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

This is the case in which the Supreme Court refused to take English law as it found it. Faced with a gas escape from a chemical plant in the middle of Delhi, barely a year after Bhopal, the Court declined to apply the 1868 rule in Rylands v Fletcher and built a new rule in its place: absolute liability. An enterprise carrying on a hazardous activity is liable for harm from an accident in that activity — no exceptions, no defence of reasonable care.

Module 3.2 examines three things separately: the ratio, the guidelines, and the Bench.

Delhi Cloth Mills Ltd ran a complex of chemical units in Kirti Nagar, Delhi, under the name Shriram Foods and Fertiliser Industries — caustic soda, chlorine, sulphuric acid, bleaching powder — on some seventy-six acres in a densely populated part of the capital, two lakh people living within a mile.

M.C. Mehta, an advocate, had already moved the Supreme Court under Article 32 by public interest litigation, seeking closure and relocation of the hazardous units on the ground that their presence in a crowded city violated Article 21. That petition was pending.

On 4 December 1985, while it was pending, oleum gas escaped from the sulphuric acid plant. Oleum is fuming sulphuric acid; the vapour attacks the eyes and the airways. Many in the neighbourhood were affected, and an advocate practising in the Tis Hazari courts was said to have died after inhaling it. A second, smaller escape followed on 6 December, and the District Magistrate ordered the manufacture of hazardous chemicals at the works to stop.

Note the posture: the escape did not begin the litigation. It happened during a pending Article 32 petition to close the plant, and turned that petition into an inquiry into what such an industry owes its neighbours.

Expert committees appointed by the Court — the Manmohan Singh and Nilay Choudhary Committees — found serious lapses in maintenance and operation, and on 17 February 1986 the plant was allowed to restart on conditions. The compensation applications then raised substantial questions on Arts 21 and 32 and went to a Constitution Bench of five Judges.

The Court itself separated two questions of principle:

1. The scope of Article 32. Is the Court's power confined to the prerogative writs, or does it extend to awarding compensation for infringement of a fundamental right?
2. The measure of liability. What is an enterprise's liability for harm from an accident in a hazardous or inherently dangerous activity — the strict liability of Rylands v Fletcher, with its exceptions, or something stricter?

Two subsidiary questions arose: (3) whether a private company running a licensed hazardous industry is "the State" or "other authority" under Article 12, so that a writ lies against it at all; and (4) whether the plant should restart, on what conditions, and whether it should be relocated.

For the petitioner. No degree of care can eliminate the risk of a chlorine escape, and such a plant has no business in a crowded city. Article 32 must carry the power to give real relief, or the right is a promise without a remedy. Shriram, licensed and pervasively controlled by the State, is an authority under Art. 12.

For Shriram. The committees' recommendations had been complied with and the residual risk reduced almost to nothing. The governing rule was Rylands v Fletcher with its exceptions, and a claim in tort belongs in a civil suit.

For the workmen's unions. Closure would put over four thousand workers out of employment — which is why the Court framed the problem as regulated coexistence rather than prohibition.

1. Article 32 is not merely injunctive. The power is "not only injunctive in ambit" but "also remedial in scope", so it may include the power to award compensation in appropriate cases — not in every case, but where the infringement is "gross and patent, that is, incontrovertible and ex facie glaring" and either affects many people or falls on those too poor to sue in the civil courts.

2. Absolute liability. Bhagwati CJ refused to be bound by English authority:

"We have to evolve new principles and lay down new norms which would adequately deal with the new problems which arise in a highly industrialised economy."

"We no longer need the crutches of a foreign legal order."

He then stated the duty:

"We are of the view that an enterprise which is engaged in a hazardous or inherently dangerous industry which poses a potential threat to the health and safety of the persons working in the factory and residing in the surrounding areas owes an absolute and non-delegable 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 "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 rule:

"We would therefore hold that where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results to anyone on account of an accident in the operation of such hazardous or inherently dangerous activity 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-à-vis the tortious principle of strict liability under the rule in Rylands v Fletcher."

3. The measure of damages. "The measure of compensation ... must be co-related to the magnitude and capacity of the enterprise because such compensation must have a deterrent effect. The larger and more prosperous the enterprise, the greater must be the amount of compensation payable by it."

4. Article 12 left open. After setting out the arguments at length the Court declined to decide, leaving the question "for a proper and detailed consideration at a later stage if it becomes necessary to do so". Shriram was neither held to be the State nor held not to be.

5. Disposition. The Court awarded no damages itself. It directed the Delhi Legal Aid and Advice Board to file the victims' actions within two months in the appropriate court.

Where an enterprise is engaged in a hazardous or inherently dangerous activity, and harm results to anyone from an accident in the carrying on of that activity, the enterprise owes an absolute and non-delegable duty to the community and is absolutely liable to compensate all those affected. The liability is not subject to the exceptions recognised in Rylands v Fletcher, and it is no defence that the enterprise took all reasonable care and that the harm occurred without negligence. Compensation must be correlated to the magnitude and capacity of the enterprise, so as to have a deterrent effect.

The four differences from Rylands v Fletcher

| | Rylands v Fletcher (1868) — strict liability | M.C. Mehta (1987) — absolute liability | |---|---|---| | Escape | The thing must escape from the defendant's land; harm inside the premises is outside the rule | No escape required — harm inside the premises is covered too, so workmen are protected | | Exceptions | Defences available: act of God (vis major), act of a stranger, plaintiff's default, consent, statutory authority, natural user of land | No exceptions at all — none of these defences is available | | Who is caught | An occupier who brings on to his land something likely to do mischief if it escapes — a non-natural user of land | An enterprise engaged in a hazardous or inherently dangerous activity — the test is the activity, not the land | | Damages | Ordinary compensatory damages — the loss actually suffered | Damages correlated to the magnitude and capacity of the enterprise, to have a deterrent effect |

Note also the source of the duty: in Rylands, the use of land; here, a duty to the community — hence non-delegable.

Why a new rule. Rylands was decided in 1868, in a society without chemical plants of this scale. Article 141 obliges the Supreme Court to declare the law of India; it does not oblige it to freeze English law of 1868 into Indian law.

Why absolute and not merely strict. The enterprise conducting a hazardous activity for profit creates the risk and alone controls it, so the cost of the harm belongs to the cost of the activity. And the victim can prove almost nothing: the evidence is inside the factory. If the enterprise may escape by proving care, or by blaming sabotage, the burden of proof defeats every claim.

Why damages tied to size. Ordinary compensation, spread over thousands of poor claimants, may cost a company less than the safety measures it omitted.

The obiter problem — say this, it earns marks. On the facts the Court did not apply the rule it had just stated: it awarded no compensation and sent the victims to the ordinary courts. Strictly, then, the formulation was not necessary to the decision and is obiter dictum; the Supreme Court said so itself in the Bhopal review (1991). It binds in practice because a Constitution Bench of five Judges spoke, whose considered obiter all courts follow; because later Benches applied it as law, decisively in Indian Council for Enviro-Legal Action (1996); and because Parliament legislated on its premise in 1991.

The directions and guidelines — the examinable list

Two stages — reopening the caustic chlorine plant (17 February 1986) and compensation (20 December 1986).

1. Expert-committee inspection — a Court-appointed committee to inspect the plant within a fortnight and report whether the Manmohan Singh and Nilay Choudhary Committees' recommendations had been carried out.
2. Personal responsibility for each safety device — one named operator liable for each device or measure.
3. Weekly inspection by the Chief Inspector of Factories, to verify compliance and the working of the safety devices.
4. Weekly visits by a senior inspector of the Central Board, to check that effluent met the prescribed standards.
5. Personal undertakings from management — the Chairman, Managing Director and other named officers to accept personal liability for death or injury from any escape of chlorine.
6. A workers' safety committee — three representatives of each of the two unions.
7. Warning charts in English and Hindi in every department and at the gate, stating the effects of chlorine and the immediate treatment.
8. Training of every worker by audio-visual programmes on his equipment and on the precautions on a leak.
9. Loudspeakers around the premises, to warn the neighbourhood of a leak.
10. Protective equipment and medical check-ups — helmets, gas masks and safety belts in hazardous departments.
11. Financial security — Rs 20 lakhs deposited with the Court for the victims' claims, and a bank guarantee of Rs 15 lakhs within two weeks, encashable if a chlorine escape within three years caused death or injury; failure to furnish it would withdraw the permission to restart.
12. Compensation claims through legal aid — the Delhi Legal Aid and Advice Board to file the victims' actions within two months, funded by the Delhi Administration, with High Court Judges nominated for expeditious trial.
13. Relocation left open — restart permitted only pending consideration of whether the plant should be shifted elsewhere.

These are not abstract norms like Vishaka's but a plant-specific supervisory regime.

1. Public Liability Insurance Act 1991 (Act 6 of 1991) — the direct statutory sequel. Every owner handling a hazardous substance must take out insurance before he begins (s. 4) and must give relief on a no-fault basis for death, injury or property damage from an accident while handling it (s. 3); the claimant "shall not be required to plead and establish" wrongful act, neglect or default. Section 7A creates the Environment Relief Fund. Note the limit: relief comes in modest scheduled amounts, larger claims being left to be pursued at law.

2. National Environment Tribunal Act 1995 — a tribunal for no-fault compensation claims from accidents involving hazardous substances. Never effectively brought into operation.

3. National Green Tribunal Act 2010 (Act 19 of 2010) — established the NGT, with power to award compensation and order restitution of the environment; section 38(1) repealed the 1995 Act and the National Environment Appellate Authority Act 1997. The NGT is now the usual forum for the M.C. Mehta principle.

4. Indian Council for Enviro-Legal Action v Union of India (1996) 3 SCC 212 — the Bichhri case. Chemical works in Rajasthan discharged sludge and acid that poisoned the soil and groundwater of nearby villages. The Court held the M.C. Mehta rule, not Rylands v Fletcher, to be part of the law of the land, and used it to fix the polluters with the whole cost of remediation. This is the case establishing the polluter pays principle — the polluter bears not only compensation to victims but the cost of restoring the degraded environment.

5. Vellore Citizens Welfare Forum v Union of India (1996) 5 SCC 647. Tanneries in Tamil Nadu. Kuldip Singh J held that sustainable development, the precautionary principle and polluter pays are part of India's environmental law. The precautionary principle reverses the burden: where an activity threatens serious or irreversible damage, want of scientific certainty is no reason to postpone measures, and the onus lies on the developer to show his action is benign.

6. Union Carbide Corporation v Union of India (1991) 4 SCC 584 — the Bhopal review. A Constitution Bench (Ranganath Misra CJ, M.N. Venkatachaliah, K.N. Singh, A.M. Ahmadi and N.D. Ojha JJ) upheld the settlement of the Bhopal claims at US $470 million on quantum but restored the quashed criminal proceedings. Ranganath Misra CJ — who had himself sat on the M.C. Mehta Bench — explained why absolute liability was not used to fix the figure: no compensation had been awarded in M.C. Mehta, so what was said there was "essentially obiter"; and a decree resting on a liability standard unknown to American law, for a sum far beyond the company's Indian assets, would have had to be executed in the United States, where it might well have proved unenforceable.