Indian Council for Enviro-Legal Action v Union of India — the Bichhri case (1996 and 2011)

This is the case in which the polluter pays principle was first worked out in Indian law, and it is the case Vellore relies on for that principle. It also:

• rescues the absolute liability rule from the doubt cast on it in the Bhopal review, holding expressly that the rule is not obiter;
• explains why Rylands v Fletcher is unsuitable for India, with a comparative survey of the English and Australian positions;
• shows that where the Court cannot itself award damages, it can direct the Central Government to determine and recover the cost of remedial measures under ss. 3 and 5 of the Environment Act;
• contains the earliest and clearest Supreme Court argument for environment courts, which is the intellectual origin of the National Green Tribunal; and
• in its 2011 sequel, is the leading Indian authority on unjust enrichment by abuse of process — a polluter who litigates for fifteen years to avoid paying.

Bichhri is a small village in Udaipur District, Rajasthan. Its troubles began in 1987 when Hindustan Agro Chemicals Limited (Respondent 4) started producing oleum (described as the concentrated form of sulphuric acid) and single super phosphate.

"The real calamity occurred when a sister concern, Silver Chemicals (Respondent 5), commenced production of 'H' acid in a plant located within the same complex." H acid was made exclusively for export. Its manufacture "gives rise to enormous quantities of highly toxic effluents" — iron-based and gypsum-based sludge — which "It poisons the earth, the water and everything that comes in contact with it." Jyoti Chemicals (Respondent 8) was another unit producing H acid.

All the units of Respondents 4 to 8 were in the same complex, "controlled by the same group of individuals", within the limits of Bichhri village.

The Court noted the trade pattern with some acidity: "Because of the pernicious wastes emerging from the production of 'H' acid, its manufacture is stated to have been banned in the western countries. But the need of 'H' acid continues in the West. That need is catered to by the industries like the Silver Chemicals and Jyoti Chemicals in this part of the world."

The harm. Silver Chemicals produced 375 MT of H acid; Jyoti Chemicals claimed only 20 MT as trial production. Whatever the quantity, "it has given birth to about 2400-2500 MT of highly toxic sludge (iron-based sludge and gypsum-based sludge) besides other pollutants". Untreated waste waters were allowed to flow out freely and untreated sludge was thrown in the open, so that "the toxic substances have percolated deep into the bowels of the earth polluting the aquifers and the subterranean supply of water". "The water in the wells and the streams has turned dark and dirty rendering it unfit for human consumption." The soil became unfit for cultivation, "the mainstay of the villagers". "It spread disease, death and disaster in the village and the surrounding areas."

The villagers "rose in virtual revolt", leading to the imposition of s. 144 CrPC by the District Magistrate and the closure of Silver Chemicals in January 1989. The present social action litigation was begun in August 1989.

NEERI — the National Environmental Engineering Research Institute — was asked by the Court's order of 11 December 1989 to study the situation and report "as to the choice and scale of the available remedial alternatives", both short-term and long-term. It later "worked out the cost for repairing the damage at more than Rupees forty crores". The affected area was taken as about 350 hectares.

Jeevan Reddy J.'s first paragraph is quoted more often than any other passage in Indian environmental law, and it is worth reproducing because it explains the tone of everything that follows:

The petition "brings to light the woes of people living in the vicinity of chemical industrial plants in India. It highlights the disregard, nay, contempt for law and lawful authorities on the part of some among the emerging breed of entrepreneurs, taking advantage, as they do, of the country's need for industrialization and export earnings. Pursuit of profit has absolutely drained them of any feeling for fellow human beings". And: "It is such instances which have led many people in this country to believe that disregard of law pays and that the consequences of such disregard will never be visited upon them - particularly, if they are men with means. Strong words indeed - but nothing less would reflect the deep sense of hurt, the hearing of this case has instilled in us."

The respondents argued that a writ petition would not lie against private industries. The Court's answer defines the shape of environmental public interest litigation:

The petition "is directed against the Union of India, Government of Rajasthan and RPCB to compel them to perform their statutory duties enjoined by the Acts aforementioned on the ground that their failure to carry out their statutory duties is seriously undermining the right to life (of the residents of Bichhri and the affected area) guaranteed by Article 21 of the Constitution."

If the authorities have not acted as the law requires and "their inaction is jeopardising the right to life of the citizens of this country or of any section thereof, it is the duty of this Court to intervene". And on the merits of the objection: "If an industry is established without obtaining the requisite permission and clearances and if the industry is continued to be run in blatant disregard of law to the detriment of life and liberty of the citizens living in the vicinity", it is self-evident that the Court has power to intervene.

The Court also rejected the attack on the expert reports. The complaint that the Board was hostile was answered shortly: "Repeated and persistent violations call for repeated orders. That is no proof of hostility." And on the request to cross-examine the experts, raised late: the makers of the reports "are all experts in their field and under no obligation either to the RPCB or for that matter to any other person or industry".

On responsibility: "We accordingly hold and affirm that the respondents alone are responsible for all the damage to the soil, to the underground water and to Village Bichhri in general".

Counsel argued that in the Oleum Gas Leak case no compensation was awarded and that the Chief Justice in Union Carbide Corpn. had said the statement of the law "was essentially obiter". Jeevan Reddy J. dealt with this squarely:

"We on our part find it difficult to say, with great respect to the learned Chief Justice, that the law declared in Oleum Gas Leak case, is obiter. It does not appear to be unnecessary for the purposes of that case. Having declared the law, the Constitution Bench directed the parties and other organisations to institute actions on the basis of the law so declared."

He also noted that the majority judgment in Union Carbide "has not expressed any opinion on this issue" — so the obiter characterisation was itself one judge's concurring view.

Why Rylands is unsuitable. The Court surveyed the comparative material:

• Blackburn J.'s original statement in Rylands: a person who brings on his land and keeps there anything likely to do mischief if it escapes "must keep it in at his peril, and, if he does not do so, he is prima facie answerable for all the damage which is the natural consequence of its escape", with excuses for the plaintiff's default or vis major.
• The House of Lords added the rider that the user must be non-natural. So the "twin tests" to attract the rule are foreseeability and non-natural user of the land.
• Cambridge Water Co. Ltd. v Eastern Counties Leather (1994): a tannery's solvent percolated into a borehole used for public supply. The House of Lords held "that foreseeability of the harm of the relevant type by the defendant was a pre-requisite to the right to recover damages both under the heads of nuisance and also under the rule in Rylands", and the claim failed although the use was non-natural. This is the crucial comparative point: on the English rule, a polluter of groundwater escapes if the harm was not foreseeable.
• Burnie Port Authority v General Jones Pty Ltd. (1994): the Australian High Court held that the rule in Rylands, "having attracted many difficulties," "uncertainties, qualifications and exceptions, should now be seen, for the purposes of Australian Common Law, as absorbed by the principles of ordinary negligence", though it imposed a non-delegable duty of care.

The choice. On those two lines of thought, "we are of the opinion that any principle evolved in this behalf should be simple, practical and suited to the conditions obtaining in this country", and "We are convinced that the law stated by this Court in Oleum Gas Leak case, is by far the more appropriate one - apart from the fact that it is binding upon us."

The rule restated. "once the activity carried on is hazardous or inherently dangerous, the person carrying on such activity is liable to make good the loss caused to any other person by his activity irrespective of the fact whether he took reasonable care while carrying on his activity. The rule is premised upon the very nature of the activity carried on." And the reason: the enterprise "alone has the resource to discover and guard against hazards or dangers", together with "the practical difficulty (on the part of the affected person) in establishing the absence of reasonable care or that the damage to him was foreseeable by the enterprise".

Applied: Respondents 4 to 8 are "absolutely liable to compensate for the harm caused by them to the villagers in the affected area, to the soil and to the underground water", bound to remove the sludge and other pollutants and "also to defray the cost of the remedial measures required to restore the soil and the underground water sources".

The Court then approached liability "from another angle, which has now come to be accepted universally as a sound principle" — the polluter pays principle:

"The Polluter Pays principle demands that the financial costs of preventing or remedying damage caused by pollution should lie with the undertakings which cause the pollution, or produce the goods which cause the pollution. Under the principle it is not the role of Government to meet the costs involved in either prevention of such damage, or in carrying out remedial action, because the effect of this would be to shift the financial burden of the pollution incident to the taxpayer."

Its history, as the Court gave it:

• Promoted by the Organisation for Economic Cooperation and Development (OECD) during the 1970s.
• Accepted by the European Community as a fundamental part of its environmental strategy and an underlying principle of the four Community Action Programmes on the Environment; the Fourth Action Programme makes it clear that "the cost of preventing and eliminating nuisances must in principle be borne by the polluter".
• Incorporated into the European Community Treaty by the Single European Act of 1986; Article 130-R(2) bases action on three principles: "the need for preventive action; the need for environmental damage to be rectified at source; and that the polluter should pay".
• The Court noted candidly that "the precise scope of the principle and its implications for those involved in past, or potentially polluting activities have never been satisfactorily agreed".

The Indian formulation: "according to this principle, the responsibility for repairing the damage is that of the offending industry", and ss. 3 and 5 of the Environment Act empower the Central Government to give directions to give effect to it.

This is the reasoning that makes the case practically important, and it answers an objection students often raise — that the Supreme Court has no power to award damages in a writ.

"even if it is assumed (for the sake of argument) that this Court cannot award damages against the respondents in these proceedings that does not mean that the Court cannot direct the Central Government to determine and recover the cost of remedial measures from the respondents."

Section 3 empowers the Central Government "to take all such measures as it deems necessary or expedient for the purpose of protecting and improving the quality of the environment"; s. 5 empowers it to issue directions; read with the wide definition of environment in s. 2(a), those powers include directions for the removal of sludge, remedial measures, "and also the power to impose the cost of remedial measures on the offending industry and utilise the amount so recovered for carrying out remedial measures". As the Court put it, the objection "is more a matter of form".

1. The Central Government shall determine the amount required for remedial measures, including removal of the sludge. Chapters VI and VII of the NEERI report were deemed to be the show-cause notice; the respondents to explain within six weeks; the Secretary, Ministry of Environment and Forests to determine the amount within six weeks of the explanation. On failure to pay, recovery by the Central Government according to law. "The factories, plant, machinery and all other immovable assets of Respondents 4 to 8 are attached herewith."
2. Closure. For "their continuous, persistent and insolent violations of law, their attempts to conceal the sludge" and their non-implementation of the Court's orders, Respondents 4 to 8 "have earned the dubious distinction of being characterised as" rogue industries. "They have forfeited all claims for any consideration by this Court." All their plants and factories at Bichhri were ordered closed and the RPCB directed to seal them forthwith, the Sulphuric Acid Plant at the end of one week to allow a safe wind-down.
3. Damages for the villagers. It remained open to them or to any organisation on their behalf "to institute suits in the appropriate civil court", and if they sued in forma pauperis "the State of Rajasthan shall not oppose their applications for leave to sue in forma pauperis".
4. Chemical industries as a category apart. The Central Government to consider treating them so, since "the chemical industries are the main culprits in the matter of polluting the environment", with no distinction between large, medium and small scale; and to examine "the advisability of allowing the establishment of these industries in arid areas", these being water-intensive.
5. Quarterly reports by the Central Government and the RPCB.
6. Environment courts. "The suggestion for establishment of environment courts is a commendable one." The reasons given are the case for the NGT in miniature: prosecutions in ordinary criminal courts under the Water, Air and Environment Acts "never reach their conclusion either because of the workload in those courts or because there is no proper appreciation of the significance of the environment matters"; orders of the authorities "are immediately questioned by the industries in courts" and those proceedings "take years and years to reach conclusion", with interim orders that "effectively disable the authorities from ensuring the implementation of their orders". Hence the need for courts "which alone should be empowered to deal with all matters, civil and criminal, relating to environment", manned by "legally trained persons/judicial officers" and allowed "to adopt summary procedures".
7. Strengthening the machinery. Heads of units and agencies "should be made personally accountable for any lapses"; and the Court floated "The idea of an environmental audit by specialist bodies created on a permanent basis with power to inspect, check and take necessary action", and of an audit "conducted periodically and certified annually, by specialists in the field, duly recognised". The stated aim: "to integrate and balance the concern for environment with the need for industrialisation and technological progress."

Costs. Respondents 4 to 8 to pay Rupees fifty thousand to the petitioner, which "had to fight this litigation over a period of over six years with its own means", the Court adding that "Voluntary bodies, like the petitioner, deserve encouragement wherever their actions are found to be in furtherance of public interest."

Bhandari J. opened by describing the position: "even after fifteen years of the final judgment of this court (date of judgment 13th February, 1996) the litigation has been deliberately kept alive by filing one interlocutory application or the other in order to avoid compliance of the judgment". It is, he said, "a classic example how by abuse of the process of law even the final judgment of the apex court can be circumvented for more than a decade and a half".

By an order of 4 November 1997, accepting the MoEF report, the Court had directed Hindustan Agro Chemical Ltd. to pay Rs. 37.385 crores towards the costs of remediation. It had not been paid. Review and curative petitions were dismissed on 18 July 2002, and applications continued.

The principles on unjust enrichment — a numbered list which is itself examinable, and which is why this judgment is cited far outside environmental law:

1. "It is the bounden duty and obligation of the court to neutralize any unjust enrichment and undeserved gain made by any party by invoking the jurisdiction of the court."
2. A stay or injunction is granted "always at the risk and responsibility of the party applying"; "An order of stay cannot be presumed to be conferment of additional right upon the litigating party."
3. "Unscrupulous litigants be prevented from taking undue advantage by invoking jurisdiction of the Court."
4. A person in wrongful possession should be removed and "be compelled to pay for wrongful use of that premises fine, penalty and costs".
5. "No litigant can derive benefit from the mere pendency of a case in a court of law."
6. "A party cannot be allowed to take any benefit of his own wrongs."
7. "Litigation should not be permitted to turn into a fruitful industry".
8. "The institution of litigation cannot be permitted to confer any advantage on a party by delayed action of courts."

The order. The applications were dismissed and "the applicant-industry is directed to pay Rs.37.385 crores along with compound interest @ 12% per annum from 4.11.1997 till the amount is paid or recovered", with costs of Rs. 10 lakhs, the costs also to be used for remedial measures at Bichhri; and if unpaid within two months, recoverable "as arrears of the land revenue".

1. A writ petition under Art. 32 lies to compel statutory authorities to perform their duties where their inaction jeopardises the Art. 21 rights of residents, and consequential directions may be made against the polluting industries.
2. The absolute liability rule of the Oleum Gas Leak case is law, not obiter, and is preferred to Rylands v Fletcher, which fails because it requires foreseeability and non-natural user.
3. The polluter pays principle means the offending industry bears the cost of repairing the damage, not the taxpayer.
4. Where the Court does not itself assess damages, it may direct the Central Government under ss. 3 and 5 of the Environment (Protection) Act to determine, recover and apply the cost of remedial measures; recovery may be as arrears of land revenue and assets may be attached.
5. A litigant who keeps proceedings alive to avoid compliance is liable to be stripped of the benefit, with compound interest and costs.