The Tragedy

Early in the morning of December 3, 1984, one of the greatest industrial tragedies that history has recorded got clamped down on the otherwise quiet township of Bhopal, the capital of Madhya Pradesh. The incident was large in magnitude – 2,600 people died instantaneously and suite a good number of the inhabitants of the town suffered from several ailments.

Union Carbide Corporation (‘UCC’ for short), a multi- national one, had diverse and extensive international operations in countries like India, Canada, West Asia, the Far East, African countries, Latin America and Europe. It has a sister concern known as Union Carbide India Limited (‘UCIL’ for short).

The Union Carbide (India) Limited (for short the UCIL) owned and operated, in the northern sector of Bhopal, a chemical plant manufacturing pesticides commercially marketed under the trade-names “Sevin” and “Temik”. Methyl Isocy- anate (MIC) was an ingredient in the composition of these pesticides. In the early hours of the 3rd of December, 1984, there was a massive escape of lethal gas from the MIC Storage Tank of the plant into the atmosphere which led to the calamity.

Owing to the then prevailing wind conditions the fumes blew into the hutments abutting the premises of the plant and the residents of that area had to bear the brunt of the fury of the vitriolic fumes. Besides large areas of the city were also exposed to the gas.

In some cases, the reaction manifested contemporaneously and in others the effect was to manifest itself much later.

Bhopal Gas Leak Disaster (Processing of Claims) Act of 1985

On 29th of March, 1985 the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (Act) was passed authorising the Government of India, as parens patriae exclusively to represent the victims so that interests of the victims of the disaster are fully protected, and that claims for compensation were pursued speedily, effectively, equitably and to the best advantage of the claimants.

On 8th of April, 1985 Union of India, in exercise of the powers conferred on it under the Act, instituted before the U.S. District Court, Southern District of New York, an action on behalf of the victims against the Union Carbide Corporation (UCC) for award of compensation for the damage caused by the disaster. A large number of fatal-accidents and personal-injury actions had earlier also come to be filed in Courts in the United States of America by and on behalf of about 1,86,000 victims.

All these earlier claims instituted in the various Courts in United States of America had come to be consolidated by the “Judicial Panel on Multi District Litigation” by its direction dated 6th February 1985 and assigned to United States District Court, Southern District of the New York, presided over by a Judge Keenan. The claim brought by the Union of India was also consolidated with them.

Suits in USA

The UCC resisted the choice of the American Forum on the plea of Forum-Non-Conveniens[1]. Union of India sought to demonstrate that the suggested alternative forum before the judiciary in India was not an ‘adequate’ forum pointing out the essential distinction between the American and Indian systems of Tort Law both substantive and procedural available under and a comparison of the rights, remedies and procedure the competing alternative forums.

The suits were consolidated and Judge Keenan by his order dated, 2th May, 1988, dismissed them on the ground of forum non conveniens subject, inter alia, to the following conditions:

1. Union Carbide shall consent to submit to the jurisdiction of the Courts of India and shall continue to waive defences based on the statute of limitations, and

2. Union Carbide shall agree to satisfy any judgment rendered against it in an Indian Court, and if appealable, upheld by any appellate court in that country, whether such judgment and affirmance comport with the minimal requirements of due process.

The United States Court of Appeals for the Second Circuit by its decision, upheld the first condition and in respect of the second one stated:

“In requiring that UCC consent to enforceability of an Indian judgment against it, the district court proceeded at least in part on the erroneous assumption that absent such a requirement, the plaintiffs, if they should succeed in obtaining an Indian judgment against UCC, might not be able to enforce it against UCC in the United States.

The law, however, is to the contrary, Under New York law, which governs actions brought in New York to enforce foreign judgments …… foreign-country judgment that is final, conclusive and enforceable where rendered must be recognised and will be enforced as “conclusive between the parties to the extent that it grants or denies recovery of a sum of money” except that it is not deemed to be conclusive if:

“1. The judgment was rendered under a system which does not provide impartial tribunals or procedures, compatible with the requirements of due process of law;

2. The foreign court did not have personal jurisdiction over the defendant”.

The Court rejected the plea advanced by UCC of breach of due process by non-observance of proper standards and ultimately stated:

“Any denial by the Indian Courts of due process can be raised by UCC as a defence to the plaintiffs’ later attempt to enforce a resulting judgment against UCC in this country.”

Legal Proceedings in India

After Judge Keenan made the order, Union of India in exercise of its power under the Act filed a suit in the District Court at Bhopal, seeking a compensation of 3 Billion Dollars against the UCC and UCIL came to be field at Bhopal.

In the plaint it was stated that death toll upto then was 2,660 and serious injuries had been suffered by several thousand persons and in all more than 5 lakh persons had sought damages upto then. But the extent and nature of the injuries or the after effect thereof suffered by victims of the disaster had not yet been fully ascertained though survey and scientific and medical studies had already been undertaken.

The suit asked for a decree for damages for such amount as may be appropriate under the facts and the law and as may be determined by the Court so as to fully, fairly and finally compensate all persons and authorities who had suffered as a result of the disaster and were having claims against the UCC. It also asked for a decree for effective damages on an amount sufficient to deter the defendant and other multi-national corporations involved in business activities from committing wilful and malicious and wanton disregard of the rights and safety of the citizens of India.

Efforts were made by the District Court at Bhopal to explore the possibilities of a settlement. But they were not fruitful. Zahreeli Gas Kand Sangharsh Morcha one of the victim-organisations appears to have moved the Court for award of interim-compensation. On 13th December 1987, The District Court made an order directing payment of Rupees 350 crores as interim compensation.

Suit at High Court of Madhya Pradesh

UCC challenged this award before the High Court of Madhya Pradesh. The High Court by its order dated 4th of April, 1988 reduced the quantum of interim compensation to Rs. 250 crores.

At Supreme Court

Then, both Union of India and UCC brought up appeals by Special Leave before Supreme Court against the order of the High Court. Government of India assailing the reduction made by the High Court in the quantum of interim compensation from Rs. 350 crores to Rs. 250 crores and the UCC assailing the very jurisdiction and permissibility to grant interim compensation in a part-action where the very basis of liability itself had been disputed.

The contention of the UCC was that in a suit for damages where the basis of the liability was disputed the Court had no power to make an award of interim-compensation. It was urged that in common law-and that the law of India too-in a suit for damages no court could award interim-compensation.

Efforts for Settlements

While the litigations were pending in the US Courts an offer of 350 million dollars had been made for settlement of the claim. When the dispute arising out of interim compensation ordered by the District Court of Bhopal came before the High Court, efforts for settlement were continued. When the High Court reduced the quantum of interim compensation from Rs. 350 crores to a sum of Rs. 250 crores, both UCC and Union of India challenged the decision of the High Court by filing special leave petitions. It is in these cases that the matter was settled by supreme court in two orders dated 14th and 15th of February, 1989.

Case in Supreme Court of India

Four Constitution Benches for a Single matter

The Bhopal gas leak matter has been heard in Supreme Court by four different Constitution Benches.

  • The first Bench consisted of Chief Justice Pathak, Venkataramiah, Misra, Venkatachaliah and Ojha, JJ. The hearing continued for 24 days.
  • The challenge to the validity of the Act was heard by a different Bench consisting of Mukharji, C J, Singh, Ranganathan, Ahmadi and Saikia, JJ. where the hearing continued for 27 days.
  • The review proceedings wherein challenge was to the settlement were then taken up for hearing by a Constitution Bench presided over by Mukharji, CJ with Misra, Singh, Venkatachaliah and Ojha, JJ. as the other members. This continued for 18 days. It was unfortunate that Mukharji, CJ. passed away soon after the judgment had been reserved and that necessitated a rehearing.
  • The matters were re-heard at the earliest opportunity and this further hearing took 19 days.

Perhaps this litigation was unique from several angles and this feature is an added one to be particularly noted. The validity of the Act has been upheld and three separate but concurring judgments have been delivered. At the final hearing of these matters long arguments founded upon certain varying observations of the learned Judges constituting the vires Bench in their respective decisions were advanced and some of them have been noticed in the judgment.

The decision of 14th and 15th February

On 14th February, 1989 Supreme Court recorded an over-all settlement of the claims in the suit for 470 million U.S. Dollars and the consequential termination of all civil and criminal proceedings. The relevant portions of the order of Supreme Court dated 14th February, 1989 provide:

(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, rights and liabilities related to and arising out of the 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 (supreme) 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.”

The Protest against the low amount of settlement

When the settlement was reached a group of social activists, the Press and even others claiming to be trustees of society came forward to question it. For some time, what appeared to be a tirade was carried on by the media against the Court. Some people were claiming to speak on behalf of the social Think Tank in meetings disparaged the Court. Some of the innocent victims were even brought into the Court premises to shout slogans at the apex institution. Some responsible citizens oblivious of their own role in the matter carried on mud-slinging. The main foundation of the challenge was two- fold:

(i) The criminal cases could not have been compounded or quashed and immunity against criminal action could not be granted; and

(ii) the quantum of compensation settled was grossly low.

The argument had been that the principle enunciated by Supreme Court in M.C Mehta v. Union of India, [1987] 1 SCC 395 should have been adopted. In the case, the court held that Where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results to anyone on account of an accident in the operation of such hazardous or inherently dangerous activity resulting, for example, in escape of toxic gas the enterprise is strictly and absolutely liable to compensate all those who are affected by the accident and such liability is not subject to any of the exceptions.

The court said on the protest that public activists should also be permitted to espouse the cause of the poor citizens but there must be a limit set to such activity and nothing perhaps should be done which would affect the dignity of the Court and bring down the serviceability of the institution to the people at large. Those who are acquainted with jurisprudence and enjoy social privilege as men educated in law owe an obligation to the community of educating it properly and allowing the judicial process to continue unsoiled.

The review petition

The settlement was assailed in Review Petitions and Writ Petitions, filed before the supreme court on various grounds. The arguments of the petitioners in the case had covered a wide range and had invoked every persuasion–jurisdictional, legal, humanitarian and those based on considerations of public-policy.

It was urged that the Union of India had surrendered the interests of the victims before the might of multinational cartels and that what were in issue in the case were matters of great moment to developing countries in general.

On May 4, 1989, the Constitution Bench which had recorded the settlement proceeded to set out brief reasons on three aspects,

“(a) How did this Court arrive at the sum of 470 million US dollars for an over-all settlement?

(b) Why did the Court consider this sum of 470 million US dollars as ‘just, equitable and reasonable?

(c) Why did the Court not pronounce on certain important legal questions of far-reaching importance said to arise in the appeals as to the principles of liability of monolithics, economically entrenched multi- national companies operating with inherently dangerous technologies in the developing countries of the third world – questions said to be of great contemporary relevance to the democracies of the third- world?”

The Court indicated that considerations of excellence and niceties of legal principles were greatly overshadowed by the pressing problems of very survival of a large number of victims. The Court also took into account the law’s proverbial delays.

In paragraph 31 of its order the Constitution Bench said:

“As to the remaining question, it has been said that many 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 arose in this case. It is said that this is an instance of lost opportunity to this apex Court to give the law the new direction of new vital issues emerging from the increasing dimensions of the economic exploitation of developing countries by economic forces of the rich ones.”

Finality to the case

When the case was re-heard and judgment was reserved, it was delivered on 3 October, 1991. The court summed the whole contentions in following points-

i) The contention that the Apex Court had no jurisdiction to withdraw to itself the original suits pending in the District Court at Bhopal and dispose of the same in terms of the settlement and the further contention that, similarly, the Court had no jurisdiction to withdraw the criminal proceedings are rejected.

It is held that under Article 142(1) of the Constitution, the Court had the necessary jurisdiction and power to do so.

(ii) The contention that the settlement is void for non-compliance with the requirements of Order XXIII Rule 3B, CPC is rejected.

(iii) The contention that the Court had no jurisdiction to quash the criminal proceedings in exercise of power under Article 142(1) is rejected. But, in the particular facts and circumstances, it is held that the quashing of the criminal proceedings was not justified. The criminal proceedings are, accordingly, directed to be proceeded with.

(iv) The orders dated 14th 15th of February, 1989 in so far a, they seek to prohibit future criminal proceedings are held no to amount to a conferment of criminal immunity; but are held to be merely consequential to the quashing of the criminal proceedings. Now that the quashing is reviewed, this part of the order is also set aside.

(v) The contention that the settlement, and the orders of the Court thereon, are void as opposed to public policy and as amounting to a stifling of criminal proceedings is rejected.

(vi) Having regard to the scheme of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, the incidents and imperatives of the American Procedure of ‘Fairness Hearing’ is not strictly attracted to the Court’s sanctioning of a settlement. Likewise, the absence of a “Re-opener” clause does not, ipso facto, vitiate the settlement.

(vii) It is held, per invitim, that if the settlement is set aside the UCC shall be entitled to the restitution of the US 420 million dollars brought in by it pursuant to the orders of this Court. But, such restitution shall be subject to the compliance with and proof of satisfaction of the terms of the order dated 30th November 1986, made by the Bhopal District Court. Contention is rejected subject to the condition aforesaid.

(viii) The settlement is not vitiated for not affording the victims and victim-groups an opportunity of being heard. However, if the settlement-fund is found to be insufficient, the deficiency is to be made good by the Union of India.


Union Carbide Corporation v. Union of India, (1991)

[1] Doctrine through which a court acknowledges that another forum or court where the case might have been brought is a more appropriate venue for a legal case, and transfers the case to such a forum.