Absolute Liability.docx

BASICS OF LEGISLATION AND CASE LAW

DR.RAM MANOHAR LOHIA NATIONAL LAW UNIVERSITY

(FINAL

PROJECT)

TOPIC- ABSOLUTE LIABILITY (MC MEHTA V. UNION OF INDIA)

SUBMITTED BY

SUBMITTED TO

ASHISH AMAR TIWARI

MR.SHASHANK SHEKHAR

ROLL NO-32

DR.RAM MANOHAR

SECTION A

LOHIA NATIONAL LAW

B.A.LL.B (HONS)

UNIVERSITY.

1ST SEMESTER

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DECLARATION

I hereby declare that the project entitled “Absolute Liability” is a record of original work done by me under the guidance of Mr Shashank Shekhar, Faculty member, Dr. Ram Manohar National Law University, and this project has not performed the basis for the award of any degree, diploma and similar project if any.

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ACKNOWLEDGMENT

I would like to take this opportunity to extend a word of my gratitude to my esteemed ‘Study of basics of Case law and Legislation’ teacher Mr. Shashank Shekhar, who had been a constant source of inspiration for me in the pursuance of this project. Sir has been gracious enough to guide me on the right path which has enabled me to strengthen my efforts. Also I would like to thank Prof (Dr.) C.M. Jariwala for being a source of constant support in this effort. I may also take this opportunity to wish the reader of my project a knowledgeable experience. The project has been made with utmost care & with utmost finesse to see that the information mentioned is to the best of the accuracy and correctness

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TABLE OF CONTENTS

DECLARATION ......................................................................... Error! Bookmark not defined. ACKNOWLEDGMENT .............................................................. Error! Bookmark not defined. TABLE OF CASES ..................................................................... Error! Bookmark not defined. STATEMENT OF PROBLEM .................................................... Error! Bookmark not defined. OBJECTIVES of RESEARCH .................................................... Error! Bookmark not defined. HYPOTHESIS ............................................................................ Error! Bookmark not defined. RESEARCH METHODOLOGY ................................................. Error! Bookmark not defined. ABSOLUTE LIABILITY ............................................................. Error! Bookmark not defined. FACTS ........................................................................................ Error! Bookmark not defined. JUDGEMENT ............................................................................ Error! Bookmark not defined. AFTER EFFECTS ...................................................................... Error! Bookmark not defined. CONCLUSION........................................................................... Error! Bookmark not defined. BIBLIOGRAPHY........................................................................ Error! Bookmark not defined.

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TABLE OF CASES A Lakshminath M Sridhar, RAMASWAMY IYER’S THE LAW OF TORTS, 10th ed., LexisNexis Butterwood Wadhaw, Nagpur ....................................................................... v, vi Bandhua Mukti Morcha v. Union of India and Ors ................................................................... 3 Charan Lal Sahu v. Union of India AIR 1990 SC 1480 ............................................................ 7 Madhya Pradesh Electricity Board v. Shail Kumari JT 2002 1 SC 50 ...................................... 7 Mushtaq Ahmend v. State of Jammu and KashmirVAIR 2009 J AND K 29 ........................... 8 Rylands v. Fletcher (1868) LR 3 HL 330 .................................................................................. 1 Union Carbide Corporation v. Union of India AIR 1990 SC 273 ............................................. 7

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STATEMENT OF PROBLEM This project talks about how MC Mehta v UOI case brings the Absolutely Liability in INDIA. How this case has become a precedent for the future case in India.

OBJECTIVES of RESEARCH

   

What is Absolute Liability? Situation of concept of law in other country. How has MC Mehta case develops this law in India? Application of this law in future cases.

HYPOTHESIS The project would aim to answer the following questions 1. 2. 3. 4. 5.

What is absolute liability? How did the law come up in india? What were the scenarios in the case of MC Mehta v Union of India What was the opinion of Judges in this case? How has this case set a Precedent for future cases?

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RESEARCH METHODOLOGY The methodology to be used for the completion of the project is literary in nature; various books and journals have been consulted for better understanding of this case at hand.

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ABSOLUTE LIABILITY

Absolute liability in its basic sense refers to no fault liability, in which the wrong doer is not provided with exceptions which are provided in rule of strict liability. Absolute liability is more stringent from of strict liability, the rule laid by Rylands v. Fletcher1 and was recognized by Supreme Court of India in M. C. Mehta v. Union of India2 (Oleum gas leak case).3 This case originated in the aftermath of oleum gas leak from Shriram Food and Fertilisers Ltd. complex at Delhi. This gas leak occurred soon after the infamous Bhopal gas leak and created a lot of panic in Delhi.4 Bhagwati CJ. was a pioneer in this important development, and he didn’t follow the rule laid in Rylands v. Fletcher5, on an important ground that the principles established in the said case are not in keeping with the present day jurisprudential thinking.6 Justice Bhagwati also stated that the rule of strict liability was evolved in 19th century, the time when nature industrial developments was at primary stage, in today’s modern industrial society where hazardous or inherently dangerous industries are necessary to carry out development programme, thus this rule cannot be held relevant in present day context. Also one cannot feel inhibited by this rule which was evolved in the context of totally different social and economic structure.7 A clear distinction between Strict and Absolute liability rule was laid down by SC in M.C.Mehta v. Union of India8 , giving four basic points for it: First, only those enterprises will be liable which are betrothed in hazardous or inherently dangerous activity, this implies that other industries not falling in the ambit stated above, will be covered under Strict liability rule9.Second, the escape of a dangerous thing from one’s land is not necessary, which means that the rule will be applicable to those injured within the premise and person outside the premise. Third, rule doesn’t have an exception, which is provided in rule of Strict Liability. Four, the quantum of damages depends on the magnitude and financial capability of the enterprise. SC very aptly also contended that ,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 on account of such activity, the enterprise must be absolutely liable to compensate for such damage and it should be no answer to the enterprise to say that

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(1868) LR 3 HL 330:LRI AIR 1987 SC 965 3 Ratanlal and Dhirajlal, THE LAW OF TORTS, 26th ed., pp.520-521 4 S.P.Singh, LA(1868) LR 3 HL 330:LRIW OF TORT,5th ed.,pp.281-282 5 (1868) LR 3 HL 330:LRI 6 S.P.Singh, LAW OF TORT,5th ed.,pp.281-282 7 Ibid 8 AIR 1987 SC 965 9 Ratanlal and Dhirajlal, THE LAW OF TORTS, 26th ed.,p.520 2

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it had taken all reasonable care and that the harm transpired without any negligence on its part.

FACTS Shriram Food and Fertilizers Industry a subsidiary of Delhi Cloth Mills Limited was producing caustic and chlorine. On December 4th and 6th 1985, a major leakage of petroleum gas took place from one of the units of Shriram Food and Fertilizers Limited in the heart of the capital city of Delhi which resulted in the death of several persons that one advocate practicing in the Tis Hazari Courts died. The leakage was caused by a series of mechanical and human errors. This leakage resulted from the bursting of the tank containing oleum gas as a result of the collapse of the structure on which it was mounted and it created a scare amongst the people residing in that area. Hardly had the people got out of the shock of this disaster when, within two days, another leakage, though this time a minor one took place as a result of escape of oleum gas from the joints of a pipe. Shriram Foods and Fertilizer Industries had several units engaged in the manufacture of caustic soda, chlorine, hydrochloric acid, stable bleaching powder, super phosphate, vanaspati, soap, sulphuric acid, alum anhydrous sodium sulphate, high test hypochlorite and active earth. All units were set up in a single complex situated in approximately 76 acres and they are surrounded by thickly populated colonies such as Punjabi Bagh, West Patel Nagar, Karampura, Ashok Vihar, Tri Nagar and Shastri Nagar and within a radius of 3 kilometres from this complex there is population of approximately 2, 00,000. On 6th December, 1985 by the District Magistrate, Delhi under Section 133(1) of Cr.P.C, directed Shriram that within two days Shriram should cease carrying on the occupation of manufacturing and processing hazardous and lethal chemicals and gases including chlorine, oleum, super-chlorine, phosphate, etc at their establishment in Delhi and within 7 days to remove such chemicals and gases from Delhi. At this juncture M.C.Mehta moved to the Supreme Court to claim compensation by filing a PIL for the losses caused and pleaded that the closed establishment should not be allowed to restart. This writ petition under Article 32 of the Constitution had come before the court on a reference made by a Bench of three Judges. The reference was made because certain questions of seminal importance and high constitutional significance were raised in the course of arguments when the writ petition was originally heard. The facts giving rise to the writ petition and the subsequent events have been set out in some detail in the Judgment 9

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given by the Bench of three Judges P. N. BHAGWATI, C.J.I., D. P. MADON AND G. L. OZA, JJ. on 17th February 1986 (reported in AIR 1987 SC 965). The Bench of three Judges permitted Shriram Foods and Fertilizer Industries to restart its power plant as also plants for manufacture of caustic soda and chlorine including its by-products and recovery plants like soap, glycerin and technical hard oil, subject to the conditions set out in the Judgment. While the writ petition was pending another applications were filed by the Delhi Legal Aid and Advice Board and the Delhi Bar Association for award of compensation to the persons who had suffered harm on account of escape of oleum gas. These applications for compensation raised a number of issues of great constitutional importance and the Bench of three Judges therefore formulated these issues and asked the petitioner and those supporting him as also Shriram to file their respective written submissions so that the Court could take up the hearing of these applications for compensation. When these applications for compensation came up for hearing it was felt that since the issues raised involved substantial questions of law relating to the interpretation of Arts. 21 and 32 of the Constitution, the case should be referred to a larger Bench of five Judges and thus the case stood in the Coram of the Hon’ble bench consisting of P. N. BHAGWATI, C.J.I., RANGANATH MISRA, G. L. OZA, M. M. DUTT AND K. N. SINGH, JJ.

JUDGEMENT The first question which requires to be considered is as to what is the scope and ambit of the jurisdiction of this Court under Article 32.

The Court wholly endorsed what had been stated by Bhagwati, J. in Bandhua Mukti Morcha v. Union of India and Ors. as regards the true scope and ambit of Article 32. It may now be taken as well settled that Article 32 does not merely confer power on this Court to issue a direction, order or writ for enforcement of the fundamental rights but it also lays a constitutional obligation on this Court to protect the fundamental rights of the people and for that purpose this Court has all incidental and ancillary powers including the power to forge new remedies and fashion new strategies designed to enforce the fundamental rights.

The next question which arises for consideration on these applications for compensation is whether Article 21 is available against Shriram which is owned by Delhi Cloth Mills Limited, 10

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a public company limited by shares and which is engaged in an industry vital to public interest and with potential to affect the life and health of the people. The issue of availability of Article 21 against a private corporation engaged in an activity which has potential to affect the life and health of the people was vehemently argued by counsel for the applicants and Shriram.10

The Court traced the evolution of the Doctrine of State Action to ascertain whether the defendants in this case fall under the definition of the term state, as provided under Article 12, or not. The Court also looked into the Industrial Policy of the Government. Under the Industrial Policy Resolution 1956 industries were classified into three categories having regard to the part which the State would play in each of them. The first category was to be the exclusive responsibility of the State. The second category comprised those industries which would be progressively State owned and in which the State would therefore generally take the initiative in establishing new undertakings but in which private enterprise would also be expected to supplement the effort of the State by promoting and development undertakings either on its own or with State participation. The third category would include all the remaining industries and their future development would generally be left to the initiative and entRatanlal and Dhirajlal, THE LAW OF TORTS, 26th ed.,p.520erprise of the private sector.11

If an analysis of the declarations in the Policy Resolutions and the Act is undertaken, we find that the activity of producing chemicals and fertilisers is deemed by the State to be an industry of vital public interest, whose public import necessitates that the activity should be ultimately carried out by the State itself, in the interim period with State support and under State control, private corporations may also be permitted to supplement the State effort. The argument of the applicants on the basis of this premise was that in view of this declared industrial policy of the State, even private corporations manufacturing chemicals and fertilisers can be said to be engaged in activities which are so fundamental to the Society as to be necessarily considered government functions.

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Ratanlal and Dhirajlal, THE LAW OF TORTS, 26th ed.,p.520

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ANALYSIS

Hazardous industries are enterprises engaged in hazardous process which may cause adverse effect on health of the people and the environment unless special care is taken to the leakage of the raw material or by product. In this era of open global market economy hazardous industries are playing a decisive role in the economic development and in the advancement of the economy, but simultaneously they are causing the problem of risk to human life and environment. The developing countries like India suffer from the acute problem of environmental pollution.

The origin of the national policy on chemical and hazardous industries relates to two major incidents of gas leakage, the Bhopal tragedy in 1994 and the oleum gas leak tragedy in 1995. In these cases the Hon’ble Supreme Court felt that the English doctrine of Strict Liability adopted by the House of Lords in Rayland v. Fletcher would not suffice the changing need of the liability principle in India. So the Hon’ble Supreme Court felt the need of adopting the principle of Absolute Liability or else the Court of law would fail to provide justice to the victims of these large scale environmental disaster. Where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results to anyone on account of an accident in the operation of such hazardous or inherently dangerous activity resulting, for example, in escape of toxic gas the enterprise is strictly and absolutely liable to compensate all those who are affected by the accident and such liability is not subject to any of the exceptions which operate in the tortious principle of strict liability. 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 principles that came up from this historical case was the Principle of Absolute Liability, secondly the Principle of Polluters Pays, thirdly the Principle of Precautionary Measures, and finally the Principle of Highest Safety Standards came up in this particular case.

There after a number of enactments were made by the union legislature for the purpose of controlling the environmental pollution, like the Hazardous Waste (Management and Handling) Rules, 1989, secondly the Manufacturing Storage and Import of Hazardous Waste Chemical Rules, 1989, thirdly the Public Liability Insurance Act, 1991, fourthly the National Environmental Tribunal Act, 1995, an even many more legislation are made on the protection of environment from pollution.

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Again the scope of Art 21 was enlarged the Right to human health and healthy environment was approved, the Right of enjoyment of pollution free water and air for full enjoyment of life as a part of Right to Life was approved. And Right to clean environment was also comprehended as a Right under Art 21 of The Constitution of India.

In addition to all these the judgment of M.C.Mehta case gave a new dimension to the Tort Laws in India. Before this case the principle of strict liability was applicable where the defendant could take the plea of defenses, but this ruling of the Supreme Court the Absolute principle came up. Though the Court of Law is always open to hear any kind of injustice done to people and it provides compensation to the victims whose rights are violated or who have suffered loss due to the negligence of others but at this juncture the Hon’ble Court could not provide any compensation to the victims of the oleum gas leake tragedy. The Court could have given an interim compensation to the victims and to the families of those who have died in the course of the disaster. The interim compensation could have helped the victims by way of proper habilitation, providing proper medical facilities and others.

Latter the Hon’ble Court has given exemplary compensation to the victims of the oleum gas tragedy and even today the Court is of the view that the compensation that was granted was not enough as compared to the losses suffered. Till date the Hon’ble Court is thinking of providing more compensation to the victims, as people who are living even today in the area where the tragedy took place are suffering a lot, as the oleum gas is still present in the atmosphere. A lot of cases of still born child came up, and the medical report of many showed that the presence of oleum gas is the reason for those still born child. What ever may it be the situation I hope that the Hon’ble Court will definitely provide the victims with appropriate compensation, as the Hon’ble Court deems fit keeping in mind the principles of Natural Justice.

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AFTER EFFECTS

In the case of Charan Lal Sahu v. Union of India12, this case was in accordance with the Act formulated for the protection of the victims of Bhopal gas tragedy, is valid or not, doubts were expressed by Mishra C.J as to correctness of rule as it was held that Mehta case was an obiter and was differentiated from the western countries. The doubts so expressed in the above case were no accepted in Indian Council for Environmental Legal Action v. Union of India13 and Mehta case rule was not called to be an obiter.14 This case related to hazardous chemical industries, releasing highly toxic sludge and toxic untreated waste water which had percolated deep into the oil rendering the soil unfit for cultivation and water unfit for irrigation, human or animal consumption resulting in untold misery to the villagers of surrounding areas.15 SC directed the government determine and recover the cost of remedial measure from the private companies which polluted the environment by attaching all their assets and further use to restore soil, forest etc. These industries were characterized by the SC as ‘rouge industries’ and were ordered to be closed down. In recognition of the principle of absolute liability, the concept mentioned above is based on ‘polluters pay’. Considering the position of high court on the principle of absolute liability, division bench of the Madhya Pradesh High Court applied the rule in the case, where due to negligence of electricity board a person died of electric shock, high court recognized the principle of absolute liability here as it was due to negligence on the part of the board as it failed to maintain the wires properly. SC in the case of Madhya Pradesh Electricity Board v. Shail Kumari16 , applied the same rule, in this case a cyclist was entrapped and electrocuted by a live-wire. The board tried to defend by stating that the wire on the ground was a wire diverted b a stranger to misuse the energy. The court held that the particular responsibility to supply electric energy is statutory conferred on the board. If the energy so transmitted causes injury, it is the primary liability to compensate the sufferer is that of the supplier of the electric energy. The court also stated that a person undertaking an activity involving hazardous or risky exposure to human life is liable under law of torts to compensate for the injury, irrespective of any negligence or carelessness on the part of the managers of such undertakings. In an important case of Union Carbide Corporation v. Union of India17, paragraph 15 of the case clearly states that in determining the compensation payable to Bhopal gas victims, absolute liability principle was adopted. The inappropriateness of compensation given to the victims, being a different issue all together, the relevant factor here is that of recognition of the 12

AIR 1990 SC 1480 AIR 1996 SC 1446 14 S.P.Singh, LAW OF TORT,5th ed.,pp.285 15 Ratanlal and Dhirajlal, THE LAW OF TORTS, 26th ed.,p.521 16 JT 2002 1 SC 50 17 AIR 1990 SC 273 13

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concept of absolute liability while paying compensation. Prior to conclusion of this section a very recent case needs to be discussed in here, which is of Mushtaq Ahmend v. State of Jammu and Kashmir18, in this case the state was negligent in maintaining electricity wire and the victim died due to electric shock. The court held that state being engaged in undertaking the activity of electricity supply, is liable under the law of torts to compensate the petitioners for the death of the victim irrespective of any negligence or carelessness on their part. Strict liability principle was held here, although the principle so used was not of absolute liability, but the compensation provided by court was in accordance with it. This part of the project being of great importance as to it helped us to determine the very existence of principle of absolute liability, we can see that to an extent the judiciary in India has recognized the principle and clearly stated the principle is not merely an obiter but suits to the current situations in the country.

CONCLUSION The principle of Absolute liability so stated in M.C.Mehta19, oleum gas leak case, has been extensively discussed and arguments formulated in the paper were solely based on the question and hypothesis formulated in the chapter. It is necessary to conclude the project, as researcher believes that there is a need to formulate findings and provide for suggestions. The research questions has two parts first being is there a need for recognition of concept of absolute liability and other being whether judiciary has recognized the same principle. Dealing with the first part, the conclusion is that there is an urgent and inherent need for a principle of absolute liability as, the rule of strict liability which is followed in most of the countries, cannot be taken as the sole principle to provide for compensation, it being formulated about two centuries ago, when the level of technological development was nearly nothing in comparison with today’s development. For the purpose of providing better remedy 18 19

AIR 2009 J and K 29 Ibid

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under civil law and broadly development of our own jurisprudence, to suit our own needs we require a principle which will be just to both the wrongdoer and the sufferer. Absolute liability is in accordance with the prevailing situation in our country, we are destination for globalization and large investments and when the nature of industries is mostly hazardous. Second part of the question deals with the existence of the principle of absolute liability in India or recognition of principle by our judiciary. A very important finding here is that yes to a extent their exist a principle of absolute liability and judiciary recognizes, and the principle so given by court in the case of M.C.Mehta is not merely an obiter but is an important aspect which suits our present day conditions. The word extent used above is of great significance, researcher believes that although the judicial recognition has been done, but it is not in accordance with the required level which is very much required looking at prevailing situations in our country. Also the principle of absolute liability, according to the researcher, should not pay compensation to the sufferers on the basis of the paying capacity of the industries. Agreeing with the SC explanation of the very point that, it will help one to get exemplary damages and also larger the industries more the compensation can be provided to the sufferers, the consequences will be that if the industry is small, then the compensation will be paid to the victim not in accordance with the damage suffered, which is the basic principle of tortuous liability, but in relation to the paying capacity of the wrongdoer. Thus according to the researcher the element of paying capacity should be restricted to the large industries and for the rest the quantum of damages suffered should be used which is in accordance with tort law. Concluding, the research question formulated before, the findings are mix as the first part stands true that there is a need for recognition of concept of absolute liability and the later part is not true as, judiciary has recognized the principle to an extent. The hypothesis is so dealt also has the same reply as, the first part of it stands false and the second part of it stands true. Thus there is a need for more recognition of concept of absolute liability in India.

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BIBLIOGRAPHY

Books:  A Lakshminath M Sridhar, RAMASWAMY IYER’S THE LAW OF TORTS, 10th ed., LexisNexis Butterwood Wadhaw, Nagpur  Law of Torts by Dr. R.K. Bangia. (Allahabad Law Agency- Law Publishers).  Ratanlal and Dhirajlal, THE LAW OF TORTS, 26th ed., LexisNexis Butterwood Wadhaw, Nagpur  S.P.Singh, LAW OF TORT, 5 th ed. 2010, Universal Law Publishers Co., New Delhi  Vivienne Harpwood, MODERN TORT LAW, 17th ed., Routledge .Cavendish , USA  W.V.H Rogers, WINFIELD AND JOLOWICZ TORTS,8th ed. 2010, Sweet and Maxwell, UK.

Websites:  www.jstor.org/stable/4398052  http://www.manupatrafast.in/pers/Personalized.aspx  www.californiaattorneygroup.com/strict-liability.html  www.jstor.org/stable/106909  http://www.manupatrafast.in/pers/Personalized.aspx  http://www.lexuniverse.com/torts/india/Vicarious-Liability-&-Rules-OfStrict-AndAbsolute-Liability.html

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