Bhopal Gas Tragedy : Supreme Court Dismisses Centre's Curative Petition Seeking Additional Compensation From UCC

A Bench comprising Justice S.K. Kaul, Justice Sanjiv Khanna, Justice A.S. Oka, Justice Vikram Nath and Justice J.K. Maheshwari, which had reserved judgment on January 12, 2023, said that the Union's curative petition has no basis in legal principles.

The Court noted that the Union Government had itself failed to take out insurance policies as directed by the Apex Court -

"The Union has filed the curative petition seeking to reopen the settlement. The responsibility was placed on the Union of India, being a welfare state, to make good the deficiency( in the compensation) and to take out the relevant insurance policy. Surprisingly, we are informed that no such insurance policy was taken out. This is gross negligence on the part of Union and in breach of the judgment of this Court. The Union cannot be negligent on this aspect and then seek a prayer from this Court to fix such responsibility on the UCC."

It added - 

"We are unsatisfied with the Union of India for not furnishing any rationale for raking up this issue more than two decades after the incident". The Court held that the Union's plea for top up compensation has no basis in legal principle. "Either a settlement is valid, or it has to be set aside on the ground that it has been vitiated on the ground of fraud. No such fraud has been pleaded by the Union of India", the bench noted.

The Court noted that the Union's case is based on the number of victims and injuries which were not envisaged at the time when the settlement was effected. However, there was bound to be environmental degradation and it was known that medical facilities will have to be extended to rehabilitate people. It is the allegation of UCC that Union and State did not promptly detoxify the site and this aggravated the problem. In any case, this cannot be ground to seek enhancement, the Court noted.

Even if it is assumed that there are more claims than envisaged, an excess amount of funds remain available to satisfy such claims.

The Court noted that the Union's stand is that the Commissioner has adjudicated all claims in accordance with the law. Further, it was admitted in the proceedings which culminated in 2004 that the the amounts were sufficient to meet the actual requirements. Thus the claimants was awarded more than reasonable compensation. This reinforces the position that the settlement amount was sufficient.

In 1989, UCC agreed to pay a sum of US $ 470 million to the Union of India in settlement of all claims, rights, and liabilities relating to and arising out of the Bhopal Gas disaster. The terms of the settlement were set out in the orders of the Supreme Court passed on 14th and 15th February, 1989.  In review petition filed by private parties, he settlement was approved by a Constitution Bench of the Court in 1991 in Union Carbide Corporation & Others v. Union of India & Others 2 (1991) 4 SCC 584.

Arguments

Over a span of three days, the Bench heard arguments put forth by the Attorney General for India, Mr. R. Venkataramani on behalf of the Union Government; Advocate, Ms. Karuna Nundy and Senior Advocate, Mr. Sanjay Parikh representing organisations and victims of the disaster. Their arguments were countered by Senior Advocate, Mr. Harish Salve who appeared for Dow Chemicals.

At the very threshold, the Bench had raised questions regarding the scope of curative petitions and expressed concern that it appears that the Union Government is seeking to reopen or to add-on to a settlement that was reached long back, in 1989. The Attorney General defended the stand of the Government by indicating the inadequacy of the compensation amount and the requirement to amend the same in the light of the subsequent developments. The Judges were baffled that it took the Union Government 25 years to realise that the compensation fixed in 1989 was inadequate. Justice Kaul pointed out that when the settlement was negotiated in 1989 it was between the Corporation and the Government of India and not between unequals, so there could not have been any scope for oppression. It was further emphasised upon by the Judges at different points in time during the course of the hearing that, a part of the compensation, amounting to INR 50 crores 25 lakhs was still lying with the Reserve Bank of India.

Mr. Salve apprised the Bench that the arguments of the Union Government in the curative petition has traveled beyond the scope of issue raised in the original suit. He categorically pointed out that the issue of relief and rehabilitation and disposal of toxic waste was not a part of the suit. However, the Attorney General vehemently urged the Bench to grant enhanced compensation considering the unprecedented nature of the disaster. Justice Oka pointed out that in the review judgment the Apex Court had said that if there is a shortfall in compensation, then the same ought to be paid by the Government. He also noticed that in its 1991 judgment the Apex Court had directed the Union Government to take out insurance policies for at least 1 lakh people, so that it can take care of the future claims. However, it appears that the same had not been implemented by the Centre. Justice Kaul also expressed displeasure that the Union Government had failed to implement a direction which could have benefitted that affected families to a great extent.

On the third day, Ms. Nundy commenced with her submissions. Her arguments were premised on the ground that there was a gross miscarriage of justice; a fraud was played by the Corporation, that had suppressed material facts that go to the very root of the settlement. The Bench was of the view that the plea raised by her would require the Court to restart the trial; and moreover it travels beyond the ambit of the curative petition. Mr. Parikh argued that the entire control of the settlement proceedings was retained by the Apex Court and therefore the Court ought to see that it does not end in manifest injustice, but the Judges refused to accept the submission. They stated that the settlement was entirely negotiated by the parties and the Court never proposed the amount of compensation; it merely recorded the amount agreed upon by the parties. Mr. Salve on behalf of the Union Carbide Corporation (now Dow Chemicals) asserted that a full and final settlement was arrived at between his client and the Government of India in 1989 and there is no scope for re-opening of the same.

The curative petition filed by the Union Government in December, 2010, argued that the earlier settlement was based on incorrect assumptions on the number of deaths, injuries and losses, and has not taken into account the subsequent environmental degradation. As per the plea, the earlier figures for death was 3000 and for injury was 70,000, whereas the actual figures for death is 5295 and for injury, it is 5,27,894.

In 1985, the Parliament had enacted the Bhopal Gas Leak (Processing of Claims) Act, envisaging the Union Government to represent the victims of the tragedy before the Courts. Initially, the Union Government had filed a case in the Federal District Court at New York claiming about 3 billion dollars in damages. The case was dismissed with directions being passed to submit to the jurisdiction of the Indian Courts. Thereafter, a suit was filed in District Court in Bhopal. Interim direction was issued by the District Judge to Union Carbide to pay INR 350 crores to the victims of the gas leak. The Corporation approached the Madhya Pradesh High Court challenging the order of the District Judge. Upholding the principle of compensation, the High Court reduced the quantum from INR 350 crore to INR 250 crore. The same was challenged by both the Corporation and the Union Government before the Apex Court. The Supreme Court asked the parties to explore possibilities of settlement. In 1989, a settlement was arrived at between the Corporation and the Government of India, which was endorsed by the Apex Court. 470 million dollars were paid by the Corporation in the settlement. A review petition was filed by organisations, where the Apex Court refused to increase the quantum of settlement. Subsequently, a petition was filed by the Union Government seeking to re-open the settlement, which was dismissed by an order in 1991. After almost 19 years, in 2010, the Union Government filed the curative petition, which the Constitution Bench is to now decide. It appears that several class action suits were also filed by the victims of the tragedy against Union Carbide Corporation, in the US Courts.

When the matter came up for hearing for the first time before this Constitution Bench, in September, 2022, it had asked the Solicitor General of India, Mr. Tushar Mehta to seek instructions from Centre regarding its present stand on the curative petition filed by it more than a decade ago. In October, 2022, the Attorney General informed the Bench that the Union Government was keen to pursue the curative petition. Accordingly, the Bench permitted the Union Government to represent the claims of persons who have suffered the Bhopal gas leak. So far as the other non-governmental organisations were concerned, the Bench refused to grant them liberty to file pleadings, but did not foreclose their right to be heard.

[Case Status: UoI And Ors. v. M/s. Union Carbide Corporation And Ors. Curative Petition (C) No. 345-347/2010]