M.C. Mehta v Union of India — the Oleum Gas Leak case (1987)

This is India's own contribution to the law of torts and the single most important case in Module 1. It does two large things at once, and a good answer separates them:

1. It settles that the Supreme Court may award compensation in a petition under Art. 32, and states the conditions on which it will.
2. It creates the rule of absolute liability for enterprises engaged in a hazardous or inherently dangerous activity, expressly displacing the English rule in Rylands v Fletcher and all of its exceptions.

The writ petition under Art. 32 was originally an application for the closure of the units of Shriram Foods and Fertiliser Industries in Delhi on the ground that they were hazardous to the community. A Bench of three Judges, by judgment of 17 February 1986, permitted Shriram to restart its power plant and its plants for the manufacture of caustic chlorine including by-products and recovery plants for soap, glycerine and technical hard oil, on conditions. What would then have survived was only the question of relocation away from human habitation.

While the petition was pending there was an "escape of oleum gas from one of the units of Shriram on 4th and 6th December, 1985". Applications for compensation to those harmed were filed by the Delhi Legal Aid & Advice Board and the Delhi Bar Association. Because those applications raised substantial questions on the interpretation of Arts. 21 and 32, the matter was referred to a larger Bench of five Judges.

Counsel for Shriram objected that no claim for compensation had been made in the original writ petition, that the petitioner could have applied to amend it and had not, and that the constitutional issues therefore did not arise.

The Court rejected this. The applications "are for enforcement of the fundamental right to life enshrined in Article 21 of the Constitution", and in dealing with them "we cannot adopt a hypertechnical approach which would defeat the ends of justice". Where a fundamental right of persons who by reason of poverty or disability cannot approach a court is violated, any public spirited individual or social action group may act for them — and may do so "not only by filing a regular writ petition but also by addressing a letter to the Court". If a letter suffices, an application for compensation certainly does. The governing rule was stated shortly: "The Court while dealing with an application for enforcement of a fundamental right must look at the substance and not the form."

The Court began from the ambit of Art. 32, endorsing what had been said in Bandhua Mukti Morcha v Union of India. Its statement of the jurisdiction is the passage to learn:

"Article 32 does not merely confer power on this Court to issue a direction, order or writ for enforcement of the fundamental rights but it also lays a constitutional obligation on this Court to protect the fundamental rights of the people" — and for that purpose the Court has all incidental and ancillary powers including "the power to forge new remedies and fashion new strategies".

Under Art. 32(1) the Court is "free to devise any procedure appropriate for the particular purpose of the proceeding"; under Art. 32(2) it has "the implicit power to issue whatever direction, order or writ is necessary in a given case". The power is not only injunctive — preventing an infringement — but remedial, giving relief against a breach already committed. Otherwise, the Court said, the position would be absurd: "if a fundamental right is threatened to be violated, the Court can injunct such violation but if the violator is quick enough to take action infringing the fundamental right, he would escape from the net of Article 32."

But the power is exceptional, and the limits are examinable. The Court used the words "in appropriate cases" deliberately. Compensation under Art. 32 requires that:

• the infringement "must be gross and patent, that is, incontrovertible and ex facie glaring"; and
• either the infringement is on a large scale affecting the fundamental rights of a large number of persons, or
• it would be "unjust or unduly harsh or oppressive" on account of poverty, disability or a socially or economically disadvantaged position to require the persons affected to pursue action in the civil courts.

The Court added the closing caution: "Ordinarily, of course, a petition under Article 32 should not be used as a substitute for enforcement of the right to claim compensation for infringement of a fundamental right through the ordinary process of civil court."

The rule departed from

The Court set out Rylands v Fletcher accurately before leaving it. The rule, "evolved in the year 1866", is that a person who for his own purposes brings on to his land and collects and keeps there anything likely to do mischief if it escapes "must keep it at his peril" and, failing that, is prima facie liable for the damage which is the natural consequence of its escape. Liability is strict; it is no defence that the thing escaped without wilful act, default or neglect.

But — and this is why the rule was useless against a modern chemical works — "this rule applies only to non-natural user of the land and it does not apply to things naturally on the land or where the escape is due to an act of God and an act of a stranger or the default of the person injured or where the thing which escapes is present by the consent of the person injured or in certain cases where there is statutory authority".

The reason for departing

The Court refused to be bound by nineteenth-century English learning on natural and non-natural user, because the rule "evolved in the 19th Century at a time when all these developments of science and technology had not taken place cannot afford any guidance in evolving any standard of liability consistent with the constitutional norms and the needs of the present-day economy and social structure".

Then the sentences every student should be able to reproduce:

"Law has to grow in order to satisfy the needs of the fast-changing society and keep abreast with the economic developments taking place in the country." "Law cannot afford to remain static." "We no longer need the crutches of a foreign legal order."

The rule laid down

An enterprise engaged in a hazardous or inherently dangerous industry which poses a potential threat to the health and safety of persons working in the factory and residing in the surrounding areas "owes an absolute and nondelegable duty to the community to ensure that no harm results to anyone on account of hazardous or inherently dangerous nature of the activity which it has undertaken". The activity "must be conducted with the highest standards of safety and if any harm results on account of such activity, the enterprise must be absolutely liable to compensate for such harm and it should be no answer to the enterprise to say that it had taken all reasonable care and that the harm occurred without any negligence on its part". And the operative formula: where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results from an accident in its operation, 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 which operate vis-a-vis the tortious principle of strict liability under the rule in Rylands v. Fletcher".

The three justifications

The Court gave three reasons, and each is worth a separate line in an answer.

1. Social cost. Those harmed cannot "isolate the process of operation from the hazardous preparation of substance or any other related element that caused the harm", so the enterprise must bear the loss "as a part of the social cost for carrying on the hazardous or inherently dangerous activity".
2. The price of permission. If the enterprise is permitted to carry on such an activity for its profit, "the law must presume that such permission is conditional on the enterprise absorbing the cost of any accident arising on account of such hazardous or inherently dangerous activity as an appropriate item of its over-heads". Such an activity for private profit "can be tolerated only on condition that the enterprise engaged in such hazardous or inherently dangerous activity indemnifies all those who suffer", and that "regardless of whether it is carried on carefully or not".
3. Capacity to know. The principle is sustainable because "the enterprise alone has the resource to discover and guard against hazards or dangers and to provide warning against potential hazards".

The measure of damages

This is the third distinctive contribution and the one most often forgotten. Compensation "must be co-related to the magnitude and capacity of the enterprise because such compensation must have a deferent effect". (The report reads deferent; the word intended, and universally cited, is deterrent.) "The larger and more prosperous the enterprise, the greater must be the amount of compensation payable by it for the harm caused" on account of the accident.

So Indian law rejects, for this class of case, the ordinary tort principle that damages compensate loss and nothing more. Damages here are calibrated to the defendant, not only to the plaintiff, because their function is deterrence.

The ratio is twofold: the Art. 32 compensation jurisdiction with its stated conditions, and the absolute liability rule with its measure of damages.

The extended discussion of the exceptions to Rylands v Fletcher, and the passages on judicial independence from English law, are reasoning rather than free-standing rules — but they are the reasoning examiners want, because they explain why the Indian rule is different rather than merely stating that it is.

Note carefully what the Court did not do in this judgment: it did not quantify any award against Shriram.

| | Rylands v Fletcher strict liability | Indian absolute liability | |---|---|---| | Trigger | Non-natural user; escape of a thing likely to do mischief | Hazardous or inherently dangerous activity; harm from an accident in its operation | | Escape required | Yes | The rule is framed around harm to anyone, including persons working in the factory | | Defences | Act of God, act of a stranger, plaintiff's default, consent, statutory authority | None — liability "is not subject to any of the exceptions" | | Duty | Duty of the occupier | "absolute and nondelegable duty to the community" | | Damages | Compensatory | Correlated to the magnitude and capacity of the enterprise; deterrent |

• Bichhri — Indian Council for Enviro-Legal Action v Union of India (case 8) applies the absolute liability rule to soil and groundwater contamination and ties it to the polluter pays principle.
• Union Carbide Corporation v Union of India (case 4) contains the later Court's discussion of the status of the Oleum rule, which is the point of controversy chapter 3 flags.
• The Public Liability Insurance Act 1991 creates a statutory no-fault relief scheme for accidents involving hazardous substances, so that a victim need not first establish anything at all.
• The National Green Tribunal Act 2010 gives the Tribunal power to award relief and compensation, which is the procedural home the doctrine had been waiting for.