in
India in respect of actions for tortious acts
in this country; (ii) that the liability of
such a corporation is not limited to such of
its assets (or the assets of its affiliates)
as may be found in this country, but that the
victims are able to reach out to the assets of
such concerns anywhere in the world; (iii)
that any decree obtained in Indian Courts in
compliance with due process of law is capable
of being executed against the foreign corpora-
tion, its affiliates and their assets without
further procedural hurdles, in those other
countries.
Our brother, K.N. Singh, J., has in this context dealt
at some length with the United Nations Code of Conduct for
multi-national Corporations which awaits approval of various
countries. We hope that calamities like the one which this
country has suffered will serve as catalysts to expedite the
acceptance of an international code on such matters in the
near future.
With these observations, we agree with the order pro-
posed by the learned Chief Justice.
G.N. Petitions dis-
posed of.
731