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Union Carbide Corporation v. Union of India

Parties Involved

PetitionersUnion Carbide Corporation
RespondentUNION OF INDIA
Citation: (1991) 4 S.C.C. 584

Facts of the case

IN 1934, UNION Carbide India Ltd (UCIL) was incorporated in India to manufacture batteries, chemicals, pesticides and other industrial products. The American enterprise, Union Carbide Corporation (UCC) owned a majority stake in UCIL. In 1970, UCIL erected a pesticide plant in a densely populated area of Bhopal, Madhya Pradesh. At the inception stage, UCC’s Argentine agronomic engineer expressed concerns over the plant’s safety, but his superiors disregarded them, saying that the plant would be ‘as inoffensive as a chocolate factory’. With approval from the Government of India, UCIL manufactured the pesticides Sevin and Temik in its Bhopal plant. On the night of 2–3 December 1984, water seeped into a tank containing over forty tonnes of the highly poisonous methyl isocyanate (MIC), a gas used in the production of Sevin and Temik. This caused an exothermic reaction because of which the MIC escaped into the atmosphere—and when the north-westerlies blew this gas over the hutments adjacent to the plant and into the very densely populated parts of Bhopal, the city was transformed into a ‘gas chamber’. As many as 2600 people died in the immediate wake of the leak, and the death toll rose to 8000 within a fortnight, while hundreds of thousands were impacted. Bhopal had found a place on the world map for all the wrong reasons. The ghosts of December 1984 haunted several generations of Bhopal’s inhabitants. Over the next twenty-five years, although no official death count was undertaken, estimates indicate that the number of fatalities rose to a whopping 20,000 while 6,00,000 people suffered irreparable physical damage. Many who were not even born at the time of the disaster but were still in the womb of their mothers endured its catastrophic consequences.

In order to provide speedy justice, the government enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (the Bhopal Act) giving it authority to file cases on behalf of the victim by the virtue of Doctrine of Parens patriae. However, the validity of this act was challenged in Supreme Court, however the court by applying Charanlal Sahu v. Union of India ruled in favour of the Union of India and held that the state is obligated to protect the interests of its citizens. The court further held that our Constitution makes it imperative for the state to secure to all its citizens the rights guaranteed 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.

However, the Union of India decided to litigate for the settlement in US courts. The Union of India to support its stance of choosing American courts contended the following:

  1. Indian legal system is not appropriate to entertain such big a matter including the flaws of substantial backlogs in the cases.
  2. India did not have adequate legal provisions in the environmental law as well as the tort law.

Therefore, all the appeals against Union carbide were clubbed into one single petition before Keenan’s court. The Keenan’s Court dismissed the case on the grounds of forum non conviniens.  The American court wa sof the view that all the relevant evidences are within the jurisdiction of India, therefore, it held that Indian courts are better forum for this matter.

Therefore, in September 1986 Union of India initiated proceedings against Union Carbide in Bhopal District Court. The District court asked Union Carbide to deposit as sum of 350 Million as interim compensation. Union Carbide went into appeal in High Court & the court reduced the sum to 250 Million. Finally, Union Carbide reached Supreme Court.     

Issues

The validity of settlement ordered by the High Court of Madhya Pradesh

Provisions

1] Single European Act, 1986 (European Community Treaty) – ‘Polluter Pays Principle’ [Article 130R(2)]

2] Sections 3, 4, and 5 – Environment (Protection) Act, 1986

3] Article 48A of the Indian Constitution

4] Article 51A(g) of the Indian Constitution

5] Section 24 (1) and 33A of Water (Prevention and Control of Pollution) Act, 1974

6] Air (Prevention and Control of Pollution) Act, 1981

7] Hazardous Wastes (Management and Handling) Act, 1989

8] Article 21 of the Indian Constitution (Right to live in a healthy environment)

9] M. C. Mehta v. Union of India [Oleum Gas Leak Case] (1987 (1) SCC 395) judgment

Principles

  • Parens Patriae – [Latin, Parent of the country.] A doctrine that grants the inherent power and authority of the state to protect persons who are legally unable to act on their own behalf.
  • Forum non-conviniens- Forum nonconveniens is a discretionary power that allows courts to dismiss a case where another court, or forum, is much better suited to hear the case. This dismissal does not prevent a plaintiff from re-filing his or her case in the more appropriate forum.
  • Polluters Pay Principle- The ‘polluter pays’ principle is the commonly accepted practice that those who produce pollution should bear the costs of managing it to prevent damage to human health or the environment.

Judgement

  • The court hurriedly ordered the Union Carbide Company on February 14, 1989 to pay a one-time settlement sum of US $470 Million as compensation before March 31, 1989. However, in May 4, 1989 the court passed an order giving reasons for this judgement.

    The Supreme Court ordered Union Carbide to pay US $470 million against all the destruction that the leak of MIC gas from the industrial premise. In the reasoned order Justice Pathak said that it was the duty of the court to secure immediate relief to the victims and that the court did not enter into any virgin territory. The compensation of $470 million was calculated by applying the polluters pay principle.

    Analysis showed the at an amount less than INR 50,000 was to be delivered to each victim, which was much less than the amount promised by the government.

    Therefore, the validity of the settlement done was challenged in Union Carbide Corporation v. Union of India. The petitioners in this case argued that the drop of criminal proceeding against Union Carbide was illegal and the amount of Compensation was inappropriate to the injury the disaster caused. On the point that whether such compensation is adequate or not the majority bench held that the said compensation is adequate, reasonable and fair and in case any deficiency arises in money for rehabilitation, such money shall be tendered by the Union & State government. On this point Ahmadi J. dissented with the majority that when Union of India is not even remotely connected to the MIC leak in UCIL then how it could be made liable to pay the damages. In his opinion any deficiency that may arise in rehabilitation of victims must be tendered by Union Carbide as applying the formula of Rylands v. Fletcher.

Analysis

Two major points to be noted in this case were:

  1. At the time of the disaster, UCIL’s ownership structure was such that UCC owned 51 per cent of the company, Life Insurance Corporation of India/Unit Trust of India owned 22 per cent and the Indian public owned 27 per cent. Thus, by acting the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (the Bhopal Act) which made the Union of India representative of the victims, the Government itself escaped the liability which otherwise it would have been responsible for.
  2. The court honed a parochial view by limiting its authority to just an interpreter of law and its role to just provide the settlement in the case, whereas this Supreme Court could have taken a step further to formulate a set of guidelines in environment law to avert such future disasters. This awakening was observed Vishaka v. State of Rajasthan, where the court not only provided justice but also formed the famous ‘Vishaka Guidelines’ that were to act as laws to provides deterrence against sexual harassment of women at workplace.
Written By Kanishk