1989 (12) TMI 349 - SC - Indian Laws

Supreme Court validates Bhopal Gas Leak Disaster Act 1985 allowing government to represent victims in litigation

CHARAN LAL SAHU Versus U.O.I.

CHARAN LAL SAHU Versus U.O.I. - 1990 AIR 1480, 1989 (2) Suppl. SCR 597, 1990 (1) SCC 613, 1989 (4) JT 582 ISSUES: Whether the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 ('the Act') is constitutionally valid under Articles 14, 19(1)(g), and 21 of the Constitution.Whether the Act validly vests exclusive right in the Central Government to represent and act in place of victims for claims arising out of the disaster.Whether the Act deprives victims of their fundamental rights, including the right to access courts and to be heard before compromise or settlement of claims.The applicability and scope of the doctrine of parens patriae in empowering the State to represent victims in mass disaster claims.Whether the Act improperly restricts or abridges criminal liability or proceedings related to the disaster.The reasonableness and fairness of the procedure established by the Act and the Scheme framed thereunder for processing claims and disbursing compensation.Whether the settlement approved by the Court under the Act without prior notice to all victims violates principles of natural justice.Whether the Government of India's role as a joint tort-feasor and shareholder in the subsidiary company creates a conflict of interest invalidating its representation of victims.The extent and nature of liability of the multinational corporation and principles applicable to damages, including strict, absolute, and punitive liability.Whether the Act's provisions override inconsistent laws including the Civil Procedure Code and affect the rights and remedies of victims.Whether interim relief to victims during pendency of claims is an implied obligation under the Act.Whether the Act and settlement comply with constitutional guarantees and principles of natural justice in mass tort litigation.The role of the judiciary in approving settlements and safeguarding victims' rights in mass disaster cases.Recommendations for future legislative and regulatory measures to prevent industrial disasters and ensure effective remedies. RULINGS / HOLDINGS: The Act is constitutionally valid as a special legislation enacted to secure that claims arising out of the Bhopal gas leak disaster are dealt with 'speedily, effectively, equitably and to the best advantage of the claimants,' and does not violate Articles 14, 19(1)(g), or 21.Section 3 of the Act validly confers on the Central Government the 'exclusive right to represent, and act in place of' every person entitled to make a claim connected with the disaster, making the Government the dominus litis with power to institute, withdraw, or compromise suits.Section 4 preserves a qualified right for victims to have 'due regard' by the Central Government to matters they may urge and permits victims, at their expense, to associate a legal practitioner of their choice in the conduct of proceedings, ensuring participation consistent with natural justice.The doctrine of parens patriae conceptually and jurisprudentially supports the State's role in representing victims who are disabled or disadvantaged in pursuing claims, and the Act is an exercise of sovereign power consistent with this doctrine.The Act does not deal with or curtail criminal liability or proceedings; criminal liability remains unaffected and outside the scope of the Act.The procedure established by the Act and the Scheme, including appointment of Commissioners and categorisation of claims, is constitutionally permissible, provided that the authorities act judicially, with appeal rights and adherence to natural justice.Though the Act does not expressly require pre-decisional notice to victims before settlements, principles of natural justice require that victims be given an opportunity to make representations before any compromise affecting their rights is sanctioned; the absence of such notice in the settlement was improper but does not invalidate the Act.The Government of India's representation of victims is not invalidated by its shareholding in UCIL or alleged conflict of interest, as the Government acts as a statutory representative and not as a judge of claims, and the doctrine of necessity applies.The principles of strict, absolute, and punitive liability as enunciated in M.C. Mehta's case apply to the multinational corporation's liability, but the Act does not circumscribe or abridge the extent of such liability or damages.Section 11 of the Act provides that its provisions shall have overriding effect over inconsistent laws, including the Civil Procedure Code, in matters covered by the Act.There is an implied obligation on the Central Government to provide interim relief or maintenance to victims during pendency of claims to justify deprivation of their direct right to sue.The Act and the settlement comply with constitutional guarantees when read harmoniously with principles of natural justice and the Civil Procedure Code, but the procedure for notice and hearing before settlement requires improvement.The Court's approval of the settlement was based on a broad and reasonable assessment of damages and urgent need for relief; the settlement is not set aside on grounds of natural justice violation pending review proceedings.The Court recommends legislative and executive measures including special legislation for industrial disasters, creation of Industrial Disaster Fund, compulsory insurance for hazardous industries, and safeguards for transnational corporations operating in India. RATIONALE: The Court applied constitutional principles under Articles 14, 19(1)(g), and 21, examining the reasonableness of the Act in light of the unprecedented nature and scale of the disaster, the victims' disabilities, and the need for effective, centralized litigation against a powerful multinational corporation.The concept of parens patriae, recognized in Indian jurisprudence and foreign precedents, was invoked to justify the State's substitution of victims' rights to sue, as victims were largely incapacitated and vulnerable.Precedents on natural justice and procedural fairness, including the Code of Civil Procedure's provisions on representative suits and compromise, guided the Court's interpretation that victims must have meaningful participation and notice in settlement processes.The Court distinguished between civil claims for damages and criminal liability, holding that the Act governs only the former and does not affect criminal prosecutions or liabilities.The Court emphasized that the exclusive right granted to the Central Government is subject to the requirement of 'due regard' to victims' views and the possibility of legal representation, ensuring procedural safeguards.The doctrine of necessity was accepted as applicable given the unique circumstances, allowing the Government to act despite potential conflicts of interest or joint tort-feasor status.The Court relied on established tort law principles, including the evolution from Rylands v. Fletcher to the stricter liability regime in M.C. Mehta's case, to affirm liability of hazardous enterprises and the need for adequate compensation with deterrent effect.The Court recognized the practical difficulties in mass tort litigation and the necessity of a special legislative scheme to balance speed, efficiency, and fairness in claim processing and compensation disbursal.The Court held that the absence of pre-settlement notice was a procedural defect but, given the urgency and circumstances, a post-decisional hearing and review process would suffice to remedy the deficiency without disturbing the settlement.The Court underscored the importance of judicial oversight in settlement approval and the continuing role of courts in adjudicating claims and ensuring justice for victims.The Court recommended future legislative reforms and regulatory safeguards consistent with international norms, including the United Nations Code of Conduct for Transnational Corporations, to prevent recurrence of such disasters and ensure prompt relief.