1989 (12) TMI 349 - SC - Indian Laws

Suit for damages - Bhopal Gas tragedy - Constitutional validity of the Bhopal Gas Leak Disaster (Processing of Claims) Act 1985 - powers of dominus litis - Just Fair and Reasonable Procedure - massive escape of lethal gas from the MIC storage tank at Bhopal Plant of the Union Carbide (I) Ltd. ( UCIL ) resulting in large scale death and untold disaster - application of Union Carbide Corporation (UCC) on forum non convenience - rules of natural justice - powers on the Central Government to secure that the claims arising out of or connected with - validity of the Act qua the procedure envisaged by it for a compromise or settlement - constitutionally valid or not in the light of Articles 14 19(l)(g) and 21 of the Constitution - maxim actio personalis moritur cum persona - concept of parens patriae . HELD THAT - The Act does provide a special procedure in respect of the rights of the victims and to that extent the Central Government takes upon itself the rights of the victims. It is a special Act providing a special procedure for a kind of special class of victims. In view of the enormity of the disaster the victims of the Bhopal gas leak disaster as they were placed against the multinational and a big Indian corporation and in view of the presence of foreign contingency lawyers to whom the victims were exposed the claimants and victims can legitimately be described as a class by themselves different and distinct sufficiently separate and indentifiable to be entitled to special treatment for effective speedy equitable and best advantageous settlement of their claims. There indubitably is differentiation. But this differentiation is based on a principle which has rational nexus with the aim intended to be achieved by this differentiation. The disaster being unique in its character and in the recorded history of industrial disasters situated as the victims were against a mighty multinational with the presence of foreign contingency lawyers. looming on the scene in our opinion there were sufficient grounds for such differentiation and different treatment. In treating the victims of the gas leak disaster differently and providing them a procedure which was just fair reasonable and which was not unwarranted or unauthorised by the Constitution Article 14 is not breached. We are therefore unable to accept this criticism of the. Act. The Act empowers and substitutes the Central Govt. It displaces the victims by operation of Section 3 of the Act and substitutes the Central Govt. in its place. The victims have been divested of their rights to sue and such claims and such rights have been vested in the Central Govt. The victims have been divested because the victims were disabled. The disablement of the victims vis-a-vis their adversaries in this matter is a self-evident factor. If that is the position then in our opinion even if the strict application of the parens patriae doctrine is not in order as a concept it is a guide. The jurisdiction of the State s power cannot be circumscribed by the limitations of the traditional concept of parens patriae. Jurisprudentially it could be utilised to suit or alter or adapt itself in the changed circumstances. In the situation in which the victims were the State had to assume the role of a parent protecting the rights of the victims who must come within the protective umbrella of the State and the common sovereignty of the Indian people. As we have noted the Act is an exercise of the sovereign power of the State. It is an appropriate evolution of the expression of sovereignty in the situation that had arisen. We must recognize and accept it as such. In our opinion the constitutional requirements the language of the Section the purpose of the Act and the principles of natural justice lead us to this interpretation of Section 4 of the Act that in case of a proposed or contemplated settlement notice should be given to the victims who are affected or whose rights are to be affected to ascertain their views. Section 4 is significant. It enjoins the Central Govt. only to have due regard to any matters which such person may require to be urged . So the obligation is on the Central Govt. in the situation contemplated by Section 4 to have due regard to the views of the victims and that obligation cannot be discharged by the Central Govt. unless the victims are told that a settlement is proposed intended or contemplated. It is not necessary that such views would require consent of all the victims. The Central Govt. as the representative of the victims must have the views of the victims and place such views before the court in such manner it considers necessary before a settlement is entered into. If the victims want to advert to certain aspect of the matter during the proceedings under the Act and settlement indeed is an important stage in the proceedings opportunities must be given to the victims. Individual notices may not be necessary. The Court can and in our opinion should in such situation formulate modalities of giving notice and public notice can also be given inviting views of the victims by the help of mass media. It was argued that if the suit is considered as a representative suit no compromise or settlement would be possible without notice in some appropriate manner to all the victims of the proposed settlement and an opportunity to them to ventilate their views thereon (vide Order XXIII r. 3B C.P.C.). The argument runs thus S. 4 of the Act either incorporates the safeguards of these provisions in which event any settlement effected without compliance with the spirit if not the letter of these provisions would be ultra vires the Act. Or it does not in which event the provisions of S. 4 would be bad as making possible an arbitrary deprivation of the victims rights being inconsistent with and derogatory of the basic rules established by the ordinary Law of the land viz. the Code of Civil Procedure. We are inclined to take the view that it is not possible to bring the suits brought under the Act within the categories of representative action envisaged in the Code of Civil procedure. The scheme of the Act is that on the one hand the Union of India pursues the litigiation against the UCC and the UCIL; on the other all the victims of the tragedy are expected to file their claims before the prescribed authority and have their claims for compensation determined by such authority. Certain infirmities were pointed out on behalf of the petitioners in the statutory provisions enacted in this regard. Our learned brother has dealt with these aspects and given appropriate directions to ensure that the claims will be gone into by a quasi judicial authority (unfettered by executive prescriptions of the amounts of compensation by categorising the nature of injuries) with an appeal to an officer who has judicial qualifications. In this manner the scheme under the Act provides for a proper determination of the compensation payable to the various claimants. Claims have already been filed and these are being scrutinised and processed. A correct picture as to whether the amount of compensation for which the claims have ben settled is meagre adequate or excessive will emerge only at that stage when all the claims have been processed and their aggregate is determined. In these circumstances we feel that no useful purpose will be served by a post-decisional hearing on the quantum of compensation to be considered adequate for settlement. With these observations we agree with the order proposed by the learned Chief Justice. Petitions disposed of.

Summary

Issues Involved:
1. Constitutional validity of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985.
2. Whether the Act provides a just, fair, and reasonable procedure for the victims.
3. The role of the Central Government as the exclusive representative of the victims.
4. The legality and fairness of the settlement reached under the Act.
5. The necessity of notice to victims before any settlement.
6. The adequacy of compensation and the inclusion of punitive damages.
7. The impact of the Act on criminal liability.

Issue-Wise Comprehensive Details:

1. Constitutional Validity of the Act
The Supreme Court held that the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 is constitutionally valid. The Act was enacted to ensure that claims arising from the disaster are dealt with "speedily, effectively, equitably and to the best advantage of the claimants." The Act does not curtail the liability of the Union Carbide Corporation (UCC) or the Union Carbide India Limited (UCIL) and does not address criminal liability.

2. Just, Fair, and Reasonable Procedure
The Court emphasized that the Act provides a special procedure for a unique class of victims, ensuring their claims are processed effectively. The Act was considered necessary due to the unique nature of the disaster and the victims' inability to pursue claims independently. The Court found that the Act, coupled with the principles of natural justice, provides a fair procedure.

3. Role of the Central Government
The Act grants the Central Government the exclusive right to represent the victims. This was justified under the doctrine of "parens patriae," where the State acts as a guardian for those unable to protect their own interests. The Central Government's role was to ensure the victims' claims were pursued effectively against the multinational corporation, UCC.

4. Legality and Fairness of the Settlement
The Court acknowledged the settlement of $470 million reached with UCC. It stated that the settlement was made considering the urgent need for relief and the complexities of prolonged litigation. The Court also noted that the settlement was approved after considering all relevant factors and ensuring it was just, equitable, and reasonable.

5. Notice to Victims Before Settlement
The Court held that the victims should have been given notice before any settlement to ensure their views were considered. However, it recognized the practical difficulties in providing individual notices and suggested that public notices through mass media could suffice. The lack of pre-decisional notice was deemed a procedural lapse, but the Court did not find it sufficient to invalidate the settlement.

6. Adequacy of Compensation and Punitive Damages
The Court noted that the settlement amount was based on a reasonable estimate of the damages. It acknowledged the argument for punitive damages but found it an uncertain area of law. The Court emphasized that the settlement aimed to provide immediate relief rather than engage in prolonged litigation over punitive damages.

7. Impact on Criminal Liability
The Act does not address criminal liability, and the settlement's provision to quash criminal proceedings was outside the scope of the Act. The Court clarified that the Act deals only with civil claims for compensation and not with criminal proceedings.

Conclusion:
The Supreme Court upheld the constitutional validity of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, while emphasizing the need for a fair procedure, including notice to victims before settlement. The Court recognized the urgency and complexity of the situation, justifying the settlement reached. The Act was found to be a necessary and reasonable measure to ensure effective relief for the victims.