Special disaster claims law upheld with prior victim notice required before settlement and no effect on criminal liability.

The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 was upheld as a valid special law because Parliament could rationally vest exclusive claim representation in the Central Government for a disadvantaged class of victims and act in a parens patriae capacity. Section 4 was read as incorporating natural justice: before any settlement or compromise affecting victims' rights, they had to receive prior meaningful notice and an opportunity to place their views, though individual consent was not required. The Act was also held to concern only civil compensation claims and not to extinguish or limit criminal liability, which remained outside its scope.

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Issues: (i) Whether the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 was constitutionally valid in so far as it vested the Central Government with the exclusive right to represent claimants and conduct proceedings; (ii) Whether Section 4 and the scheme framed under the Act required notice to the victims and an opportunity to place their views before any settlement or compromise was approved; (iii) Whether the Act affected criminal liability arising out of the disaster.

Issue (i): Whether the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 was constitutionally valid in so far as it vested the Central Government with the exclusive right to represent claimants and conduct proceedings.

Analysis: The Act was enacted to secure speed, effectiveness and equity in dealing with claims arising from the disaster. The victims formed a special class created by the magnitude of the tragedy, their poverty, and their inability to prosecute claims effectively against a multinational corporation. In that setting, the vesting of the claims in the Central Government was treated as a rational legislative choice. The Court accepted that the State could act in a parens patriae capacity and that Sections 3 and 4, read with the scheme and the Act's object, created a special procedure that was not arbitrary merely because it displaced individual control of litigation.

Conclusion: The Act was held constitutionally valid in principle, and Section 3 was upheld as conferring the exclusive right of representation on the Central Government.

Issue (ii): Whether Section 4 and the scheme framed under the Act required notice to the victims and an opportunity to place their views before any settlement or compromise was approved.

Analysis: The Court read Section 4 as embodying the principles of natural justice. Since the victims' rights were being affected by any proposed settlement, the Government was required to have due regard to their views, which in turn meant that they had to be informed of a proposed settlement in some meaningful way. The Court held that the opportunity contemplated by Section 4 could not be effective unless notice was given before a settlement was concluded. At the same time, individual consent of every victim was not treated as a pre-condition, and the precise form of notice was left to be worked out by the Court in the circumstances of the case.

Conclusion: Section 4 was construed as requiring prior notice and a meaningful opportunity for the victims to place their views before settlement, though not unanimity or individual consent.

Issue (iii): Whether the Act affected criminal liability arising out of the disaster.

Analysis: The Act was confined to the processing of civil claims for compensation and damages. It did not purport to deal with criminal liability, nor could it be read as extinguishing or abridging criminal proceedings. Any settlement term concerning criminal prosecutions was outside the statutory scheme and could not be justified by the Act itself.

Conclusion: The Act was held not to affect criminal liability, and criminal proceedings were treated as outside its scope.

Final Conclusion: The statute was upheld as a valid special law for mass disaster claims, but it had to be read as preserving meaningful victim participation before settlement and as leaving criminal liability untouched.

Ratio Decidendi: A special statute may validly vest collective claim-management in the State for a mass disaster where victims constitute a distinct disadvantaged class, but if the statute contemplates compromise or settlement affecting their rights, the principles of natural justice require prior meaningful notice and an opportunity to be heard.

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