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MC Mehta v/s Union Of India (1986): Case Analysis

The plaintiff contends that a manufacturing facility is responsible for inflicting a grave bodily injury upon him through the inhalation of hazardous gas emitted by said facility. The plaintiff, hailing from an economically disadvantaged group and burdened by poverty, endures daily suffering due to his health issues.

The remedy for his ailments comes with exorbitant costs. Conversely, the defendant, a renowned industrialist, and their legal representative, exhibit unwavering confidence in their triumph, having presented ample evidence to support the defence of "act of god" and absolve themselves of strict liability. Ultimately, the judge renders a verdict in the favour of the defendant, asserting that the occurrence transpired unexpectedly and was an unforeseeable event caused by natural forces, making it impossible for the defendant to anticipate.

Undoubtedly, it is a severe injustice; However, we can find solace in the fact that such a travesty would never occur in present-day India. This achievement can be attributed to the establishment of the principle of 'Absolute liability,' as elucidated in the landmark case of MC Mehta v. Union of India & Ors, also known as the 'Oleum gas leak case.' This particular case not only introduced the concept of absolute liability but also introduced the notion of deep pockets.

Background Of The Case
A writ petition numbered 12739 was filed by MC Mehta, an environmental activist, before the Supreme Court to obtain a direction for the closure of various units of Shriram, a subsidiary of Delhi Cloth Mills Ltd. located in a densely populated area in Delhi on the grounds that they were hazardous to the community.

While the petition was still pending, there was an escape of oleum gas from one of the units of Shriram on the 4th and 6th Dec 1985 from one of the units of the plant, which led to the death of an advocate of Tis Hazari Court and applications were filed by the Delhi Legal Aid & Advice Board and the Delhi Bar association for the award of compensation to people who have suffered harm on account of the escape of the gas.

The three-judge bench initially permitted Shriram Foods and Fertilizers industries to restart its power plant as also plants for the manufacture of caustic chlorine, including its by-product and recovery plants like soap, glycerine, and technical hard oil, subject to the conditions set out in the judgment.

Under Article 32, the petitioner filed a second writ petition to seek legal recourse against the State in case of violations of fundamental rights and to seek appropriate compensation. In response, the Court issued directions to two expert teams: the Nilay Chaudhary Committee, appointed by the Court itself, and the Agarwal Committee, appointed by the petitioner. Their task was to assess whether the recommendations made by the Manmohan Singh Committee, which were formulated during the pendency of the first petition seeking the closure of Shriram, had been implemented effectively to control pollution and ensure safety measures. The Lieutenant Governor of Delhi also established a third committee, the Seturam Committee, to provide its own recommendations and conduct on-site inspections.

The applications filed after the gas leak raised certain issues of great constitutional importance, and therefore the three-judge bench formulated the issues and asked the petitioner and Shriram to file their respective written submissions so the Court could take up a hearing.

The issues raised involved some critical questions of law relating to the interpretation of Article 21 and Article 32 of the Constitution, and therefore the case was rendered to a larger bench of 5 judges.

Issues Involved
  1. What is the scope of the jurisdiction of the Supreme Court under Article 32 since the applications for compensation are sought to be maintained under that Article?
  2. Whether Shriram falls under "other authorities" under Article 12?
  3. Whether Art. 21 can be invoked against Shriram, a company owned by Delhi Cloth Mills Limited, a publicly traded company operating in a crucial industry that has the potential to impact the well-being and health of the general public?
  4. Whether a letter addressed to any individual judge is maintainable as public interest litigation?
  5. What is the extent of responsibility borne by a company operating in a high-risk or intrinsically perilous sector when individuals lose their lives or sustain injuries due to an accident within that industry?
  6. Whether Supreme Court is bound to follow foreign case laws?

Petitioner's Arguments
In the case of Bandhua Mukti Morcha v. Union of India, the Court established that Article 32 of the Indian Constitution not only grants the Court the power to issue directives, orders, or writs in order to enforce fundamental rights, but it also imposes a constitutional duty on the Court to safeguard those rights. In pursuit of this objective, the Court possesses all necessary and supplementary powers, including the ability to devise new remedies and employ various methods to uphold fundamental rights. In appropriate circumstances, the Court may also possess the authority to grant compensation. However, a violation of a fundamental right to warrant such compensation must be extensive in scope and impact the fundamental rights of numerous individuals. Consequently, the present applications seeking compensation are considered admissible under Article 32.

In the case of Rajasthan Electricity Board v. Mohan Lal, Justice Bhargava J. stressed the importance of recognizing that any statutory or constitutional body bestowed with legal authority should be classified as an "other authority" under Article 12. Furthermore, the presence of the "State" can be inferred if a particular group possesses the ability to issue directives, the violation of which would be subject to criminal penalties.

The petitioner argued that Shriram Industry must be permanently shut down, as its continued operation would infringe upon the fundamental right safeguarded by Article 21 and threaten the well-being and safety of the neighbouring community. Although not explicitly stated in the Constitution, the right to a safe and healthy environment is implicitly encompassed within the right to life. The guiding principles laid out in the Constitution outline the State's responsibility to take action toward promoting a higher standard of living and enhancing healthcare for its citizens.

The industry in question was accused of engaging in a hazardous activity that could potentially pose health risks to the public. In order to ensure that the responsible party is held liable, it was suggested that the corporation bear absolute liability for any harm caused due to its hazardous operations.

After thorough investigations carried out by expert committees appointed by court orders to examine the current case and provide recommendations, it has been determined that while the implementation of appropriate and efficient safety measures can mitigate the risks to workers and the general public, it is impossible to eliminate the risk completely. The prevailing consensus among these expert committees is that the permanent relocation of the caustic chlorine plant is the sole viable solution to eliminate the risk posed to the community.

Respondent's Argument
Mr. Diwan, the knowledgeable advocate representing Shri-ram, presented an initial objection, asserting that the Court should refrain from addressing these constitutional matters. The objection was based on the fact that the original writ petition did not include a compensation claim; therefore, these issues could not be deemed pertinent to the petition.

While they acknowledged that the release of oleum gas occurred after filing the writ petition, they argued that the petitioner could have sought to amend the petition to include a claim for compensation for the victims of oleum gas. However, no such application for amendment was made. Consequently, according to the current form of the writ petition, these constitutional matters were not subject to consideration.

Shriram diligently managed the industry in accordance with the Government's prescribed industrial policy and had a long-term objective of running the industry independently. While pursuing this goal, Shriram was granted permission to operate under the direct oversight and regulation of the Government. The Government's involvement, primarily focused on overseeing the industry's operations which could have substantial ramifications for the public interest, as they intended to assume long-term responsibility for this industry.

Moreover, when the State exercises control or imposes regulations on the operations of a private corporation through extensive statutes such as the Industries (Development and Regulation) Act of 1951, it signifies the State's utilization of its authoritative power to oversee. However, this legislation does not transform the nature of the private corporation's activities into state activities. Instead, the State's authoritative power dictates how the activities will be carried out. In contrast, the actual responsibility for conducting the activities remains with the private enterprise.

The council further argued that the principle of strict liability established in Rylands v. Fletcher must be applied in the present case.

Court's Judgement
The Court, as stated in Article 32(1), has the freedom to establish suitable procedures for the specific purpose of enforcing fundamental rights. Additionally, under Article 32(2), the Court possesses the inherent authority to issue any necessary directions, orders, or writs in a given situation, along with all the associated powers required to ensure the enforcement of fundamental rights. Therefore, it is evident that Article 32 is not devoid of authority in providing assistance to individuals whose fundamental rights have been violated. In such circumstances, individuals can seek remedial assistance under Article 32. The Court's power to grant such remedial relief may also extend to awarding compensation in appropriate instances.

A company involved in a risky or inherently perilous industry, which can potentially endanger the well-being of its employees and the community residing nearby, has an unconditional and non-transferable responsibility. It is their duty to ensure that no harm befalls anyone due to the hazardous nature of their operations. This obligation entails maintaining the utmost level of safety standards during the execution of these dangerous activities. If any harm arises as a result of such activities, the company should bear full responsibility for compensating the affected parties. The company cannot escape liability by claiming that it exercised reasonable care and that the harm occurred without any negligence on its part.

We have reached a point where we no longer rely on the legal framework of another country. While we are open to gaining insights from any source, it is imperative that we establish our own legal system. In India, we cannot hesitate to take the necessary steps in formulating a fresh principle of liability, one that the English courts have not yet explored. It is our responsibility to shape our own laws, and if we encounter unique situations resulting from hazardous or inherently dangerous industries that are inherent to an industrialized economy, we should not hesitate to establish a new rule of liability. Merely because this has not been done in England should not deter us from embracing such a liability rule.

The court instructed the organizations that filed the petition to bring forward their lawsuits on behalf of the victims of the gas leak within a period of two months in the appropriate court. Furthermore, the management was directed to deposit a sum of Rs. 20 lakhs as a security measure for compensating the victims affected by the Oleum gas leakage. Additionally, a Bank guarantee of Rs. 15 lakhs had also been mandated, which will be cashed if there is any gas leakage within three years from the date of the court's judgment.

Moreover, it had been acknowledged that the permanent shutdown of the caustic soda factory would result in the loss of employment for 4,000 workers and exacerbate the issue of social poverty. Consequently, the court has issued a temporary operating order for the factory, subject to 11 conditions, and has established an expert committee to oversee the operations of the industry.

Deep Pocket Theory
In MC Mehta v. Union of India, The Supreme Court rejected the idea of unlimited damages in civil law and instead implemented a principle known as the "deep pocket theory." This principle, as explained by the judges, states that the amount of compensation a company must pay should be proportionate to its size and financial strength, with the intention of serving as a deterrent. In other words, if a large and economically successful company causes harm through a hazardous or dangerous activity that affects the public and becomes a nuisance, it is obliged to pay a higher amount of compensation solely due to its capacity to do so.

The Concept Of Absolute Liability
  • · Only enterprises involved in hazardous or inherently dangerous activities will be held responsible under this rule.
  • · It is not a requirement for a dangerous substance or object to escape from one's property to another for the rule to be applicable. It applies not only to individuals harmed outside the premises but also to those injured within the premises.
  • · The rule is absolute and does not have any exceptions. It applies without any conditions or limitations.
  • · The amount of compensation awarded in cases governed by this rule is determined based on the severity of the harm caused and the financial capacity of the defendant's enterprise.

The judgment rendered in the case proved to be crucial for future challenges in environmental law, as it generated numerous significant opinions that continue to be praised today. By adopting a broad interpretation of the right to life as stated in Article 21, the Supreme Court adopted a proactive approach to resolving the case and ensured the protection of people's fundamental rights.

During the period in which the court deliberated on the case, it aimed to alleviate concerns that had arisen following the verdict on the Bhopal Gas tragedy, which had been delivered just a year prior. This was done to restore the nation's confidence in the legal system. It was imperative to issue a strong ruling in order to assure the public that industries would be held fully accountable for their actions. That is where the judgment came into play.

The decision took into consideration the significance of industrialization and the potential for accidents to occur as a result. The choice was made while also acknowledging the necessity of industrialization and the likelihood and consequences of injuries. Through its overall commendable judgment, which factored in relevant social, economic, and legal aspects, the Supreme Court emerged as a champion of the environment and public rights.

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