Supreme Court of India

CHARAN LAL SAHU ETC. ETC.versusUNION OF INDIA AND ORS.

Citation: 1989 INSC 395
Decided: 22 December 1989
Disposal: Disposed off
Bench: SABYASACHI MUKHERJI

Holding

The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 is constitutionally valid.

Summary

The Supreme Court examined the constitutional validity of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, which gave the Central Government exclusive authority to represent all victims of the 1984 Bhopal gas tragedy in litigation against Union Carbide. The Court held that the Act was a valid exercise of Parliament’s power, justified by the doctrine of parens patriae and the need for speedy, effective redress for a large, disadvantaged class of claimants. It found that the Act’s provisions did not violate Articles 14, 19 or 21, nor the principles of natural justice, because the statute provided sufficient safeguards, including a limited right of victims to be heard under Section 4. The Court also rejected the contention that the Union of India’s shareholding in UCIL created a conflict of interest that invalidated the Act. Consequently, the writ petitions challenging the Act were dismissed, leaving the settlement and the Act intact.

Issues considered

The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, violates Articles 14, 19(1)(g) and 21 of the Constitution.
The Act’s grant of exclusive representation to the Central Government infringes the victims' right to sue and constitutes a breach of natural justice.
Whether the doctrine of parens patriae permits the State to substitute itself for individual claimants in mass tort actions.
The validity of the settlement entered into without pre‑decisional notice to all victims.
The alleged conflict of interest arising from the Union of India’s shareholding in UCIL.
Whether the Act improperly curtails criminal liability of the respondents.
The compatibility of the Act’s procedures with the Code of Civil Procedure, 1908.

Legislation cited

Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985s. Section 11, s. Section 2, s. Section 3, s. Section 4, s. Section 5, s. Section 9
Code of Civil Procedure, 1908s. Order 1 Rule 8, s. Order 23 Rule 3B
Constitution of Indias. Article 14, s. Article 19, s. Article 21

Subjects

constitutional validityparens patriaenatural justiceindustrial disastermass tortcompensationpublic interest litigationcorporate liabilityenvironmental lawprocedural fairness

Judgment

CHARAN LAL SAHU ETC. ETC.
A
v.
UNION OF INDIA AND ORS.

DECEMBER 22, 1989

[SABYASACHI MUKHARJI, CJ, K.N. SINGH, S. RANGA- B
NATHAN, .A.M. AHMADI AND K.N. SAIKIA, JJ.]

Constitution of India, 1950: Articles 14, 19 and 21-Bhopal Gas
Leak Disaster (Processing of claims) Act, 1985-Whether constitution-
ally valid. ·

Preamble and Articles 38, 39 and 39A-Doctrine of 'parens
c
patriae'-Applicabi/ity of Exercise of sovereign power-Limitations.
Articles 21, 48A and 5J(g)-Human righ~tate's obligation to
protect-Need for enacting law protecting the constitutional rights of
citizens-Evolving standards highlighted by clauses Y and 13 of U.N.
Code of Conduct on transnational corporations. D

Bhopal Gas Leak Disaster (Processing of claims) Act, 1985: Sec-
tions 3, 4, 5, 9 and 11-Constitutional validity of: Central Govt. repre-
senting victims m suit against multinational company-Govt. holding
share in company-Govt. alleged to be joint tort feasor-Whether com-
petent to represent victims-Whether principles of natural justice E
violated.

Settlement of claims before court-Pre-decisional and post-
decisional notice-Need for-Effect of non-issue of notice.

Power conferred on Central Govt. to represent vidims in suit- F
Divesting individual rights to legal remedy-Procedure followed-
Whether consistent with the Code of Civil Procedure 1908.

Interim Compensation-Payment of Precautionary measures-
Need for-Guidelines for the future-Immediate relief to victims-
Setting up of a Tribunal-Creation of Industrial Disaster Furid- G
Mooted.

Code of Civil Procedure, 1908: Order 1 Rule 8 and Order 23 Rule
JR-Procedure followed under the Bhopal Gas Leak Disaster (Proces-
sing of claims) Act, 1985-Central Govt. representing victims in suit-
Divesting individual rights to legal remedy-Whether procedure II

597
598 SUPREME COURT REPORTS [19M9J Supp. 2 S.C.R.

standard and fair-Whether violative of principles of natural justice.
A
Administrative Law-Principles of Natural Justice: Act of Parlia-
ment within legislative competence-applicability of the principles.

Pre-decisional notice not given-Effect of. Central Government
B representing victims in a suit against a multinational company-Govt.
having shares in company-Alleged tort-feasor-Whether competent to
represent victims-Doctrine that no man shall be judge of his own
cause-Doctrine of necessity-Doctrine of 'de facto validity'-Doctrine
of bona fide representation-Applicability of.

Statutory construction: Constructive intuition approach-statute
c to be read purposefully and meaningfully-Regard to be had to ihe
spirit of the statute and the mischief intended to be cured by it.

Law of Torts: Bhopal Gas Leak Disaster (Processing of claims)
Act, 1985-Grant of interim relief to the victims-Whether inherent in
D the Act and the Scheme framed thereunder-Liability of tort-feasor-
Whether limited to civil liability to compensation-whether includes cri-
minal liability to punitive damages also.

Union Carbide (India) Ltd. (UCIL) is a subsidiary of Union
Carbide Corporation (UCC), a New York Corporation. UCIL was
E incorporated in India in 1954. 50.99% of its shareholding was with UCC
and 22% of the shares were held by Life Insurance Corporation of India
and Unit Trust of India. UCIL owned a chemical plant in Bhopalfor the
manufacture of pesticides using Methyl Isocyanate (MIC) a highly toxic
gas.

F On the night between 2nd and 3rd December, J984, there was a
massive escape of lethal gas from the MIC Storage tank at the Bhopal
plant resulting in the tragic death of about 3,000 people. Thousands of
people suffered injuries. The environment also got polluted, badly
affecting the flora and the fauna.

G On behalf of the victims, many suits were filed in various District -:
Courts in the United States of America. All such suits were consolidated
by the Judicial Panel on Multi-District Litigation and were assigned to
the U.S. District Court, Southern District of New York and Judge
Keenan was the Presiding Judge throughout. Later, the legal battle
shilled to Indian Courts, as it could not proceed in the U.S. Courts, on
H the ground of forum non conveniens.
C.l SAHU v. U.0.1 599

Meanwhile, the Bhopal Gas Leak Disaster (Processing of claims) A
Ac( 1985 was passed by the Government of India with a view to secure
that the claims arising out of or connected with the Bhopal gas leak
disaster were dealt with speedily, effectively and equitably.

Union of India filed a snit for damages in the District Court of B
Bhopal on 5.9.86. However, there were negotiations for a settlement; hut
ultimately the settlement talks had failed.

On 17.12.1987, the District .Jndge ordered interim relief of Rs.350
crores. On appeal, the High Court, on 4.4.88 modified the order of the
District Judge and ordered an interim relief of Rs. 250 crores. c
Aggrieved, the UCC as also the Union of India filed petitions for
spechtl leave before this Court. Leave was granted. By its orders dated
14.2.89 and 15.2.89, this Court, on the basis of a settlement arrived at
between the parties, directed UCC to pay a sum of 470 million U.S. D
Dollars to the Union of India in full settlement of all claims, rights and
liabilities related to and arising out of the Bhopal gas disaster.

The said orders were passed keeping in view the Bhopal Gas
Disaster (Processing of claims) Act, 1985.
E

The present Writ Petitions challenge the constitutional validity of
the said Act inter alia on the Rronnds that the Act is violative of the
fundamental rights guaranteed under Articles 14, 19 and 21 of the Con-
stitution; that the Act is violative of the Principles of Natural Justice
mainly on the ground that Union of India, being a joint tort-feasor, in F
that it has permitted establishment of such factories without necessary
safe2uards, has no locusstandi to compromise on behalf of the victims;
that tne victims and their legal heirs were not given the opportunity of
being heard, before the Act was passed; that in the guise of giving aid,
the State could not destroy the rights inherent in its citizens; nor could it
demand the citizens to surrender their rights to the State; that vesting of G
the rights in Central Government was bad and unreasonable because
there was conflict of interest between the Central Government and the
victims. since the Central Government owned 22% share in UCIL, and
that would make the Central Government a Judge in its own cause.

Disposing of the Writ Petitions, this Court, H
600 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

HELD: Sabyasachi Mukharji, CJ and K.N. Saikia, J.-Per CJ:
A
1. I The Act is constitutionally valid. It proceeds on the hypo·
thesis that until the claims of the victims are realised or obtained from
the delinquents, namely, UCC and UCIL by settlement or by adjudica-
tion and until the proceedings in respect thereof continue, the Central
Government must pay interim compensation or maintenance for the
B victims. In entering upon the settlement in view of s. 4 of the Act,
regard must be had to the views of the victims and for the purpose of
giving regard to these, appropriate notices before arriving at any settle-
ment, was necessary. In some cases, however, post-decisional notice
might be sufficient but in the facts and the circumstances of the present
case, no useful purpose would be served by giving a post-decisional
hearing having regard to the circumstances mentioned in the order of
c this Court dated 4th May, 1989 and having regard to the fact that there
are no further additional data and facts available with the victims which
can be profitably and meaningfully presented to controvert the basis of
the settlement and further having regard to the fact that the victims had
their say, or on their behalf their views had been agitated in these
D proceedings, and will have further opportunity in the pending review
proceedings. [703E-H; 704A]
1.2 Though settlement without notice is not quite proper, on the
materials so far available, it is seen that justice has been done to the
victims but justice has not appeared to have been done. In view of the
E magnitude of the misery involved and the problems in this case, the
setting aside of the settlement on this ground in view of the facts and the
circumstances of this case keeping the settlement in abeyance and giving
notice to the victims for a post-decisional hearing would not be in the
ultimate interest of justice. It is true that not giving notice was not
proper because principles of natural justice are fundamental in the
constitutional set up of this country. No man or no man's right should
F
be affected without an opportunity to ventilate his views. Justice is a
psychological yearning, in which men seek acceptance of their view
point by having an opportunity of vindication before the forum or the
authority enjoined or obliged to take a decision affecting their right. Yet
in the particular situations, one has to bear in mind how an infraction of
that should be sought to be removed in accordance with justice. "To do
G a great right" after all. it is permissible sometimes "to do a little
wrong''. In the facts and circumstances of the case, this is.one of those
rare occasions. [701G-H; 702A-C]
2.1 The constitutional validity of the statute would have to be
determined on the basis of its provisions and on the ambit of its opera-
H lion as reasonably construed. It has to be borne in mind that if so
C.L. SAHU v. U.0.1. 601

jndged it passed the test of reasonableness, then the possibility of the
A
power conferred being improperly used is no ground for pronouncing
the law itself invalid. [659E-G]

2.2 Conceptually and from the jurisprudential point of view,
especially in the background of the Preamble to the Constitution of
India and the mandate of the Directive Principles, it was possible to B
authorise the Central Government to take over the claims of the Victims
to fight against the multinational corporation in respect of the claims.
Because of the situation the victims were under disability in pursuing
their claims in the circumstances of the situation fully and properly. But
there is no prohibition or inhibition, for Indian State taking over the
claims of the victims or for the State acting for the victims as the Act has
sought to provide. !6~0E-HJ c
2.3 The Act does provide a special procedure in respect of rights
of the victims and to that extent the Central Govt. 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 D
the victims of the Bhopal gas leak disaster, as they were placed against
the multi-national 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
"" identifiable to be entitled to special treatment for effective, speedy, E
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 disaster, situated as the victims were
against a mighty multinational with the presence of foreign contingency F
lawyers looming on the scene, 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. [683E-H; 684A-B]
G
Collector of Customs, Madras v. Nathella Sampathu Chetty,
[1962] 3 SCR 786; P.J. Irani v. State of Madras, [1962] 1 SCR 169;
D.K. Trivedi v. State of Gujarat, [1986] Suppl. SCC 20, relied on.

Ba/fast Corporation v. O.D. Commission, [1960] AC 490, refer-
~~ H
602 SUPREME COURT REPORTS (1989] Supp. 2 S.C.R.

3.1 The present case is one where the Govt. of India only rep-
A resented the victims as a party" and did not adjudicate between the
victims and the UCC. It is the court which would adjudicate the rights
of the victims. The representation of the victims by the Government of
India cannot be held to be bad, and there is and there was no scope of
violation of any principle of natural justice. [670B]
B
3.2 The connotation of the term "parens patria" differs from
country to country, for instance, in England it is the King, in America
it is the people, etc. According to Indian concept parens patria doctrine
recognised King as the protector of all citizens as parent. The Govern-
ment is within its duty to protect and to control persons under disabi-
lity. Conceptually, the parens patriae theory is the obligation of the
C State to protect and take into custody the rights and privileges of its
citizens for discharging its obligations. Our Constitution makes it
imperative for the State to secure to all its citizens the rights
guaranteed by the Costitution and where the citizens are not in a posi-
tion to assert and secure their rights, the State must come into picture
0 and protect and fight for the right of the citizens. The Preamble to the
Constitution, read with the Directive Principles contained in Articles
38, 39 and 39A enjoins the State to take up these responsibilities. It is
the protective measure to which the social welfare state is committed. It
is necessary for the State to ensure the fundamental rights in conjunc-
tion with the Directive Principles of State Policy to effectively discharge
E its obligation and for this purpose, if necessary, to deprive some rights -•
and privileges of the individual victims or their heirs to protect their
rights better and secure these further. [638E-H; 639AJ

3.3 The UCC had to be sued before the American courts. The
tragedy was treated as a national calamity and the Govt. of India had
F the right, and indeed the duty, to take care of its citizens, in the exercise
of its parens patriae jurisdiction or on principles analogous thereto.
After having statutorily armed itself in recognition of such parens
patnae right or on principles analogous thereto, it went to the American
Courts. No other person was properly designed for representing the
victims, as a foreign court had to recognise a right of representation.
The Govt. of India was permitted to represent was permitted to re-
G
present the victims before the American courts. Private plaintiffs were
also represented by their attorneys. The order of Judge Keenan per-
mitted the Govt. of India to represent the victims. If there was any
remote conflict of interests between the Union of India and the victims
from the theoretical point of view the doctrine of necessity would over-
H ride the possible violation of the principles of natural justice-that no
man should be Judge in his own case. [669C-F]
C.L. SAHU v. U.0.1. 603

3.4 The Act in question has been passed in recognition of the
A
right of the sovereign to act as parens patriae. The Government of India
in order to effectively safeguard the rights of the victims in the matter of
the conduct of the case was entitled to act as parens patriae, which
position was reinforced by the statutory provisions, namely the Act. It
has to be borne in mind that conceptually and jurisprudentially, the
doctrine of parens patriae is not limited to representation of some of the B
victims outside the territories of the country. It is true that the doctrine
has been so utilised in America so far. Where citizens of a country are
victims of a tragedy because of the negligence .of any multinational a
peculiar situation arises which calls for suitable effective machinery to
articulate and effectuate the grievance and demands of the victims, for
which the conventional adversary system would be totally inadequate.
The State in discharge of its sovereign obligation must come forward.
c
The Indian State becanse of its constitutional commitment is obliged to
take upon itself the claim of the victims and to protect them in their
hour of need. [6588-F)

3.5 There is no bar on the State to assume responsibilities analo- D
gous to parens patriae to discharge the State's obligations under the
Constitution. What the Central Government has done in the instant
case seems to be an expression of its sovereign power. This power is
plenary and inherent in every sovereign state to do all things which
promote the health, peace, moral, education and good order of the
people and tend to increase the wealth and prosperity of the State. E
Sovereignty is difficult to define. By the nature of things, the State
Sovereignty in these matters cannot be limited. It has to be adjusted to
the conditions touching the common welfare when covered by legislative
enactments. This power is to the public wh~t the law of necessity is to
the individnal. It is comprehended in the maxim sa/us populi suprema
/ex-regard for public welfare is the highest law. It is not a rule, it is an F
evolution. This power has always been as broad as public welfare and as
strong as the arm of the stat~, this can only be measured by the legisla-
tive will of the people, subject to the fundamental rights and constitu-
tional limitations. This is an emanation of sovereignty and it is the
obligation of the State to assume such responsibilities and protect its
citizens. l658G-H; 659A-CJ G

3.6 In the instant case, the victims cannot be considered to be any
match to the multinational companies or the Government with whom in
the conditions that the victims or their representatives were after the
disaster physically, mentally, financially, economically and also because
of the position of litigatimi would have to contend. In such a situation of H
604 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A predicament the victims can legitimately be considered to be disabled.
They were in no position by themselves to look after their own interest
effectively or purposefully. In that background, they are people who
needed the State's protection and should come within the umbrella of
State's sovereignty to assert, establish and maintain their rights against
the wrong doers in this mass disaster. In that perspective, it is jurispru-
B dentially possible to apply the principle of parens patriae doctrine to the
victims. But quite apart from that, it bas to be borne in mind that in this
case the State is acting ou the basis of the Statute itself. For the autho-
rity of the Central Government to sue for and on behalf of or instead in
place of the victims, no other theory, concept, or any jurisprudential
principle is required than the Act itself. The Act empowers and substi-
tutes the Central Government. The victims have been divested of their
c rights to sue and such claims and such rights have been vested in the
Central Government. 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. Even if the strict
application of the 'parens patriae' doctrine is not in order, as a concept
D it is a guide. The jurisdiction of the State's power cannot be circumscri-
bed by the limitations of the traditional concept of parens patriae.
Jurisprudentially it could be utilised to suit or alter or adapt itself to 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
E the common sovereignity of the Indian people. 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. It has to be
accepted as such. [685C-H]

3. 7 The concept of parens patriae can be varied to enable the
F Government to represent the victims effectively in domestic forum if the
situation so warrants. There is no reason to confine the 'parens patriae'
doctrine to only quasi-sovereign right of the State independent of and
behind the title of the citizen. [692B-C]

3.8 The power to compromise and to conduct the proceedings are
G not uncanalised or arbitrary. These were clearly exercisable only in the
ultimate interests of the victims. The possibility of abuse of a statute
does not impart to it any element of invalidity. [659C-D]

E.P. Royappa v. State of Tamil Nadu, [1974] 2 SCR 348; Menaka
Gandhi v. Union of India, [1978] 2 SCR 621; R.D. Shetty v. Interna-
H tional Airport Authority of India, [1979] 3 SCR 1014 followed.
C.L. SAHU v. U.U.1. 605

Ram Saroop v. S.P. Sahi, [1969] 2 Suppl. SCR 583 relied ou. A

Budhkaran Chankhani v. Thakur Prasad Shah, AIR 1942 Col
311; Banku Behari Monda/ v. Banku Behari Hazra, AIR 1943 Cal 203;
Medai Dalavoi T. Kumaraswamy Mudaliar v. Medai Dalavoi Rajam-
mal, AIR 1957 Mad. 563 approved. B

State of U.P. · v. Poosu, [1978] 3 SCR 1005; K.M. Nanavati v.
State of Bombay, [1961] l SCR 497; Ram Gopal Sarubai v. Smt.
Sarubhai & Ors., [1981] 4 SCC 505; India Mica & Micanite Industries
Ltd. v. State of Bihar & Ors. [1982] 3 SCC 182; Alfred L Snapp &
Soninc. v. Puerto Rico, 458 US 592 73, Ed. 2d 995, 102 s. ct. 3260; Stute
of Georgia v. Tennessee Copper Co., 206 US 230, 51L.Ed.1038 27 s. c
,t. 618, referred to.

B.K. Mukherjea on Hindu Religious and Charitable Trusis,
Tagore Law Lectures, Sth Edu. p. 404; Words & Phrases, permanent
Edn. vol. 33 p. 99; Black's Law Dictionary, 5th Edn. 1979, p. 1003;
D
Weever's Constitutional Law, p. 490; American Costitutional Law by
Lawrence H. Tribe 1978 Edn. para 3.24, referred to.

4.1 Section 3 provides for the substitution of the Central Govern-
ment with the right to represent and act in place of (whether within or
outside India) every person who has made or is entitled to make, a claim
E
in respect of the disaster. The State has taken over the rights and claims
of the victims in the exercise of sovereignty in order to discharge the
constitutional obligations as the parent and guardian of the victims who
in the situation as placed needed the umbrella of protection. Thus, the
State has the power and jurisdiction and for this purpose unless the Act
is otherwise unreasonable or violative of the constitutional provisions
no question of giving a hearing to the parties for taking over these rights F
by the State arises. For legislation by the Parliament, no prin~iple of
natural justice is attracted provided such legislation is within the com-
petence of the legislature. Indeed the present Act is within the compe-
tence of the Parliament. Section 3 makes the Central Government the
dominus litis and it has the carriage of the proceedings, but that does
not solve the problem of by what procedure the proceedings shOuld be G
carried. [692A-D]

4.2 Section 4 means and entails that before entering into any
settlement affecting the rights and claims of the victims some kind of
notice or information should be given to the victims. I699D J
H
606 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

4.3 Sections 3 and 4 are categorical and clear. When the expres-
A sion is explicit, the expression is conclusive, alike in what it says and in
what it does not say. These give the Central Government an exclnsive
right to act in place of the persons who are entitled to make claim or
have already made claim. The expression 'exclusive' is explicit and
significant. The exclusivity cannot be wittled down or watered down.
B The said expression must be given its foll meaning and extent. This is
corroborated by the use of the expression 'claim' for all purposes. If
such duality of rights are given to the Central Government alongwith
the victims in instituting or proceeding for the realisation or the
enforcement of the claims arising out of Bhopal gas leak disaster, then
that would be so cumbersome that it would not be speedy, effective or
equitable and would not be the best or more advantageous procedure
C for securing the claims arising out of the leakage. [683A-C]

4.4 Sections 3 and 4 of the Ad should be read together alongwith
other provisions of the Act and in particular s.ections 9 and II of the
Act. These should be appreciated in the context of the object sought to
D be achieved by the Act as indicated in the Statement of objects and
Reasons and the Preamble to the act. The Act was so designed that the
-
victims of the disaster a.re fully protected and the claims of compensa-
tion or damages for loss of life or personal injuries or in respect of other
matters arising out of or connected with the disaster are processed
speedily, effectively, equitably and to the best advantage of the claimants.
E Section 3 of the Act is subject to other provisions of the Act which includes ·.
Sections 4 and II. Section 4 of the Act opens with non-obstante clause,
vis-a-vis, section 3 and, therefore overrides section 3. [659G-H; 660A-B]

4.5 In the instant case, the Government 11f India is only capable to
represent the victims as a party. The adjudication of the claims would
F be done by the Court. The doctrine of •Bona fide Representation' as
also 'de facto validity' are not applicable to the present case. [690F]

Basheshar v. Income Tax Commissioner, AIR 1959 SC 149; In re Spe-
cial Courts Bill, [I979] 2 SCR 476; A.R. Antulay v. R.S. Nayak &
A'nr., [1988] 2 SCC 602; Ram Krishna Dalmia v. Tendulkar, [1955]
G SCR 279; Ambika Prasad Mishra v. State of U.P. & Ors. etc. [1980] 3 ,_,
SCR 1159; Bodhan Chowdhary v. State of Bihar, [1955] 1 SCR 1045;
Lakshmi Kant Pandey v. Union of India, [1984] 2 SCR 795; Mis
Mackinnon Mackenzie & Co. Ltd. v. Audrey D' Costa and Anr.,
[I987] 2 SCC 469; Sheela Barse v. Secretary, Children Aid Society &
Ors., [1987] l SCR 870; Gokaraju Rangaraju v. State of A.P., [1981] 3
H SCR 474; Pushpadevz M. Jatia v. M.L. Wadhwan. [1987] 3 SCC 367;
• C.L. SAHU V, IJ.0.1.

Mis Beopar Sahayak (P) Ltd. & Ors. v. Vishwanath & Ors., [1987] 3
SCC 693; Dharampal Singh v. Director of Small Industries Services &
Ors., AIR 1980 SC 1888; N.K. Mohammad Sulaiman v. N.C. Moham-
607

med Ismail & Ors., [1966] 1 SCR 937; Malkariun Bin Shidrammappa
Pasare v. Narhari Bin Shivappa & Anr., 27 IA 216, referred to.

Black's Law Dictionary 5th Edn. p. 437, referred to. B

5. The restrictions or limitations on the substantive and pro-
cedural rights in the Act will have to be judged from the point of view of
the particular Statute in quetion. No abstract rule or standard of
reasonableness can be applied. That question has to be judged having
regard to the nature of the rights alleged to have been infringed in this
case, the extent and urgency of the evil sought to be remedied, dispro-
c
portionate imposition, prevailing conditions at the time, all these facts
will have to be taken into consideration. Having considered the back-
ground, the plight of the impoverished, the urgency of the victims'
need, the presence of the foreign contingency lawyers, the procedure of
settlement in USA in mass action, the strength of the foreign multina- D
tionals, the nature of injuries and damages, and the limited but signific-
ant right of participation of the victims as contemplated by s. 4 of the
Act, the Act cannot be condemned as unreasonable. [684C-E]

State of Madras v. V. G. Row, [1952] SCR 597, referred to.
E
6.1 In view of the principles settled by this Court and accepted all
over the world in a case of this magnitude and nature, when the victims
have been given some say by Section 4 of the Act, in order to make that
opportunity contemplated by section 4 of the Act, meaningful and effec-
tive, it should be so read that the victims have to be given an oppor-
•
( tunity of making their representation before the court comes to any F
conclusion in respect of any settlement. How that opportunity should be
given, would depend upon the particular situation. Fair procedure
should be followed in a representative mass tort action. l696E-FJ

6.2 One assumption under which the Act is justified is that the
victims were disabled to defend themselves in an action of this type. If G
that is so, then the Court cannot presume that the victims were a lot,
capable and informed to be able to have comprehended or contemplated
the settlement. In the aforesaid view of the matter notice was necessary.
The victims at large did not have the notice. The Central Government
as the representative of the victims must have the views of the victims
and place such view before the court in such manner it considers neces- H
A
608 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

sary 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, opportuni-
•
ties must be given to the victims. Individual notices may not be neces-
sary. The Court can, and should in such situation formulate modalities
of giving notice and public notice can also be. given inviting views of the
B victims by me help of mass media. However, it is not necessary that such
views would require the consent of all the victims. [698B-C; 698G-H; 699A]

6,3 One of the important requirements of justice is that people
affected by an action or inaction should have opportunity to have their
say. That opportunity the victims have got when these applications were

C
heard and they were heard after utmost publicity and they would have
further opportunity when review application against the settlement
would be heard. [700G-H; 701A]
·-
k

7. I The Act does not expressty exclude tne application of the
Code of Civil Procedure. Section I I of the Act provides the overriding
D effect indicating that anything inconsistent with the provisions of the
Act or in other laws including- the Civil Procedure Code should be ignored
and the Act should prevail. Strictly speaking, Order I Rule 8 will not
apply to a suit or a proceeding under the Act. It is not a case of one
having common interest with others. Here the plaintiff, the Central
Government has replaced and divested the victims. [696H; 697A-BJ
E
7 .2 In the instant case, there is no question of abandonment as
such of the suit or part of the suit, the provisions of order XXIII Rule I
•
would also not strictly apply. However, Order XXIII Rule 3H of the
Code is an important and significant pointer and the principles behind
I,-
the said provision wrndd apply to this case. The said rule 3B provides
F that no aweement of compromise in a representative suit shall be
entered into without the leave of the Court expressly recorded in the
proceedings; and sub-rule (2) of rule 3B enjoins that before grantini:
such leave the court shall give notice in such manner as it may think fit
in a representative action. Representative suit has been defined under
Explaination to the said rule vide clause (d) as any other suit in which I
G the decree passed may, by virtue of _the provisions this Code or of •ny
other law for the time being in force, bind any person who is not named
as party to the snit. Indubitably the victims would be bound by the
settlement thoul!h not named in the suit. This is a position conceded by
all. If that is so, it would be a representative suit in terms of and for the
purpose of Rule 3H of Order XXIII of the Code. lf the prmciples of this
H rule are the principles of natural justice then we are of the opinion that
C.L. SAHU v. U.0.I. 609

the principles behind it would be applicable; and also that section
A
4 of the Act should be so construed in spite of the difficulties of the
process '!f notice and other difficulties of making "infOrmed decision
making process cumbersome". ,l697C-G]

7 .3 Inasmuch as section 4 of the Act had given a qualified right of
participation to the victims, there cannot be any question of violation of B
the principles of natural justice. The scope of the application of the
principles of natural justice cannot be judged by any strait jacket
formula. l662G-HJ

R. Viswanathan v. Rukn-ul-Mulk Syed Abdul Wajid, [1963] 3
SCR 22; M. Narayanan Nambiar v. State of Kerala, [1963] Supp. (2)
724; Chintaharan Chose & Ors. v. Gujaraddi Sheik & Ors., All< c
1951 Cat. 456; Ram 'Sarup v. Nanak Ram, AIR 1952 All. 275;
referred to.

8. The Act has to he understood that it is in respect of the person
responsible, being the person in-charge-of the UCIL and the parent D
company UCC. This interpretation of the Act is further strengthened
hy the fact that a 'claimant" has been defined in clause (c) of Section 2
I as a person who is entitled to make a claim and the expression ''person!'
in Section 2(e) in~ludes the Government. TherefOre, the Act proceeded
on the assumption that the Government could be a claimant being a
person as such. [690A-B] E

9. I The fact that the provisions of the principles of natural justice
have to be complied with, is undisputed. This is well-settled by the
various decisions of the Court. The Indian Constitution mandates that
clearly, otherwise the Act and the actions would be violative of Article
14 of the Constitution and would also be destructive of Article l9(l)(g) F
and negate Article 21 of the Constitution by denying a procedure which
is just, fair and reasonable. [693D-E]

9.2 Rules of natural justice are not embodied rules. Hence, it was
not possible to make an exhaustive catalogue of such rules. Audi
alteram partem Is a highly effective rule devised by the Courts to ensure G
that a statutory authority arrives at a just decision and it is calculated to
act as a healthy check on the abuse or niisuse of power. The roles of
natural justice can operate only in areas not covered by any law validly
made. The general prineiple as distinguished from an absolute rule of
uniform application is that where a statute does not in terms exclude the
rule of prior hearing but contemplates a post-decisional hearing H
610 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

amounting to a full review of the original order on merits then such a
A
statute would be construed as excluding the audi alteram partem rule at
the pre-decisional stage. If the statute conferring the power is silent
with regard to the giving of a pre-decisional hearing to the person
affected the administrative decision after post-decisional hearing was
good. l694A-D]
B
9.3 In the instant case, no question of violation of the principle of
natural justice arises, and there is no scope for the application of the
principle that no man should be a Judge in his own cause. The Central
Government was not judging any claim, but was fighting and advancing
the claims of the victims. The adjudication would be done by the courts,
and therefore, there is no scope of the violation of any principle of
C natural justice. [688G-H; 689A-B]

Menaka Gandhi v. Union of India, [1978] 2 SCR 621; Olga Tellis
v. Bombay Municipal Corporation, [1985] Supp. 2 SCR 51; Union of
India v. Tulsi Ram Patel, [1985] Supp. 2 SCR 131; Swadeshi Cotton
D Mills v. Union nf India, [1981] 2 SCR 533, relied on.

Ganga Bai v. Vijay Kumar, [1974] 3 SCR 882; S.L. Kapoor v.
Jagmohan, [1981] l SCR 745; Sangram v. Election Commission, [1955]
2 SCR l, referred to.

E 10. Though not expressly stated, the Act proceeds on 'the major
inarticulate premise'. It is on this promise or premise that the State
would be justified in taking upon itself the right and obligation to pro-
ceed and prosecute the claim and deny access to the courts of law to the
victims on their own. If it is only so read, it can only be held to be
constitutionally valid. It has to be borne in mind that the language of
F the Act does not militate against this construction but on the contrary.
Sections 9, 10 and the scheme of the Act suggest that the Act contains
such an obligation. If it is so read, then only meat can be put into the
skelton of the Act making it meaningful and purposeful. The Act must,
therefore, be so read. This approach to the interpretation of the Act can >,
legitimately be called the 'constructive intution' which is a permissible
G mode of viewing the Acts of Parliament. The freedom to search for 'the
spirit of the Act' or the quantity of the mischief at which it is aimed
(both synonymous for the intention of the parliament) opens up the
possibility of liberal interpretation "that delicate and important branch
of judicial power, the concession of which is dangerous, the denial
ruinous". Given this freedom it is a rare opportunity though never to
H be misused and challenge for the Judges to adopt and give meaning to
C.L. SAHU v. U.0.1. 611

the act, articulate and inarticulate and thus translate the intention of
A
the Parliament and fulfil the object of the Act. After all, the Act was
passed to give relief to the victims, who, it was thought, were unable to
establish their own rights and fight for themselves. [687E-H; 688AJ

11.1 The circumstances that financial institutions held shares in
the UCIL would not disqualify the Government of India from acting as B
parens patriae and in discharging its statutory duties under the Act. The
suit was filed only against the UCC and not against UCIL. On the basis
of the claim made by the Government of India, UCIL was not a neces-
sary party. It was suing only the multinational based on several legal
grounds of liability of. the UCC, inter alia, on the basis of enterprise
liability. If the Government of India had instituted a suit against UCIL
to a certain extent it would have weakened its case a.gainst UCC in view c
of the judgment of this Court in M.C. Mehta's case. [668H; 669A-B]

M.C. Mehta v. Union of India, [1987] I SCR 819, referred t~.

11.2 Even if there was any remote conflict of interests between D
the Union of India and the victims on account of the sharesholding,
doctrine of necessity would override the possible violation of the princi-
ples of natural justice. T669FJ

Kasturilal Ralia Ram Jain v. State of UP, [1965] I SCR 375; State
of Rajasthan v. Vidyawati, [1962] 2 Supp. SCR 989; J. Mahapatra & E
Co. & Anr. v. State of Orissa & Anr., [1984] 4 SCC 103, referred to.

Halsbury's Laws of England, Vol. I, 4th Edn. para 73 Smith's
Judicial Review of Administrative Action, 4th Edn. pp. 276-277;
Natural Justice by G.A. Flick, [1979] Edn. pp. 138-141, referred to.
F
12. The Act does not create new causes of action or create special
courts. The jurisdiction of the civil coutt to entertain suit would still
arise out of section 9 of the CPC and the substantive cause of action and
the nature of the reliefs available would also continue to remain
unchanged. The only difference produced by the •provisions of the
.Act would be that instead of the suit being filed by the victims them- G
. selves the suit would be filed by the Central Government on their
behalf. [65SFJ

13. Normally, in measuring civil liability,. the law has attached
more importance to the principle of compensation than that of punish-
ment. ·Penal redress, however, involves both compensation to the H
612 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

person injured and punishment as deterrence. The Act, as such does DOI
abrigde or curtail damage or liability whatever that might be. So the
challenge to the Act on the ground that there has been curtailment or
deprivation of the rights of the victims which is unreasonable in the
situation is unwarranted and cannot be sustained. [680G-H; 68IA-F]

B Roshanlal Kuthiala & Ors. v. R.B. Mohan Singh, Oberoi (1975) 2
SCR 491; Nandram Heeralalv. Union of India & Anr., AIR 1978 )\1.P,
209; Ryland v. Flatcher, (1868) Vol 3 LR E & I Appeal Cases 330;
Rookes v. Barnard, [1964] AC 1129, referred to.

Salmond's Law of Torts, 15th Edn. p. 30, referred to.
c 14. The Act in question does not purport to deal with the criminal
liability, if any, of the parties or persons concerned nor it deals with any
of the consequences flowing from those. This position is clear from the
provisions and the preamble to the Act. [636FJ

D IS. The major inarticulate premise apparent from the Act and
the scheme and the spirit of the Act is that so long as the rights of the
victims are prosecuted the state must protect the victims. Otherwise the
object of the Act would be defeated its purpose frustrated. Therefore,
continuance of the payments of the interim maintenance for the con-
tinued sustenance of the victims is an obligation arising out of State's
E assumption of the power and temporary deprivation of the rights of the
victims and divestiture of the right of the victims to fight for 'their own
rights. This is the only reasonable interpretation which is just, fair and
proper. l 686B-C I

16. The promises made to the victims and hopes raised in their
F hearts and minds can only be redeemed in some measure if attempts are
made vigorously to distribute the amount realised to the victims in
accordance with the scheme. That would be redemption to a certain
extent. The law relating to damages and payment of interim damages or
compensation to the victims of this nature should be seriously and
scientifically examined by the appropriate agencies. ,[704F-H; 705A]
G
17. The Bhopal Gas Leak disaster and its aftermath emphasise the
need for laying down certain norms and standards that the Government
may follow before granting permission or licences for the running of
industries dealing with materials which are of dangerous potentialities.
The Government, should, therefore, examine or have the problem
H examined by an expert committee as to what should be the conditions on
C.L. SAHU v. U.0.1. 613

which future licences and/or permission for running industries on
A
Indian soil would be granted and for ensuring enforcement of those
conditions, sufficient safety measures should be formulated and scheme
of enforcement indicated. The Government should insist as a condition
precedent to the grant of such licences or permission, creation of a fund
in anticipation by the industries to be available for payment of damages
out of the said fund in case of leakages or damages in case of accident or B
disaster flowing from negligent working of such industrial operations or
failure to ensure measures preventing such occurrence. The Govern-
ment should also ensure that the parties must agree to abide to pay such
damages out of the said Fund by procedure separately evolved for
computation and payment of damages without exposing the victims or
sufferers of the negligent act to the long and delayed procedure. Special
procedure must be provided for and the industries must agree as a
c
condition for the grant of licence to abide by such procedure or to abide
by statutory arbitration. The basis for damages in case of leakages and
accident should also be statutorily fixed taking into consideration the
nature of damages inflicted, the consequences thereof and the ability
and capacity of the parties to pay. Such should also provide for deter- D
rant or punitive damages, the basis for which should be formulated by a
proper expert committee or by the Government. For this purpose, the
Government should have the matter examined by such body as it con-
siders necessary and proper like the _Law. Commission or other compe-
tent bodies. This is vital for the future. [705B-F]
E
18. That people are born free, the dignity of the persons must be
recognised, and competent tribunal is one of the surest methods of
effective remedy. If, therefore, as a result of this tragedy new conscious-
ness and awareness on the part of the people of this country to be more
vigilant about measures and the necessity of ensuring more strict vigi-
lance for permitting the operations of such dangerous and poisonous F
gases dawn, then perhaps the tragic experience of Bhopal would not go
in vain. [682D-E]

Per Singh,]. (concurring):

1.1 In India, the need for industrial development has led to the G
establishment of a number of plants and factories by the domestic com-
panies and under-takings as well as by Transnational Corporations.
Many of these industries are engaged in hazardous or inherently
dangerous activities which pose potential threat to life, health and
safety of persons working in the factory, or residing in the surrounding
areas. Though working of such factories and plants is regulated by a H
614 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

A number of laws of our country, there is no special legislation providing
for compensation and damages to outsiders who may suffer on account
of any industrial accident. As the law stands today, affected persons
have to approach civil courts for obtaining compensation and damages.
In civil courts, the determination of amount of compensation or
damages as well the liability of the enterprise has been bound by the
.B shackles of conservative principles. [707D-G l

1.2 The principles laid down in Ryland v. Fletcher made it
difficult to obtain adequate damages from the enterprise and that too
only after the negligence of enterprise was proved. [707G-H)

1.3 The law laid down in Oleum Gas Leak case made a land-mark
C departnre from the conservative principles with regard to the liability
of an enterprise carrying on hazardous or inherently dangerous
activities. [709C]

l.4 In the instant case, there is no scope for any doubt regarding
D the liability of the UCC for the damage caused to the human beings and
nature in and around Bhopal. [709E]

Ryland v. Fletcher, [1868] LR 3 HL 330; M.C. Mehta v. Union of
India, [1987] I SCR 819, referred to.

E 2. In the context of our national dimensions of human rights,
right to life, liberty, pollution free air and water is guaranteed by the
Constitution under Articles 21, 48A and Sl(g), it is the duty of the State
to take effective steps lo protect the constitutional rights guaranteed.
These rights must be integ~ated and illumined by evolving international
dimensions and standards, having regard to our sovereignty as high-
F lighted by Clauses 9 and 13 of U.N. Code of Conduct on Transnational
Corporations. Such a law may provide for conditions for granting
licence to Transnational Corporations, prescribing norms and stan-
dards for running industries on Indian soil ensuring the abovesaid
constitutional rights of our people. A Transnational Corporation should
be made liable and subservient to laws of our country and the liability
G should not be restricted to affiliate company only but the parent cor-
porations should also be made liable for any damage caused to the
human beings or ecology. The law must require transnational Corpora-
tions to agree to pay such damages as may be determined by the sta-
tutory agencies and forum constituted under it without exposing the
victims to long drawn litigation. In order to meet the situation, to avoid
H delay and to ensure immediate relief to the victims, the law should
C.L. SAHU v. U.0.l. 615

provide for constitution of tribunals regulated by special procedure for
determining compensation to victims of industrial disaster or accident, A
appeal against which may lie to this Court on the limited ground of ques-
tions of law only after depositing the amount determined by the Tri-
bunal. The law should also provide for interim relief to victims during
the pendency of proceedings. These steps would minimise the misery
and agony of victims of hazardous enterprises. [7IOH; 71JA-F] B

3. Industrial development in our country and the hazards
involved therein, pose a mandatory need to constitute a statutory
"Industrial Disaster Fund", contributions to which may be made by
the Government, the industries whether they are transnational cor-
porations or domestic undertakings, public or private. The extent of
contribution may be worked out having regard to the extent of hazar- c
dous nature of the enterprise and other allied matters. The fund should
he permanent in nature. so that money is readily available for providing
immediate effective relief to the victims. [711 G-H; 712A]

Ranganathan and Ahmadi, JI-Per Ranganathan, J. (Concurring): D

I. The provisions of the Act, read by themselves, guarantee a
complete and full protection to the rights of the claimants in every
respect. Save only that they cannot file a suit themselves, their right to
.acquire redress has not really been abridged by the provisions of the
Act. Sections 3 and 4 of the Act completely vindicate the objects and E
reasons which compelled Parliament to enact this piece of legislation.
Far from abridging the rights of the claimants in any manner, these
provisions are so worded as to enable the Government to prosecute the
litigation with the maximum amount of resources, efficiency and
competence at its command . as well as with all the assistance and
help that can be extended to it by such of those litigants and clai- F
mants as are capable of playing more than a mere passive role in the
litigation. [720G-H; 721A-BI

2. Even if the provisions of s. 3 had been scrupulously observed
and the names of all parties, other than the Central Government, had
been got deleted from the array of parties in the suits and proceedings G
pending in this country, the result would not have. been fatal to the
interests of the litigants. On the contrary, it enabled the litigants to
obtain the benefit of all legal exp~rtise at the command of the Govern-
ment of India in exercising their rights against the Union Carbide
Corporation. Such representation can well be justified by resort to a
principle analogous to, if not precisely the same, as that of, "parens H
•

616 SUPREME COURT REPORTS (1989] Supp. 2 S.C.R.

A patriae". A victim of the tragedy is compelled to part with a valuable
right of his in order that it might be more efficiently and satisfactorily
·exploited for his benefit than he himself is capable of. It is of course
possible ,that there may be an affluent claimant or lawyer engaged by
him, who may be capable of fighting the litigation better. It is possible
that the Government of India as a litigant may or may not be able to
B pursue the litigation with as much determination or capability as such a
litigant. But in a case of the J>resent type one should not be confounded by
such a possibility. There are more indigent litigants than affluent ones.
There are more illiterates than enlightened ones. There are very few of
the claimants, capable of finding the financial wherewithal required for
fighting the litigation. Very few of them are capable or prosecuting such
a litigation in this country not to speak of the necessity to run to a
C foreign country. The financial position of UCIL was negligible com-
pared to the magnitude of the claim that could arise and, though
eventually the battle had to be pitched on our own soil, an initial as well
as final recourse to legal proceedings in the United States was very
much on the cards, indeed inevitable. In this situation, the legislature
D was perfectly justified in coming to the aid of the victims with this piece
of legislation and in asking the Central Government to shoulder the
responsibility by substituting itself in place of the victims for all
purposes connected with the claims. ]716C-H; 717AJ

3. Section 4 adequately safeguards the interest of individual
E victims. It enables each one of them to bring to the notice of the Union
any special features or circumstances which he would like to urge in
respeci of any maller and if any such features are brought to its notice
the Union is obliged to take it into account. The individual claimants are
also at liberty to engage their own counsel to associate with the State
counsel in conducting the proceedings. If the suits in this case had
F proceeded, in the normal course, either to the stage of a decree or even
to one of settlement the claimants could have kept themselves abreast of
the developments and the statutory provisions would have been more
than adequate to ensure that the points of view of all the victims are
presented to the court. Even a settlement or compromise could not have
been arrived at without the court being apprised of the views of any of
G them who chose to do so. The statute has J>rovided that though the
Union of India will be the dominus litis in the suit, the interest of all the
victims and their claims should be safeguarded by giving them a voice in
the proceedings to the extent indicated above. This provision of the
statute is an adaptation of the principle of Order 1 Rule 8 and of order
XXIII Rule 38 of the Code of Civil Procedure in its application to the
H suits governed by it and, though the extent of partcipation allowed to
C.L. SAHU v. U.0.1. 617

the .victims is somewhat differently enunciated in the legislation,
substantially speaking, it does incorporate the principles of natural A
justice to the extent possible in the circumstances. The statute cannot,
therefore, be faulted on the ground that it denies the victims an
opportunity to present their views or places them at any disadvantage in
the matter of having an effective voice in settling the suit by way of
compromise. [724G-H; 725A-D] B

4. Sections 3 and 4 combine together the interest of the weak,
illiterate, helpless and poor victims as well as the interest of those who
could have managed for themselves, even without the help of this enact-
ment. The combination thus envisaged enables the Government to fight
the battle with the foreign adversary with the full aid and assistance of
such of the victims or their legal advisers as are in a position to offer any c
such assistance. Though section 3 denies the claimants the benefit of
being eo nominee parties in such suits or proceedings, section 4 preserves
to them substantially all that they can achieve by proceeding on their
own. In other words, while seeming to deprive the claimants of their
right to take legal action on their own, it has preserved those rights, to D
be exercised indirectly. A conjoint reading of sections 3 and 4 would
show that there has been no real total deprivation of the right of the
claimants to enforce their claim for damage in appropriate proceedings
before any appropriate forum. There is only a restriction of this right
which, in the circumstances, is totally reasonable and justified. [7180-G]
E
5. 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 Act deals with a class of action which is sui generis
and for which a special formula has been found and encapsuled in s. 4.
The Act divests the individual claimants of their right to sue and vests it
in the Union. In relation to the suit in India, the Union is the sole Plaintiff. F
none of the others are envisaged as plaintiffs or respondents. The
victims of the tragedy were so numerous that they were never defmed at the
stage of filing the plaint nor do they need to be defined at the stage of
settlement. The litigation. is carried on by the State in its capacity not
exactly the same as, but somewhat analogous to that of "parens
patriae". In the case of a litigation by a Karta of a Hindu undivided G
family or by a guardian on behalf of a ward, who is non-sui juris, the
junior members of the family or the wards, are not to be consulted
before entering into a setl_lt:ment. In s~ch <_:ases, court acts as guardian of
such persons to scrutinise the settlement and satisfy itself that it is in the
best interest of all concerned. If it is later discovered that there has been
any fraud or collusion, it may be open to the junior members of the H
618 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

family or the wards to call the Karla or guardian to account but,
A barring such a contingency, the settlement would he effective and bind-
ing. In the same way, the Union as "parens patriae' would have been at
liberty to enter into such settlement as it considered best on its own and
seek the Court's approval therefor. [723G-H; 724A-D]

B 6. It is common knowledge that any authority given to conduct a
litigation cannot he effective unless it is accompanied by an authority to
withdraw or settle the same if the circumstances call for it. The vagaries
of a litigation of this magnitude and intricacy could not he fully anti-
cipated. There were possibilities that the litigation may have to he
fought out to the hitter finish. There were possibilities that the UCC
might be willing to adequately compensate the victims either on their
C own or at the insistence of the Government concerned. There was also
the possibility, which had already been in evidence before Judge
Keenan, that the proceedings might ultimately have to end in
negotiated settlement. In most of the mass disaster cases reported,
proceedings finally end in a compromise, if only to avoid an indefinite
D prolongation of the agonies caused by such litigation. The legislation,
therefore, cannot he considered to he unreasonable merely because in
addition to the right to institute a suit or other proceedings it also
empowers the Government to withdraw the proceedings or enter into a
compromise. [719B-E]

E M.C. Mehta v. Union of India, [1987] I SCR 819, referred to.

7. The Act has provided an adequate opportunity to the victims
to speak out and if they or the counsel engaged by some of them in the
trial court had kept in touch with the proceedings in this court, they could
have most certainly made themselves heard. If a feeling has gained
F ground that their voice has not been fully heard, the fault was not with
the statute hut was rather due to the development leading to the finali-
sation of the settlement when the appeal against the interim order was
being heard in this Court. [726B-D]

8. In the field of torts, under the common law of England, no
G action could he laid by the dependants or heirs of a person whose death
was brought about by the tortious act of another on the maxim actio
persona/is maritur cum persona although a person injured by a similar
act could claim damages for the wrong done to him. In England this
situation was remedied by the passing of Fatal Accidents Act, 1846,
popularly known as Lord Compbell's Act. Thereafter the Indian Legisla-
H tore enacted the Fatal Accidents Act, 1855. This Act is fashioned on the
C.L. SAHU v. U.0.1. 619

lines of the English Act of 1840. Even though the English Act has
undergone a substantial change, our law has remained static and seems A
a trifle archaic. The magnitude of the gas leak disaster in which
hundreds lost their lives and thousands were maimed, not to speak of
the damage to livestock, flora and fauna, business and property, is an
eye opener. The nation must learn a lesson from this traumatic expe-
rience and evolve safeguards atleast for the future. The time is ripe to B
take a fresh look at the outdated century old legislation which is out of
tune with modern concepts. [728F-H; 729A-B]

9. The Central Government will be well advised to insist oncer-
tain safeguards before permitting a transnational company to do busi-
ness in the country. It is necessary to insist on a right to be informed of
the nature of the processes involved so as to take prompt action in the c
event of an accident. The victims in this case have been considerably
handicapped on account of the fact that the immediate tort-feasor was
the subsidiary of a multi-national with its Indian assets totally inade-
quate to satisfy the claims arising out of the disaster. It is, therefore,
necessary to evolve, either by international consensus or by unilateral D
legislation, steps to overcome these handicaps and to ensure that foreign
corporations seeking to establish an industry here, agree to submit to
the jurisdiction of the Courts in India in respect of actions for tortious
acts in this country; that the liability of such a corporation is not limited
to such of its assets (or the assets of its affiliates) as may be found in this
country, but that the victims are able to reach out to the assets of such E
concerns anywhere in the world; and that any decree obtained in Indian
Courts in compliance with due process of law is capable of being
executed against the foreign corporation, its affiliates and their assets with-
out further procedural hurdles, in those other countries. [729G-H; 730A-E]

IO. It is hoped that calamities like the one which this· country has F
~offered will serve as catalyst to expedite the acceptance of an interna-
tional code on such matters in the near future. [730F-G I

ORIGINAL JURISDICTION'. Writ Petition No. 268 of 1989
etc. etc.
G
(Under Article 32 of the Constitution of India).

K. Parasaran, Attorney General, R.K. Garg, Ms. Indira Jaising,
L.N. Sinha, Dr. V. Gauri Shankar, Vepa P. Sarathi, Shanti Bhushan,
Rakesh Luthra, C.L. Sahu, Indeevar Goodwill, N.S. Malik,
N .S. Pundir, R.C. Kaushik, D.K. Garg, Rajeev Dhawan, Miss Kamini H
620 SUPREME COURT REPORTS (1989] Supp. 2 S.C.R.

Jaiswal, Anip Sachthey, R.C. Pathak, H.D. Pathak, Harish Uppal,
A S.K. Gambhir, Gopal Subramanium, D.S. Shastri, Arnn Sharma,
Miss A. Subhashini, C.V.S. Rao, Satish K. Agnihotri, Ashok Kumar
Singh, R.K. Jain, Kailash Vasdev and Prashant Bhushan for the
appearing parties.

B The Judgments of the Court were delivered by .

SABYASACHI MUKHARJI, CJ. 1. Is the Bhopal Gas Leak
Disaster (Processing of Claims) Act, 1985 (hereinafter referred to as
'the Act') is constitutionally valid? That is the question.

2. The Act was passed as a sequel to a grim tragedy. On the
c night of 2nd December, 1984 occurred the most tragic industrial disas-
ter in recorded human history in the city of Bhopal in the State of
Madhya Pradesh in India. On that night there was massive escape of
lethal gas from the MIC storage tank at Bhopal Plant of the Union
Carbide (I) Ltd. (hereinafter referred to as 'UCIL') resulting in large
D scale death and untold disaster. A chemical plant owned and operated
by UCIL was situated in the northern sector of the city of Bhopal.
There were numerous hutments adjacent to it on its southern side,
which were occupied by impoverished squatters. UCIL manufactured
the pesticides, Sevin and Tamik, at the Bhopal plant, at the request of,
it is stated by Judge John F. Keenan of the United States District
E Court in his judgment, and indubitably with the approval of the Govt.
of India. UCIL was incorporated in 1984 under the appropriate Indian
law. 50.99% of its shareholdings were owned by the Union Carbide
Corporation (UCC), a New York Corporation, L.l.C. and the Unit
Trust of India own 22% of the shares of U .C.l.L., a subsidiary of
u.c.c.
F
3. Methyl Isocyanate (MIC), a highly toxic gas, is an ingredient
in the production of both Sevin and Temik. On the night of the tragedy
MIC leaked from the plant in substantial quantities. the exact reasons
for and circull]stances of such leakage have not yet been ascertained or
clearly established. The results of the disaster were horrendous.
G Though no one is yet certain as to how many actually died as the
immediate and direct result of the leakage, estimates attribute it to
about 3,000. Some suffered injuries the effects of which are described
as Carcinogenic and ontogenic by Ms. Indira Jaisingh, learned counsel;
some suffered injuries serious and permanent and some mild and
temporary. Livestock was killed, damaged and infected. Businesses
H were interrupted. Environment was polluted and the ecology affected,
flora and fauna disturbed.
C.L. SAHU v. U.0.l. [MUKHARJI, CJ.] 621

4. On 7th December, 1984, Chairman of UCC Mr. Warren An-
A
derson came to Bhopal and was arrested. He was later released on
bail. Between December 1984 and January 1985 suits were filed by
several American lawyers in the courts in America on behalf of several
victims. It has been stated that within a week after the disaster, many
American lawyers, described by some as 'ambulance chasers', whose
fees were stated to be based on a percentage of the contingency of B
obtaining damages or not, flew over to Bhopal and obtained Powers of •
Attorney to bring actions against UCC and UCIL. Some suits were
also filed before the District Court of Bhopal by individual claimants
against UCC (the American Company) and the UCIL.

5. On or about 6th February, 1985, all the suits in various U.S.
Dist!. Courts were consolidated by the Judicial Panel on Multi-District
c
Litigation and assigned to U.S. Dist!. Court, Southern Dist!. of New
York. Judge Keenan was at all material times the Presiding Judge
there.

6. On 29th March, 1985, the Act in question was passed, The D
Act was passed to secure that the claims -arising- out of or connected
with the Bhopal gas leak disaster were dealt with speedily, effectively
and equitably. On 8th April, 1985 by virtue of the Act the Union of
India filed a complaint before the U.S. Dist!. Court, Sourthern Dist!.
of New York. On 16th April, 1985 at the first pre-trial conference in
the consolidated action transferred and assigned to the U.S. Dist!. E
Court, Southern Dist!., New York, Judge Keenan gave the following
directions: ·

(i) that a three member Executive Committee be formed to
frame and develop issues in the case and prepare expeditiously
for trial or settlement negotiations. The Committee was to com- F
prise of one lawyer selected by the firm retained by the Union of
India and two other lawyers chosen by lawyers retained by the
individual plaintiffs.

(ii) that as a matter of fundamental human decency, temporary
relief was necessary for the victims and should be furnished in a G
systematic and coordinated fashion without unnecessary delay
regardless of the posture of the litigation then pending. -

7. On 24th September, 1985 in exercise of powers conferred by
section 9 of the Act, the Govt. of India framed the Bhopal Gas Leak
Disaster (Registration and Processing of Claims) Scheme, 1985 H
(hereinafter called the Scheme).
622 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

8. On 12th May, 1986 an order was passed by Judge Keenan
A allowing the application of UCC on forum non conveniens as indicated
hereinafter. On 21st May, 1986 there was a motion for fairness hearing
on behalf of the private plaintiffs. On 26th June, 1986 individual
plaintiffs filed appeal before the US Court of Appeal for the second
circuit challenging the order of Judge Keenan. By an order dated 28th
B May, 1986 Judge Keenan declined the motion for a fairness hearing.
"" The request for fairness hearing was rejected at the instance of Union
of India in view of the meagerness of the amount of proposed settle-
ment. On 10th July, 1986 UCC filed an appeal before the US Court of
Appeal for the Second Circuit. It challenged Union of India being
entitled to American mode of discovery, but did not challenge the
other two conditions imposed by Judge Keenan, it is stated. On 28th
C July, 1986 the Union of India filed cross-appeal before the US Court
of Appeal ·praying that none of the conditions imposed by Judge
Keenan should be disturbed. In this connection it would be pertinent
to set out the conditions incorporated in the order of Judge Keenan,
dated 12th May, 1986 whereby he had dismissed the case before him
D on the ground of forum non conveniens, as mentioned before. The
conditions were following:

l. That UCC shall consent to the jurisdiction of the courts of
India and shall continue to waive defenses based on the statute of
limitation,
E
2. That UCC shall agree to satisfy any judgment rendered by an
Indian court against it and if applicable, upheld on appeal,
provided the judgment and. affirmance "comport with minimal
requirements of due process"; and

F 3. That UCC shall be subject to discovery under the Federal
Rules of Civil Procedure of the US after appropriate demand by
the plaintiffs.

9. On 5th September, 1986 the Union of India filed a suit for
damages in the Distt. Court of Bhopal, being regular suit No. 1113/86.
G It is this suit, inter alia, and the orders passed therein which were
settled by the orders of this Court dated 14th & 15th February, 1989,
which will be referred to later. On 17th November, 1986 upon the
application of the Union of India, the Distt. Court, Bhopal, granted a
temporary injunction restraining the UCC from selling assets, paying
dividends or buying back debts. On 27th November, 1986 the UCC
H gave an undertaking to preserve and maintain unencumbered assets to
the extent of 3 billion US dollars.
C.L. SAHU v. U.0.J. [MUKHARJI, CJ.I 623

10. On 30th November, 1986 the Distt. Court, Bhopal lifted the
A
injunction against the Carbide selling assets on the strength of the
written undertaking by UCC to maintain unencumbered assets of 3
billion US dollars. On 16th December, 1986 UCC filed a written state-
ment contending that they were not liable on the ground that they had
nothing to do with the Indian Company; and that they were a different
legal entity; and that they never exercised any control and that they B
were not liable in the suit. Thereafter, on 14th January, 1987 the Court
of Appeal for the Second Circuit affirmed the decision of Judge
Keenan but deleted the ·condition regarding the discovery under the
American procedure granted in favour of the Union of India. It also
suo motu set aside the condition that on the judgment of the Indian
court complying with due process and the decree issued should be
satisfied by UCC. It ruled that such a condition cannot be imposed as c
the situation was covered by the provisions of the Recognition of
Foreign Country Money Judgments Act.

11. On 2nd April, 1987, the court made a written proposal to all
parties for considering reconciliatory interim relief to the gas victims. D
In September, 1987, UCC and the Govt. of India sought time from the
Court of Distt. Judge, Bhopal, to explore avenues for settlement. It
has been asserted by the learned Attorney General that the possibility
of settlement was there long before the full and final settlement was
effected. He sought to draw our attention to the assertion that the
persons concerned were aware that efforts were being made from time E
to time for settlement. However, in November'87 both the Indian
Govt. and the Union Carbide announced that settlement talks had
failed and Judge Deo extended the time.

12. The Distt. Judge of Bhopal on 17th December, 1987 ordered
interim relief amounting to Rs.350 crores. Being aggrieved thereby the F
UCC filed a Civil Revision which was registered as Civil Revision
Petition No. 26/88 and the same was heard. On or about 4th February,
1988, the Chief Judicial Magistrate of Bhopal ordered notice for
warrant on Union Carbide, Hong Kong for the criminal case filed by
CBI against Union Carbide. The charge sheet there was under sections
304, 324, 326, 429 of the Indian Penal Code read wiih section 35 IPC G
and the charge was against S/Shri Warren Anderson, Keshub
Mahindra. Viiav Gokhale, J. Mukund, Dr. R.B. Roy Chowdhary. S.P,
Chowdhary, K.V. Shetty, S.L Qureshi and Union Carbide of U.S.A.,
Union Carbide of Hong Kong and Union Carbide having Calcutta
address. It charged the Union· Carbide by saying that MIC gas was
stored and it was further stated that MIC had to be stored and handled H
624 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

in stainless steel which was not done. The charge sheet, inter alia,
A
stated that a Scientific Team headed by Dr. Varadarajan had con-
ch.1ded that the factors which had led to the toxic gas leakage causing
its heavy toll existed in the unique properties of very high reactivity,
volatility and inhalation toxicity of MIC. It was further stated in the
charge sheet that the needless storage of large quantities of the mate-
B rial in very large size containers for inordinately long periods as well as
insufficient caution in design, in choice of materials of construction
and in provision of measuring and alarm instruments, together with
the inadequate controls on systems of storage and on quality of stored
materials as well as lack of necessary facilities for quick effective dis-
posal of material exhibiting instability, led to the accident. It also
charged that MIC was stored in a negligent manner and the local
c administration was not informed, inter alia, of the dangerous effect of
the exposure of MIC or the gases produced by its reaction and the
medical steps to be taken immediately. It was further stated that apart
from the design defects the UCC did not take any adequate remedial
action to prevent back flow of solution from VGS into RVVH and
D PVH lines. There were various other acts of criminal negligence
alleged. The High Court passed an order staying the operation of the
order dated 17.12.87 directing the defendant-applicant to deposit
Rs.3,500 millions within two months from the date of the said order.
On 4th April, 1988 the judgment and order were passed by the High
Court modifying the order of the Distt. Judge, and granting interim
E relief of Rs.250 crores. The High Court held that under the substantive
law of torts, the Court has jurisdiction to grant interim relief under
Section 9 of the CPC. On 30th June, 1988 Judge Deo passed an order
restraining the Union Carbide from settling with any individual gas
leak plaintiffs. On 6th September, 1988 special leave was granted by
this Court in the petition filed by UCC against the grant of interim
F relief and Uniori of India was also granted special leave in the petition
challenging the reduction of quantum of compensation from Rs.350
crores to Rs.250 crores. Thereafter, these matters were heard in
November-December'88 by the bench presided over by the learned
Chief Justice of India and hearing, continued also in January-
February'89 and ultimately on 14-15th February, 1989 the order
G culminating in the settlement was passed.
13. In judging the constitutional validity of the Act, the subse-
quent events, namely, how the Act has worked itself out, have to be
looked into. It is, therefore, necessary to refer to the two orders of this
Court. The proof of the cake is in its eating, it is said, and it is perhaps
H not possible to ignore the terms of the settlement reached on 14th and
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 625

15th February, 1989 in considering the effect of the language used in
A
the Act. Is that valid or proper-or has the Act been worked in any
improper way? These questions do arise.

14. On 14th February, 1989 an order was passed in C.A. Nos.
3187-88/88 with S.L.P. (C) No. 13080/88. The parties thereto were
UCC and the Union of India as well as Jana Swasthya Kendra, B
· Bhopal, Zehraeli Gas Kand Sangharsh Morcha, Bhopal. MP. That
order recited that having considered all the facts and the circumstances
of the case placed before the Court, the material relating to the pro-
ceedings in the Courts in the United States of America, the offers and
counter--0ffers made between the parties at different stages during the
various proceedings, as well as the ·complex issues of law and fact
raised and the submissions made thereon, and in particular the c
enormity of human suffering occasioned by the Bhopal Gas disaster
and the pressing urgency to provide immediate and substantial relief to
victims of the disaster, the Court found that the case was pre-
eminent!~· fit for an overall settlement between the parties covering all
litigations, claims, rights and liabilities relating to and arising out of D
the disaster and it was found just, equitable and reasonable to pass,
inter alia, the following orders:

"(1) The Union Carbide Corporation shall pay a sum of
U.S. Dollars 470 million (Four hundred and seventy
millions) to the Union of India in full settlement of all E
claims, rights and liabilities related to and arising out of
Bhopal Gas disaster.

(2) The aforesaid sum shall be paid by the Union Carbide
Corporation to the Union offodia on· or before 31st March,
1989. F

(3) To enable the effectuation of the settlement, all civil
proceedings related to and arising out of the Bhopal Gas
disaster shall hereby stand transferred to this Court and
shall stand concluded in terms of the settlement, and all
criminal proceedings related to and arising out of the disas- G
ter shall stand quashed wherever these may be pending
"

15. A written memorandum was filed thereafter and the Court
on 15th February, 1989 passed an order after giving due consideration
thereto. The terms of settlement were as follows:
H
626 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

"1. The parties acknowledge that the order dated
A February 14, 1989 disposes of in its entirety all proceedings
in Suit No. 1113 of 1986. This settlement shall finally dis-
pose of all past, present and future claims, causes of action
and civil and criminal proceedings (of any nature what-
soever wherever pending) by all Indian citizens and all
B public and private entities with respect to all past, present
or future deaths, personal injuries, health effects, compen-
sation, losses, damages and civil and criminal complaints of
any nature whatsoever against UCC, Union Carbide India
Limited, Union Carbide Eastern, and all of their subsidia-
ries and affiliates as well as each of their present and former
directors, officers, employees, agents, representatives,
c attorneys, advocates and solicitors arising out of, relating
to or connected with the Bhopal gas leak disaster, including
past, present and future claims, causes of action and pro-
ceedings against each other. All such claims and causes of
action whether within or outside India of Indian citizens,
.D public or private entities are hereby extinguished, including
without limitation each of the claims filed or to be filed
under the Bhopal Gas Leak Disaster (Registration and
Processing of Claims) Scheme 1985, and all such civil
proceedings in India are hereby transferred to this Court
and are dismissed without prejudice, and all such criminal pro-
E ceedings including contempt proceedings stand quashed
and accused deemed to be acquitted.

2. Upon full payment in accordance with the Court's direc-
tions the undertaking given by UCC pursuant to the order
dated November 30, 1986 in the District Court, Bhopal
F stands discharged, and all orders passed in Suit No. 1113 of
1986 and or in any Revision therefrom, also stand dis-
charged."

16. It appears from the statement of objects & resons of the Act
that the Parliament recognized that the gas leak disaster involving the
G release, on 2nd and 3rd December, 1984 of highly noxious and abnor-
mally dangerous gas from a plant of UCIL, a subsidiary of UCC, was
of an unprecedented nature. which resulted in loss of life and damage
to property on an extensive scale, as mentioned before. It was stated
that the victims who had managed to survive were still suffering from
the adverse effects and the further complications which might arise in
H their cases, of course, could not be fully visualised. I: was asserted by
C.L. SAHU v. U.0.1. {MUKHARJI, CJ.] 627

Ms. Indira Jaising that in case of some of the victims the injuries were
carcinogenic and ontogenic and these might lead to further genetic A
complications and damages. The Central Govt. and the Govt. of
Madhya Pradesh and various agencies had to incur expenditure on a
large scale for containing the disaster and mitigating or otherwise cop-
ing with the effects thereto. Accordingly, the Bhopal Gas Leak Disas-
ter (Processing of Claims) Ordinance, 1985 was promulgated, which B
provided for the appointment of a Commissioner for the welfare of the
victims of the disaster and for the formulation of the Scheme to pro-
vide· for various matters necessary for processing of the claims and for
the utilisation by way of disbursal or otherwise of amounts received in
satisfaction of the claims.

17. Thereafter, the Act was passed which received the assent of c
the President on 29th March, 1985. Section 2(b) of the Act defines
'claim'. It says that "claims" means-(i) a claim, arising out of, or
connected wi!h,-the disaster, for compensation or damages for any loss
of life or personal injury which has been, or is likely to be suffered; (ii)
a claim, arising out of, or connected with, the disaster, for any damage D
to property which has been, or is likely to be, sustained; (iii) a claim
for expenses incurred or required to be incurred for containing the
disaster or mitigating or otherwise coping with the effects of the disas-
ter; (iv) any other claim (including any claim by way of loss of business
or employment) arising out of, or connected with, the disaster. A
"claimant" is defined as a person entitled to make a claim. It has been E
provided in the Explanation to Section 2 that for the purpose of
clauses (b) and (c), where the death of a person has taken place as a
result of the disaster, the claim for compensation or damages for the
death of such person shall be for the benefit of the spouse, children
(including a child in the womb) and other heirs of the deceased and
they shall be deemed to be the claimants in respect thereof. F

18. Section 3 is headed "Power of Central Govt. to represent
claimants". It provides as follows:

"3(1) Subject to the other provisions of this Act, the Cent-
ral Government shall, and shall have the exclusive right to, G
represent, and act in place of (whether within or outside
India) every person who has made, or is entitled to make, a
claim for all purposes connected with such claim in the
same manner and to the same effect as such persons.

(2) In particular and without prejudice to the generality· of H
628 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

the provisions of sub-section ( 1), the purposes referred to
A
therein include-

(a) Institution of any suit or other proceeding in or before
any court or other authority (whether within or outside
India) or withdrawal of any such suit or other proceeding,
B and {b) entering into a compromise.

(3) The provisions of sub-secton (1) shall apply also in
relation to claims in respect of which suits or other pro-
ceedings have been instituted in or before any court or
other authority (whether within or outside India) before
the commencement of this Act:
c
Provided that in the case of any such suit or other proceed-
ing with respect to any claim pending immediately before
the commencement of this Act in or before any court or
other authority outside India, the Central Govt. shall rep-
D resent, and act in place of, or along with, such claimant, if
such court or other authority so permits."

19. Section 4 of the Act is headed as "Claimant's right to be
represented by a legal practitioner". It provides as follows:

E "Notwithstanding anything contained in section 3, in repre-
senting, and acting in place of, any person in relation to any
claim, the Central Government shall have due regard to
any matters which such person may require to be urged
with respect to his claim and shall, if such person so desires,
permit at the expense of such person, a legal practitioner of
F his choice to be associated in the conduct of any suit or
other proceeding relating to his claim."

20. Section 5 deals with the powers of the Central Govt. and
enjoins that for the purpose of discharging its functions under this Act,
the Central Govt. shall have the powers of a civil court while trying a
G suit under the Code of Civil Procedure, 1908. Section 6 provides for
the appointment of a Commissioner and other officers and employees.
Section 7 deals with powers to delegate. Section 8 deals with limita-
tion, while section 9 deals with the power to frame Scheme. The Cent-
ral Govt. was enjoined to frame a scheme which was to take into
account, inter alia, the processing of the claims for securing their
H enforcement, creation of a fund for meeting expenses in connection
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 629

with the administration of the Scheme and of the provisions of this Act
A
and the amounts which the Central Govt. might, after due appropria-
tion made by the Parliament by law in that behalf, credit to the fund
referred to in clauses above and any other amounts which might be
credited to such fund. Such Scheme was enjoined, as soon as after it
had been framed, to be laid before each House of Parliament. Section
10 deals with removal of doubts. Section 11 deals with the overriding B
effect and provides that the provisions of the Act and of any Scheme
framed thereunder shall have effect notwithstanding anything incon-
sistent therewith contained in any enactment other than the Act or any
instrument having effect by virtue of any enactment other than the
Act.

21. A Scheme has been framed and was published on 24th
c
September, 1985. Clause 3 of the said Scheme provides that the
Deputy Commissioners appointed under Section 6 of the Act shall be
the authorities for registration of Claims (including the receipt,
scrutiny and proper catgorisation of such claims under paragraph 5 of
the Scheme) arising within the areas of their respective jurisdiction D
and they shall be assisted by such other officers as may be appointed by
the Central Govt. under Section 6 of the Act for scrutiny and verifica-
tion of the claims and other related matters. The Scheme also provides
for the manner of filing claims. It enjoins that the Dy. Commissioner
shall provide the required forms for filing the aplications. It also pro-
vides for categorisation and registration of claims. Sub-clause (2) of E
Clause 5 en joins that the claims received for registration shall be
placed under different heads.

22. Sub-clause (3) of clause 5 enjoins that on the consideration
of claims made under paragraph 4 of the Scheme, if the Dy. Commis-
sioner is of the opinion that the claims fall in any category different F
from the category mentioned by the claimant, he may decide the
appropriate category after giving an opportunity to the claimant to be
heard and also after taking into consideration any facts made available
to him in this behalf. Sub-clause (6) of Clause 5 enjoins that if the
claimant is not satisfied with the order of the Dy. Commissioner, he
may prefer an appeal against such order to the Commissioner, who G
shall decide the same.

23. Clause 9 of the Scheme provides for processing of Claims
Account Fund, which the Central Govt. may, after due appropriation
made by Parliament, credit to the said Fund. It provides that there
shall also be a Claims and.Relief Fund, which will include the amounts H
630 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A received in satisfaction of the claims and any other amounts made
available to the Commissioner as donation or for relief purposes. Sub-
clause (3) of clause 10 provides that the amount in the said Fund shall be
applied by the Commissioner for, disbursal of amounts in settlement
of claims, or as relief, or apportionment of part of the Fund for disbur-
sal of amounts in settlement of claims arising in future or for disbursal
B of amounts to the Govt. of Madhya Pradesh for the social and
economic rehabilitation of the persons affected by the Bhopal gas leak
disaster.

24. Clause 11 of the Scheme deals with the disbursal, apportion-
ment of certain amounts, and sub-clause (2) thereof en joins that the
Central Govt. may determine the total amount of compensation to be
C apportioned for each category of claims and the quantum of compen-
sation payable, in general, in relation to each type of injury or loss.
Sub-clause ( 5) thereto provides that in case of a dispute as to disbursal
of the amounts received in satisfaction of claims, an appeal shall lie
against the order of the Dy. Commissioner to the Additional Commis-
D sioner, who may decide the matter and make such disbursal as he may,
for reasons to be recorded in writing, think fit. The other clauses are
not relevant for our present purposes.

25. Counsel for different parties in all these matters have
canvassed their submissions before us for the gas victims. Mr. R.K.
E Garg, Ms. Indira Jaising, and Mr. Kailash Vasudev have made various
submissions challenging the validity of the Act on various grounds.
They all have submitted that the Act should be read in the way they
suggested and as a whole. Mr. Shanti Bhushan, appearing for inter-
veners on behalf of Bhopal Gas Peedit Mahila Udyog Sangathan and
following him Mr. Prashant Bhushan have urged that the Act should
F be read in the manner canvassed by them and if the same is not so read
then the same would be violative of the fundamental rights of the
victims, and as such unconstitutional. The lea:ned Attorney General
assisted by Mr. Gopal Subramanium has on the other hand urged that
the Act is valid and constitutional and that the settlement arrived at on
14th/15th February is proper and valid.
G
26. In order to appreciate the background Ms. Indira Jaising
placed before us the proceedings of the Lok Sabha wherein Mr.
Veerendra Patil, the Hon'ble Minister, stated on March 27, 1985 that
the tragedy that had occurred in Bhopal on 2nd and 3rd December,
1984 was unique and unprecedented in character and magnitude not
H only for our country but for the entire world. It was stated that one of
C.L. SAHU v. U.0.1. (MUKHARJI, CJ.I 631

the options available was to settle the case in Indian courts. The
second one was to file the cases in American courts. Mr. Patil A
reiterated that the Govt. wanted to proceed against the parent com-
pany and also to appoint a Commission of Inquiry.

27. Mr. Garg in support of the proposition that the Act was
unconstitutional, submitted that the Act must be examined on the B
touchstone of the fundamental rights on the basis of the test laid down
by this Court in State of Madras v. V.G. Row, [1952] SCR 597. There
at page 607 of the report this Court has reiterated that in considering
the reasonableness of the law imposing restrictions on the fundamen-
tal rights, both the substantive and the procedural aspects of the
impugned restrictive law should be examined from the point of view of
reasonableness. And the test of reasonableness, wherever prescribed, c
should be applied to each individual Statute impugned, and no
abstract standard or general pattern of reasonableness can be laid
down as applicable to all cases. The nature of the right alleged to have
been infringed, the underlying purpose of the restrictions imposed, the
extent and urgency of the evil sought to be remedied thereby, the dispro- D
portion of the imposition, the prevailing conditions at the time, should
all enter into the judicial verdict. (The emphasis supplied). Chief
Justice Pa tan jali Sastri reiterated that in evaluating such elusive
factors and forming their own conception of what is reasonable, in the
circumstances of a given case, it is inevitable that the social philosophy
and the scale of values of the judges participating in the decision would E
play an important role.

28. Hence, whether by sections, 3, 4 & 11 the rights of the
victims and the citizens to fight for their own causes and to assert their
own grievances have been taken away validly and properly, must be
judged in the light of the prevailing conditions at the time, the nature F
of the right of the citizen, the purpose of the restrictions on their rights
to sue for enforcement in the courts of law or for punishment for
offences against his person or property, the urgency and extent of the
evils sought to be remedied by the Act, and the proportion of the
impairment of the rights of the citizen with reference to the intended
remedy prescribed. According to Mr. Garg, the present position called G
for a comprehensive appreciation of the national and international
background in which precious rights to life and liberty were enshrined
as fundamental rights and remedy for them was also guaranteed under
Article 32 of the Constitution. He .sought to urge that multinational
corporations have assumed powers or potencies to override the poli-
tical and economic independence of the sovereign nations which have H
632 SUPREME COURT REPORTS (1989] Supp. 2 S.C.R.

been used to take away in the last four decades, much wealth out of the
A Third World. Now these are plundered much more than what was
done to the erstwhile colonies by imperialist nations in the last three
centuries of foreign rule. The role of courts in cases of conflict between
rights of citizens and the vast economic powers claimed by multina-
tional corporations to deny moral and legal liabilities for their corpo-
B rate criminal activities should not be lost sight of. He, in this back-
ground, urged that these considerations assume immense importance
to shape human rights jurisprudence under the Constitution, and for
the Third World to regulate and control the power and economic
interests of multinational corporations and the power of exploitation
and domination by developed nations without submitting to due
observance of the laws of the developing countries. It therefore
C appears that the production of, or carrying on trade in dangerous
chemicals by multinational industries on the soil of Third World
countries call for strictest enforcement of constitutional guarantees for
en joying human rights in free India, urged Mr. Garg. In this connec-
tion, our attention was drawn to the Charter of Universal Declaration
D of Human Rights. Article 1 of the Universal Declaration of Human
Rights, 1948 reiterates that all human-beings are born free and equal
in dignity and rights. Article 3 states that everyone has right to life,
liberty and security of person. Article 6 of the Declaration states that
everyone has the right to recognition everywhere as a person before
the law. Article 7 states that all are equal before the law and are
E entitled without any discrimination to equal protection of the law. All
are entitled to equal protection against any discrimination in violation
of the Declaration of Human Rights and against any incitment to such
discrimination. Article 8 states that everyone has the right to an effec-
tive remedy by competent National Tribunal for acts violating funda-
mental rights guaranteed to him by the Constitution or by the law. It
F is, therefore, necessary to bear in mind that Indian citizens have a right
to live which cannot be taken away by the Union of India or the Govt.
of a State, except by a procedure which is just, fair and reasonable.
The right to Vfe includes the right to protection of limb against mutila-
tion and physical injuries, and does not mean merely the right to
breathe but also includes the right to livelihood. It was urged that this
G right is available in all its dimension till the last breath against all
in juries to head, heart and mind or the lungs affecting the citizen or his
next generation or of genetic disorders. The enforcement of the right
to life or limb calls for adequate and appropriate reliefs enforceable in
courts of law and of equity with sufficient power to offer adequate
deterrence in all cases of corporate criminal liability under strict liabi-
H lity, absolute liability, punitive liability and criminal prosecution and
C.L. SAHU v. U.0.1. (MUKHARJI, CJ.} 633

punishment to the delinquents. The damages awarded in civil jurisdic-
tion must be commensurate to meet well-defined demands of evolved A
human rights jurisprudence in modern world. It was, therefore, sub-
mitted that punishment in criminal jurisdiction for serious offences is
independent of the claims enforced in civil jurisdiction and no immu-
nity against it can be granted as part of settlement in any civil suit. If
any Act authorises or permits doing of the same, the same will be B
unwarranted by law and as such bad. The Constitution of India does
not permit the same.

29. Our attention was drawn to Article 21 of the Constitution
and the principles of international law. Right to equality is guaranteed
to every person under Art. 14 in all matters like the laws of procedure
for enforcement of any legal or constitutional right in every jurisdic- c
tion, substantive law defining the rights expressly or by necessary
implications, denial of any of these rights .to any class of citizens in
either field must have nexus with constitutionally permissible object
and can never be arbitrary. Arbitrariness is, therefore, anti-thetical to
the right of equality. In this connection, reliance was placed on the D
observations of this Court in E.P. Royappa v. State of Tamil Nadu &
,Anr., [1974) 2 SCR 348 and Maneka Gandhi v. Union of India, [1978)
2 SCR 621 where it was held that the view that Articles 19 & 21
constitute watertight compartments has been rightly overruled. Arti-
cles dealing with different fundamental rights contained in Part III of
the Constitution do not represent entirely separate streams of rights E
which do not mingle at any point of time. They.are all parts of an
integrated scheme in the Constitution and must be preserved and can-
not be destroyed arbitrarily. Reliance was placed on the observations
in R.D. Shetty v. The I.A.A. of India & Ors., [1979) 3 SCR 1014.
Hence, the rights of the citizens to fight for remedies and enforce their
rights flowing from the breach of obligation in respect of crime cannot F
be obliterated. The Act and Sections 3,.4 & 11 of the Act in so far as
these purport to do so and have so o_perated, are violative of Articles
14, 19(1)(g) and 21 of the Constitution. The procedure envisaged by
the said Sections deprives the just and legitimate rights· of the victims
to assert and obtain their just dues. The rights cannot be so destroyed.
lt was contended that under the law th~ victims had right to ventilate G
their rights.

30. It was further contended that Union of India was a joint
tort-feasor along with UCC and UCIL. It hacl negligently permitted
the establishment of such a factory without proper safeguards exposing
the victims and citizens to great danger. Such a person or authority H
634 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

A cannot be entrusted to represent the victims by denying the victims
their rights to plead their own cases. It was submitted that the object of
the Act was to fully protect people against the disaster of highly
obnoxious gas and disaster of unprecedented nature. Such an object
cannot be achieved without enforcement of the criminal liability by
criminal prosecution. Entering into settlement without reference to
B the victims was, therefore, bad and unconstitutional, it was urged. If
an Act, it was submitted, permits such a settlement or deprivation of
the rights of the victims, then the same is bad.

31. Before we deal with the various other contentions raised in
this case, it is necessary to deal with the application for intervention
and submission made on behalf of the Coal India in Writ Petition No.
C 268/89 wherein Mr. L.N. Sinha in his written submission had urged for
the intervener that Article 21. of the Constitution neither confers nor
creates nor determines the dimensions nor the permissible limits of
restrictions which appropriate legislation might impose on the right to
life or liberty. He submitted that provisions for procedure are relevant
D in judicial or quasi judicial proceedings for enforcement of rights or
obligations. With regard to alteration of rights, procedure is governed
by the Constitution directly. He sought to intervene on behalf of Coal
India and wanted these submissions to be taken into consideration.
However, when this contention was sought to be urged before this
Court on 25th April, 1989, after hearing all the parties, it appeared
E that there was no dispute between the parties in the instant writ peti-
tions between the victims and the Government of India that the rights
claimed in these cases are referrable to Article 21 of the Constitution.
Therefore, no dispute really arises with regard to the contention of
Coal India and we need not consider the submissions urged by Shri
Sinha on behalf of the intervener in this case. It has been so recorded.
F
32, By the order dated 3rd March, 1989, Writ Petitions Nos.
268/89 and 164/86 have been directed to be disposed of by this Bench.
We have heard these two writ petitions along with the other writ
petitions and other matters as indicated hereinbefore. The contentions
are common. These writ petitions question the validity of the Act and
G the settlement entered into pursuant to the Act. Writ Petition No.
164/86 is by one Shri Rakesh Shrouti who is an Indian citizen and
claims to be a practising advocate having his residence at Bhopal. He
says that he and his family members were at Bhopal on 2nd/3rd
December, 1984 and suffered immensely as a result of the gas leak. He
challenges the validity of the Act on various grounds. He contends that
H the Union of India should not have the exclusive right to represent the
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 635

victims in suits against the Union Carbide and thereby deprive the
A
victims of their right to sue and deny access to justice. He further
challenges the right of the Union of India to represent the victims
against Union Carbide because of conflict of interests. The conduct of
the Union of India was also deprecated and it was further stated that
such conduct did not inspire confidence. In the premises, the said
petitioner sought a declaration under Article 32 of the Constitution B
that the Act is void, inoperative and unenforceable as violative of
Articles 14, 19 & 21 of the Constitution. Similarly, the second writ
petition, namely, writ petition Noc 268/89 which is filed by Sh. Charan
Lal Sahu, who is also a practising Advocate on behalf of the victims
and claims to have suffered damages as a result of the gas leak,
challenges the Act. He further challenges the settlement entered into
under the Act. He says that the said settlement was violative of princi- c
ples of natural justice and the fundamental right of the said petitioner
and other victims. It is his case that in so far as the Act permits such a
course to be adopted, such a course was not permissible under the
Constitution. He further asserts that the Union of India was negligent
and a joint tort-feasor. In the premises, according to him, the Act is D
bad, the settlement is bad and these should be set aside.

33. In order to determine the question whether the Act in ques-
tion is constitutionally valid or not in the light of Articles 14, 19( l)(g)
and 21 of the Constitution, it is necessary to find out what does the Act
actually mean and provide for. The Act in question, as the Preamble to E
the Act states, was passed in order to confer powers on the Central
Government to secure that the claims arising out of, or connected
with, the Bhopal gas leak disaster are dealt with speedily, effectively,
equitably and to the best advantage of the claimants and for matters
incidental \hereto. Therefore, securing the claims arising out of or
connected with the Bhopal gas leak disaster is the object and purpose F
of the Act. We have noticed the proceedings of the Lok Sabha in
connection with the enactment of the Act. Our attention was also
drawn by the learned Attorney General to the proceedings of the
Rajya Sabha wherein the Hon'ble Minister, Shri Virendra Patil
explained that the bill enabled the Government to assume exclusive
right to represent and act, whether within or outside India in place of G
every person who had made or was entitled to make claim in relation
to the disaster and to institute any suit or other proceedings or enter
into any compromise as mentioned in the Act. The whole object of the
Bill was to make procedural changes to the existing Indian law which
would enable the Central Government to take up the responsibility of
fighting litigation on behalf of these victims. The first point was that it H
636 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

A sought to create a locus standi in the Central Government to file suits
on behalf of the victims. The object of the Statute, it was highlighted,
was that because of the dimension of the tragedy covering thousands of
people, large number of whom being poor, would not be able to go to
the courts, it was necessary to create the locus standi in the Central
Government to start the litigation for payment of compensation in the
B courts on their behalf. The second aspect of the Bill was that by creating
this locus standi in the Central Government, the Central Government
became competent to institute judicial proceedings for payment of
compensation on behalf of the victims. The next aspect of the Bill was
to make a distinction between those on whose behalf suits had already
been filed and those on whose behalf proceedings had not yet then
C been instituted. One of the Members emphasised that under Article 21
of the Constitution, the personal liberty of every citizen was
guaranteed and it has been widely interpreted as to what was the
meaning of the expression 'personal liberty'. It was emphasised that
one could not take away the right of a person, the liberty of a person,
to institute proceedings for his own benefit and for his protection. It is
D from this point of view that it was necessary, the member debated, to
preserve the right of a claimant to have his own lawyers to represent
him along with the Central Government in the proceedings under
Section 4 of the Act, this made the Bill constitutionally valid.

34. Before we deal with the question of constitutionality, it has
E to be emphasised that the Act in question deals with the Bhopal gas
leak disaster and it deals with the claims meaning thereby claims aris-
ing out of or connected with the disaster for compensation of damages
for loss of life or any personal injury which has been or is likely to be
caused and also claims arising out of or connected with the disaster for
any damages to property or claims for expenses incurred or required to
F be incurred for containing the disaster or making or otherwise coping
with the impact of the disaster and other incidental claims. The Act in
question does not purport to deal with the criminal liability, if any, of
the parties or persons concerned nor it deals with any of the conse-
quences flowing from those. This position is clear from the provisions
and the Preamble to the Act. Learned Attorney General also says that
G the Act does not cover criminal liability. The power that has been
given to the Central Government is to represent the 'claims', meaning
Jhereby the monetary claims. The monetary claims, as was argued on
behalf of the victims, are damages flowing from the gas disaster. Such
damages, Mr. Garg and Ms. Jaising submitted, are based on strict
liability, absolute liability and punitive liability. The Act does not,
H either expressly or impliedly, deal with the extent of the damages or
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 637

liability. Neither section 3 nor any other section deals with any conse-
quences of criminal liability. The expression "the Central Government ·A
shall, and shall have the exclusive right to, represent, and act in place
of (whether within or outside India) every person who has made, or is
entitled to make, a claim for all purposes connected with such claim in
the same manner and to the same effect as such person", read as it is,
means that Central Government .is substituted and vested with the B
exclusive right to act in place of the victims, i.e., eliminating the
victims, their heirs and their legal representatives, in respect of all
such claims arising out of or connected with the Bhopal gas leak disas-
ter. The right, therefore, embraces right to institute proceedings
within or outside India along with right to institute any suit or other
proceedings or to enter into compromise. Sub-section 1 of section 3 of
the Act, therefore, substitutes the Central Government in place of the c
victims. The victims, or their heirs and legal representatives, get their
rights substituted in the. Central Government along with the con-
comitant right to institute such proceedings, withdraw such proceed-
ings or suit and also to enter into compromise.The victims or the heirs
or the legal representatives of the victims, are substituted and their D
rights are vested in the Central Government. This happens by opera-
tion of section 3 which is the legislation in question. Sub-section (3) of
section 3 makes it clear that the provisions of sub-section ( 1) of section
3 shall also apply in relation to claims in respect of which suits or other
proceedings have been instituted in or before any court or other
authority (whether within or outside India) before the commencement E
of this Act, but makes a distinction in the case of any such suit or other
proceeding with respect to any claim pending immediately before the
commencement of this Act in or before any court or other authority
outside India, and provides that the Central Government shall repre-
sent, and act in place of, or along with, such claimant, if such court or
other authority so permits. Therefore, in cases where such suits or F
proceedings have been instituted before the commencement of the Act
in any court or before any authority outside India, the section by its
own force will not come into force in substituting the Central Govern-
ment in place of the victims or the heirs or their legal representatives,
but the Central Government has been given the right tq act in place of,
or al,ong with, such claimant, provided such court or other authority so G
permits. It is to have adherence and conformity with the procedure of
the countries or places outside India, where suits or proceedings are to
be instituted or have been instituted. Therefore, the Central Govern-
ment is authorised to act along with the claimants in respect of
proceedings instituted outside India subject to the orders of such
courts or the authorities. Is such a right valid and proper? H
638 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

A 35. There is the concept known both in this country and abroad,
called "parens patriae. Dr. D.K. Mukherjea in his "Hindu Law of
Religious and Charitable Trusts", Tagore Law Lectures, Fifth
Edition, at page 404, referring to the concept of parens patriae, has
noted that in English Law, the Crown as parens patriae is the constitu-
tional protector of all property subject to charitable trusts, such trusts
B being essentially matters of public concern. Thus the position is that
according to Indian concept parens patriae doctrine recognized King as
the protector of all citizens and as parent. In Budhakaran Chankhani v.
Thakur Prasad Shah, AIR 1942 Cal. 311 the position was explained by
the Calcutta High Court at page 318 of the report. The same position
was reiterated by the said Court in Banku Behary Monda/ v. Banku
Behary Hazra & Anr., AIR 1943 Cal. 203 at page 205 of the report.
C The position was further elaborated and explained by the Madras High
Court in Medai Dalavoi T. Kumaraswami Mudaliar v. Medai Dalavoi
Rajammal, AIR 1957 Mad. 563 at page 567 of the report. This Court
also recognized the concept of parens patriae relying on the observa-
tions of Dr. Mukherjea aforesaid in Ram Saroop v. S.P. Sahi, [1959] 2
D Supp. SCR 583, at pages 598 and 599. In the "Words and Phrases"
Permanent edition, Vol. 35 at p. 99, it is stated that parens patriae is
the inherent power and authority of a Legislature to provide protec-
tion to the person and property of persons non sui juris, such as minor,
insane, and incompetent persons, but the words "parens patriae"
meaning thereby 'the father of the. country', were applied originally to
E the King and are used to designate the State referring to its sovereign
power of guardianship over persons under disability, (Emphasis
supplied). Parens patriae jurisdiction, it has been explained, is the
right of the sovereign and imposes a duty on sovereign, in public
interest, to protect persons under disability who have no rightful
protector. The connotation of the term "parens patriae" differs from
F country to country, for instance, in England it is the King, in America
it is the people, etc. The Government is within its duty to protect and
to control persons under disability. Conceptually, the parens patriae
theory is the obligation of the State to protect and take into custody
the rights and the privileges of its citizens for discharging its obliga-
tions. Our Constitution makes it imperative for the State to secure to
G all its citizens the rights guaranteed by the Ccnstitution and where the
citizens are not in a position to assert and secure their rights, the State
must come into picture and protect and fight for the rights of the
citizens. The Preamble to the Constitution, read with the Directive
Principles, Articles 38, 39 and 39A enjoins the State to take up these
responsibilities. It is the protective measure to which the social welfare
H state is committed. It is necessary for the State to ensure the funda-
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 639

mental rights in conjunction with the Directive Principles of State
Policy to effectively discharge its obligation and for this purpose, if A
necessary, to deprive some rights and privileges of the individual vic-
tims or their heirs to protect their rights better and secure these
further. Reference maibe made to Alfred L. Snapp & Son, Inc. v.
Puerto Rico, 458 US 592, 73 L. Ed. 2d 995, 1028. Ct. 3260 in this
connection .. There it was held by the Supreme Court of the United B
States of America that Commonwealth of Puerto have standing to sue
as parens patriae to en join apple growers' discriminatioa against
Puerto Rico migrant farm workers. This case illustrates in some aspect
the scope of 'parens patriae'. The Commonwealth of Puerto Rico sued
in the United States District Court for the Western District of
Virginia, as parens patriae for Puerto Rican migrant farmworkers, and
against Virginia apple growers, to enjoin discrimination against Puerto c
Ricans in favour of Jamaican workers in violation of the Wagner-
Peyser Act, and the Immigration and Nationality Act. The District
Court dismissed the action on the ground that the Commonwealth
lacked standing to sue, but the Court of Appeal for the Fourth Circuit
reversed it. On cerJiorari, the United States Supreme Court affirmed. D
In the opinion by White, J. joined by Burger, Chief Justice and
Brennan, Marshall, Blackmun, Rennquist, Stevens, and O'Connor,
JJ., it was held that Puerto Rico had a claim to represent its quasi-
sovereign interests in federal court at least which was as strong as that
of any State, and that it had parens patriae standing to sue to secure its
residents from the harmful effects of discrimination and to obtain full E
and equal participation in the federal employment service scheme
established pursuant to the Wagner-Peyser Act and the Immigration
and Nationality Act of 1952. Justice White referred to the meaning of
the expression "parens patriae". According to Black's Law Dictionary, '
5th Edition 1979, page 1003, it means literally 'parent of the country'
and refers traditionally to the role of the State as a sovereign and F
guardian of persons under legal disability. Justice White at page 1003
of the report emphasised that the parens patriae action had its roots in
the common-law concept of the "royal prerogative". The royal pre-
rogative included the right or responsibility to take care of persons
who were legally unable, on account of mental incapacity, whether it
proceeds from nonage, idiocy, or lunacy to take proper care of r;
themselves and their property. This prerogative of parens patriae is
inherent in the supreme power of every state, whether that power is
lodged in a royal person or m the legislature and is a most beneficient
function. After discussing several cases Justice White observed at page
1007 of the report that in order to maintain an action, in parens
patriae, the state must articulate an interest apart from the interests of H
640 SUPREME COURT REPORTS [ 1989) Supp. 2 S.C.R.

A particular parties, i.e. the State must be more than a nominal party.
The State must express a quas1'sovereign interest. Again an instructive
insight can be obtained from the observations of Justice Holmes of the
American Supreme Court in the case of Georgia v. Tennessee Copper
Co., 206 US 230, 51 L.Ed. 1038, 27 S Ct 618, which was a case involv-
ing air pollution in Georgia caused by the discharge of noxious gases
B from the defendant's plant in Tennessee. Justice Holmes at page 1044
of the report described the State's interest as follows:

"This is a suit by a State for an in jury to it in its capacity of
quasi-sovereign. In that capacity the State has an interest
independent of and behind the titles of its citizens, in all the
earth and air within its domain. It has the last word as to
c whether its mountains shall be stripped of their forests and
its inhabitants shall breathe pure air. It might have to pay
individuals before it could utter that word, but with it
remains the final power ......

D . . . . . When the States by their union made the forci-
ble abatement of outside nuisances impossible to each, they
did not thereby agree to submit to whatever might be done.
They did not renounce the possibility of making reasonable
demands on the ground of their still remaining quasi--
sovereign interests''
E
36. Therefore, conceptually and from the jurisprudential point
of view, especially in the background of the Preamble to the Constitu-
tion of India and the mandate of the Directive Principles, it was possi-
ble to authorise the Central Government to take over the claims of the
victims to fight against the multinational Corporation in respect ot the •
F claims. Because of the situation the victims were under disability in
pursuing their claims in the circumstances of the situation fully and
properly. On its plain terms the State has taken over the exclusive
right to represent and act in place of every person who has made or is
entitl'ed to make a claim for all purposes connected with such claim in
the same manner and to the same effect as such person. Whether such
G provision is valid or not in the background of the requirement of the
Constitution and the Code of Civil Procedure, is another debate. But
there is no prohibition or inhibition, in our opinion, conceptually or
jurisprudentially for Indian State taking over the claims of.the victims
or for the State acting for the victims as the Act has sought to provide.
The actual meaning of what the Act has provided and the validity
H thereof, however, will have to be examined in the light of the specific
submissions advanced in this case.
C.L. SAHU v:·U.0.I. IMUKHARJI, CJ.) 641

37. Ms. Indira Jaising as mentioned hereinbefore on behalf of
A
some other victims drew out attention to the background of the passing
of the Act i~ question. She drew our attention to the fact that the Act
was to meet a specific situation that had arisen after the tragic disaster
and the advent of American lawyers seeking to represent the victims in
American courts. The Government's view, according to her, as was
manifest from the Statement of Objects and Reasons, debates of the B
Parliament, etc. was that the interests of the victims would be best
served if the Central Government was given the right to represent the
victims in the courts of United States as they would otherwise be
exploited by 'ambulance-chasers' working on contingency fees. The
Government also proceeded initially on the hypothesis that US was the
most convenient forum in which to sue UCC. The Government however
feared that it might not have locus standi to represent the victims in the
c
courts of the United States of America unless a law was passed to enable
it tc sue on behalf of the victims. The dominant object of the Act,
therefore, according to her, was to give to the Government of India
locus Standi to sue on behalf of the victims in foreign jurisdiction, a
standing which it otherwise would not have had. According to her, the D
Act was never intended to give exclusive rights to the Central Govern-
ment to sue on behalf of the victims in India or abroad. She drew our
attention to the parliamentary debates as mentioned hereinbefore.
She drew our attention to the expression 'parens patriae' as appearing
in the Words and Phrases, Volume 31 p. 99. She contends that the Act
was passed to provide locus standi only to represent in America. She E
drew our attention to the "American Constitutional Law by Laurence
B. Trioe, 1978 Edition at paragraph 3.24, where it was stated that in its
capacity as proprietor, a state may satisfy the requirement of in jury to
its own interests by an assertion of harm to the state as such. It was
further stated by the learned author there that the State may sue under
the federal anti-trust laws to redress wrongs suffered by it as the owner F
of a railroad and as the owner and operator of various public institu-
tions. It was emphasised that in its quasi-sovereign capacity, the state
has an interest, independent of and behind' the titles of its citizens, in all
the earth and air within its domain. It was sought to be suggested that in
the instant Act no such right was either asserted or mentioned. The
State also in its quasi-sovereign capacity is entitled to bring suit against G
a private individual to enjoin a corporation not to discharge noxious
gases from its out of state plant into the suing state's territory. Finally,
it was emphasised that as 'parens patriae' on behalf of the citizens,
where a state's capacity as parens patriae is not negated by the federal
structure, the protection of the general health, comfort, and welfare of
the state's inhabitants has been held to give the state itself a snfficient H
642 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

interest. Ms. Jaising sought to contend that to the extent that the Act
A was not confined to empowering the Government to sue on behalf of
those who were not sui generis but extended also to representing those
who are, this exercise of the power cannot be referrable to the doctrine
of 'parens patriae'. To the extent, it is not confined in enabling the
Government to represent its citizens in foreign jurisdiction but
B empowered it to sue in local courts to the exclusion of the victims it
cannot be said to be in exercise of doctrine of 'parens patriae', accord·
ing to her. We are unable to agree. As we have indicated before
conceptually and jurisprudentially there is no warrant in the back-
ground of the present Act, in the light of circumstances of the Act in
question to confine the concept into such narrow field. The concept
can be varied to enable the Government to represent the victims effec-
c tively in domestic forum if.the situation so warrants. We also do not
find any reason to confine the 'parens patriae' doctrine to only quasi-
sovereign right of the State independent of and behind the title of the
citizens, as we shall indicate later.

D 38. It was further contended that deprivation of the rights of the
victims and denial of the rights of the victims or the rights of the heirs
of the victims to access to justice was unwarranted and unconstitu-
tional. She submitted that it has been asserted by the Government that
the Act was passed pursuant to Entry 13 of the List I of the Seventh
Schedule to the Constitution. It was therefore submitted that to the
E extent it was a law relating to civil procedure, it sets up a different
procedure for the Bhopal gas victims and denies to them equality
before law, violating Article 14 of the Constitution. Even assuming that
due to the magnitude of the disaster, the number of claimants and their ,.
disability they constituted a separate class and that it was permissible
to enact a special legislation setting up a special procedure for them,
F the reasonableness of the procedure has still to be tested. 11s reason-
ableness, according to her, will have to b'e judged on the touchstone of
the existing Civil Procedure Code of 1908 and when so tested, it is
found wanting in several respects. It was also contended by the
Government that it was a legislation relating to "actionable wrongs"
under Entry 8 of the Concurrent List of the Seventh Schedule. But so
G read, she said, it could only deal with the procedural aspects and not
the substantive aspect of "actionable wrongs". If it does, then the
reasonableness of a la~ must be judged with reference to the existing
substantive law of actionable wrongs and so judged it is in violation of
maµy constitutional rights as it takes away from the victims the right to
sue for actionable wrongs according to counsel for the victnns. Accord-
H ing to her, it fails to take into account the law of strict liability for ultra
'
C.L. SAHU v. U .0.1. [MUKHARJJ, CJ.] 643

hazardous activity as clarified by this Court in M.C. Mehta's, case
(supra). She further submitted that it is a bad Act as it fails to provide A
for the right to punitive damages and destruction of environment.

39. It was contended on behalf of the Central Government that
the Act was passed to give effect to the Directive Principle as
enshrined under Article 39-A of the Constitution of India. It was, on B
.the other side, submitted that it is not permissible for the State to grant
legal aid on pain of destroying rights that inhere in citizens or on pain
of demanding that the citizeqs surrender their rights to the State. The
Act in fact demands a surrender of rights of the citizens to the State.
On the interpretation of the Act, Ms. Indira Jaising submitted that
sections 3 and 4 as noted above, give exclusive power to the Govern-
ment to represent the victims and there is deprivation of the victims' c
right to sue for the wrongs done to them which is uncanalised and
unguided and the expression "due regard" in section 4 of the Act does
not imply consent and as such violative of the rights of the victims. The
right to be associated with the conduct of the suit is hedged in with so
many conditions that it is illusory. According to her, a combined read- D
ing of sections 3 and 4 of the act lead to the conclusion that the victims
are displaced by the Central Government which has constituted itself as
the "surrogate" of the claimants, that they have no control over the
proceedings, that they have no right to decide whether or not to com-
promise and if so on what terms and they have no right to be heard by
the court before any such compromise is effected. Therefore, section 3 E
read with section 4, according to her, hands over to the Government
all effective rights of the victims to sue and is a naked usurption of
power. It was submitted that in any event on a plain reading of the
Act, section 3 read with section 4 did not grant the Government
immunity from being sued as a joint tort-feasor.
F
40. It was further urged that section 9 makes the Government
the total arbitor in the matter of the registration, processing and
recording of claims. Reference was made to section 9(2)(a), (b) and
(c) and disbursal of claims under sections 9(2)(f) and lO. It was urged
that the Deputy Commissioner and Commissioner appointed under
the Act and the Scheme are subordinates and agents of the Central G
Government. They replace impartial a_nd independent civil court by
officers and subordinates of the Central Government. Clause 11 of the
Scheme makes the Central Government, according to counsel, judge
in its own cause inasmuch as the Central Government could be and
was in fact a joint tort-feasor. It was submitted that sections 5 to 9 of
the Act read with the Scheme do not set up amachinery which is H
644 SUPREME COURT REPORTS (1989) Supp. 2 S.C.R.

A constitutionally valid. The Act, it was urged, deprives the victims of
their rights out of all proportion to the object sought to be achieved,
namely, to sue in foreign jurisdiction or to represent those incapable of
representing themselves. The said object could be achieved, according
to counsel, by limiting the right to sue in foreign jurisdiction alone and
in any event representing only those victims incapable of representing
B themselves. The victims who wish to sue for and on their own behalf
must have power to sue, all proper and necessary parties including
Government of India, Government of Madhya Pradesh, UCIL and
Shri Arjun Singh to vindicate their right to life and liberty and their
rights cannot and should not be curtailed, it was submitted. Hence, the
Act goes well beyond its objects and imposes excessive restriction
amounting to destruction of the rights of the victims, according to.
C counsel. In deciding whether any rights are affected, it is not the object
of the Act that is relevant but its direct and inevitable effect on the
rights of the victims that is material. Hence no matter how laudable
the object of the Act is alleged to be by the Government of .India,
namely, that it is an Act to give effect to Directive Principles enshrined
D in Article 39-A of the Constitution, the direct and inevitable effect of
section 3 according to counsel for the victims is to deprive the victims
of the right to sue for and on their own behalf through counsel of their
choice and instead empower the Central Government to sue for them.

41. The Act is, it was contended, unconstitutional because it
E deprives the victims of their right to life and personal liberty
guaranteed by Article 21. The right to life and liberty includes the right
to sue for violations of the right, it was urged. The right to life
guaranteed by Article 21 must be interpreted to mean all that makes
life livable, life in all its fullness. According to counsel, it includes the
right to livelihood. Reference was made to the decision of Olga Tellis
F v. B.M.C., (1985) Supp. 2 SCR 51 at. p. 78-83. This right, it was
contended, is inseparable from the remedy. It was urged that personal
liberty includes a wide range of freedoms to decide how to order one's
affairs. Refere'!ce was made to Maneka Gandhi v. Union of India;
(supra). The right to life and liberty also includes the right to healthy
environment free from hazardous pollutants. The right to life and
G liberty, it was submitted, is inseparable from the remedy to judicial
vindication of the violation of that right-the right of access to justice
. must be deemed to be part of that right. Therefore, the importance is
given to the right to file a suitfor an actionable wrong. See Ganga Bai
v. Vijay Kumar, [1974) 3 SCR 882 at 886. According to counsel
appearing for the victims, the Act read strictly infringes the riizbt to
H life and personal liberty because the right to sue by the affected oerson
C.L. SAHU v. U.0.1. IMUKHARJI, CJ.] 645

for damages flowing from infringement of their rights is taken away.
A
Thus, it was submitted that not just some incidents of the right to life,
but the right itself in all its fullness is taken away. Such deprevation,
according to counsel, of the right is not in accordance with procedure
established by law inasmuch as the law which takes away the right,
i.e., impugned Act is neither substantively nor procedurally just, fair
or reasonable. A law which divests the victims of the right to sue to B
vindicate for life and personal liberty and vests the said right in the
Central Government is not just, tair or reasonable. The victims are sui
generis and able to decide for themselves how to vindicate their claims
in accordance with law. There is, therefore, no reason shown to exist
for divesting them of that right and vesting that on the Central
Government.
c
42. All the counsel for the victims have emphasised that vesting
of the right in Central Government is bad and unreasonable because
there is conflict of interests between the Central Government and the
victims. It was emphasised that the conflict of interest has already
prejudiced the victims in the conduct of the case inasmuch as a D
compromise unacceptable to the victims has been entered into in
accordance with the order of this Court of 14th/15th February, 1989
without hearing the victims. This conflict of interest will continue, it
was emphasised, to adversely affect the victims inasmuch as section 9
of the Act read with clauses 5, 10 and 11 of the Scheme empower the
Central Goverment to process claims, determine the category into E
which these fall, determine the basis on which damages will be payable
to each category and determine the amount of compensation payable
to each claimant. Learned counsel urged that the right to a just, fair
and reasonable procedure was itself a guaranteed fundamental right
under Article 14 of the Constitution. This included right to natural
justice. Reference was made to Olga Tellis's. case (supra) and S.L.
Kapoor v. Jagmohan, [1981) 1 SCR 746 at 753, 766. "lbe right to
natnral justice is included in Article 14 Tulsi Ram v. Union of India,
(1985) Supp. 2 SCR ·131. Reference was also made to Maneka
Gandhi's, case (supra). It was contended by counsel that the right to
natural justice is the right to be heard by Court at the pre-decisional
stage, i.e., before any compromise is effected and accepted. Reference G
was made to the decision of this Court in Swadeshi Cotton v. Union of
India, [1981] .2__SCR 533. It was submitted that natural justice is a
highly effective tool devised by the Courts to ensure that a statutory
authority arrives at a just decision. It is calculated to act as a healthy
check on the abuse of power. Natural justice is not dispensable nor is it
an empty formality. Denial of that right can and has led to the miscar- H
646 SUPREME COURT REPORTS [1989) Supp. 2 S.C.R.

riage of justice in this case. According to counsel, if the victims had
A been given an opportunity to be heard, they would, inter alia, have
pointed out that the amount agreed to be paid by UCC was hopelessly
inadequate and that UCC, its officer and agents ought not to be
aboolved of criminal liability, that the Central Government itself was
liable to have blw sued as a joint tort-feasor and, according to
B counsel, had agreed to submit to a decree if found liable under the
order dated 31st December, 1985, that suits had been filed against the
State of Madhya Pradesh, Shri Arjun Singh and UCIL which said suits
cannot be deemed to have been settled by the compromise/order of
14th/15th February, 1989. It was also pointed out that Union of India
was under a duty to sue UCIL, which it had failed and neglected to do.
It was submitted that to the extent that the statute does not provide for
c a pre-decisional hearing on the fairness of the proposed settlement or
compromise by Court, it is void as offending natural justice hence vio-
lative of Articles 14 and 21 of the Constitution. Alternatively, it was oon-
tended by the oounsel that since the statute neither expressly nor by neces-
sary implication bars the right to be heard by Court before any oompromise .
D is effected such a right to a pre-decisional hearing by Court must be
read into section 3(2)(b) of the Act. Admittedly, it does not expressly
exclude the right to a heaing by Court prior to any settlement being
entered into. Far from excluding such a right by necessary implication,
having regard to the nature of the rights affected, i.e., the right to life.
and personal liberty, such a right to hearing must be read into the Act
E in order to ensure that justice is done to the victims, according to all
the counsel. The Act sets up a procedure different from the ordinary
procedure established by law, namely, Civil Procedure Code. But it
was submitted that the Act should be harmoniously read with the
provisions of Civil Procedure Code and if it is not so read, then the Act
in question would be unreasonable and unfair. In this connection,
F reliance was placed on the provisions of Order I, Rule 4, Order 23,
Rule 1 proviso, Order 23, Rule 3-9 and Order 32, Rule 7 of CPC and
it was submitted that these are not inconsistent with the Act. On the
contrary these are necessary and complementary, intended to ensure
that there is no miscarriage of justice. Hence these must be held to
apply to the facts and circumstances of the case and the impugned Act
G must be read along with these provisions. Assuming that the said pro-
visions do not directly apply then, provisions analogous to the said
provisions must be read with section 3(2)(b) to make the Act reason-
able, it was submitted. It was urged that if these are not so read then
the absence of such provisicins would vest arbitrary and unguided pow-
ers in the Central Government making section 3(2)(b) uoconstitu-
H tional. The said provisions are intended to ensure the machinery of
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.) 647

accountability to the victims and to provide to them, an opportunity to
be heard by court before any compromise is arrived at. In this connec- A
tion, reference was made to Rule 23(3) of the Federal Rules of Civil
Procedure in America which provides for a hearing to the victims
before a compromise is effected. The victims as plaintiffs in an Indian
court cannot be subjected to a procedure which is Jess fair than that
provided by a US forum initially chosen by the Government of,Jndi_a, it B'
was urged.

43. Counsel submitted that Section 6 of the Act is unreruionable
because it replaces an independent and impartial Civil Court of
compet~nt jurisdiction by an Officer knwon as the Commissioner to be
appointed by the Central Government. No qualification, according to
. counsel, had been prescribed for the appointment of a Commissioner c
and clause 5 of the Scheme framed under the Act vests in the Commis-
sioner the judicial function of deciding appeals against the order of the
Deputy Commissioner registering or refusing to register a claim. It was
further submitted that clause 11(2) of the Scheme is unreasonable
because .it replaces an independent and impartial civil court of com- D
petent jurisdiction with the Central Government, which is a joint tort-
feasor for the purpose of determining the total amount of compensa-
tion to be apportioned for each category of claims and the quantum of
compensation payable for each type of injury or loss. It was submitted
that the said function i~ a judicial function and if there is any conflict of
interest between the victims and Central Government, vesting such a E
·power in the Central Government amounts to making it a judge in its
own cause. It was urged that having regard to the fact that amount
received in satisfaction of the claims is ostensibly pre-determined,
namely, 470 million dollars unless the order of 14th/15th February is
. set aside which oughi to be done, according to counsel, the Central
Government would have a vested interest in ensuring that the amount , F
of damages to be disburselil· does not exceed the said amount. Even
otherwise, according to counsel;-the Government of India has been
sued as a joint tort-feasor, and as they would have a vested interest in
depressing the quantum of damages, payable to the victims. This
would, according to counsel; result in a deliberate under-estimation
of the extent of injuries and compensation payable. · G
44. Clause 11(4) of the Scheme, according to counsel, is
·unreasonable inasmuch as it does not take into account the claims of
the victims to punitive and exemplary damages and damages for loss
and destruction of environment. Counsel submitted that in any event
the expression "claims" in section 2(b) cannot be interpreted to :nean H
648 SUPREME COURT REPORTS [1989) Supp. 2 S.C.R.

· Claims against the Central Government, the State of Madhya Pradesh,
A UCIL, which was not sued in suit No. 1113/86 and Shri Arjun Singh,
all of whom have been sued as joint tort feasors in relation to the
liability arising out of the disaster. Counsel submitted that if section 3
is to be held to be intra vires, the word "exclusive" should be severed
from section 3 and on the other hand, if section. 3 is held ultra vires,
B then victims who have already filed suits or those who had lodged
claims should be entitled to continue their own suits as well as Suit No.
·t I 13/86 as plaintiffs with leave under Order I Rule 8. Counsel submit-
ted that interim relief as decided by this Court can be paid to the
victims even otherwise also, according to counsel, under clause
10(2){b) of the Scheme.
c 45. Counsel submitted that the balance of $ 470 million after
deducting interim relief as determined by this Court should be
attached. In any event, it was submitted that, it be declared that the
·word "claim" in section 2 does not include claims against Central
Govt. or State of Madhya Pradesh or UCIL. Hence, it was urged that
-D the rights of the victims to sue the Government of India, the State of
Madhya Pradesh or UCIL would remain unaffected by the Act or by
the compromise effected under the Act. Machinery to decide suit
expeditiously has to be devised, it was submitted. Other suits filed
against UCC, UCIL, State of Madhya Pradesh and Arjun Singh
should to be transferred to the Supreme Court for trial and disposal,
E according to counsel. It was submitted that the Court should fix the
basis of damages payable to different categories, namely, death and
disablement mentioned under clause 5(2) of the :>eheme. Counsel sub-
mitted that this Court should set up a procedure which would ensure
that an impartial judge assisted by medical experts and assessors would
adjudicate the basis on which an individual claimant would fall into a
F particular category. It was also urged that this Court should quantify the
amount of compensation payable to each category of claimant in
clause 5(2) of the Scheme~ This decision cannot, it was submitted, be
left to the Central Government aS is purported to be done by clause
11(2) of the Scheme. ·

G This Court must set up, it was urged, a trust with independent
tru~tees to administer the trust and trustees to be accountable to this
Court. An independent census should be carried out of number of
claim:mt~. nature and extent of injury caused to them, the category
-into which they fall. Apportionment of amounts should be set aside or
invested for future claimants, that is the category in clause 5(2)(a) of
H the .Scheme, which is, according to counsel, of utmost importance
C.L. SAHU •. U.0.1. [MUKHAful, en-·--._ "·-·--.,,.649
since the injuries are said to be. carcinogenic and ontogenic and wide
affecting persons yet unborn. · · A

47. Shri Garg, further and on behalf of some of the victims
counsel; urged before us that deprivation of the rights of the victims
and vesting of those rights in the State is violative.of the rights of the
victims and cannot. be justified or warranted by the< Constitution. B
Neither section 3 nor section 4 of the Act gives any right to the victims;
on the other hand, it is a complete denial of access to justice for the
victims, according to him. This, according to counsel, is arbitrary. He
also submitted that section 4 of the Act, as it stands, gives no right to
the victims· and as such even assuming that in order to fight for the
rights of the victims, it was necessary to substitute the victims even
then in so far as the victims have been denied the right of say, in the c
conduct of the proceedings, this is disproportionate to the benefit
conferred upon the victims. Deitiafof rights to the victims is so great
and deprivation of the right to natllral justice and access to justice is so
tremendous that judged by the well settled principles by which yard-
sticks provisions like these should be judged in the constitutional D
framework of this country, the Act is violative of the fundamental
rights of the victims. It was further submitted by him that all the rights
of the victims by the process of this Act, the right of the victims to
enforce full liability agaist the multinationals as well as against the
Indian Compariies, absolute liability and criminal liability have all
b.een curtailed.· E
48. All the counsel submitted that in any event, the criminal
liability cannot be subject matter of this Act. Therefore, the Govern-
ment was not entitled to agree to any s.ettlement on the ground that
criminal prosecution would be withdrawn and this being a part of the
consideration or inducement for settling the civil liability, he submit- F
ted that the settlement arnved at on the 14th/15th February, 1989 as
recorded in the order of this Court is wholly unwarranted, unconstitu-
tional and illegal. ·

· 49. Mr. Garg additionally further urged that by the procedure of
the Act, each individual claim had to be first· determined and the G
Government could only take over the. aggregate of all individual
claims and that could only be done by aggregating the individual
claims of the victims. That was not done, according to him. Read in
that fashion, according to Shri Garg, the conduct of the Government· ·
in implementing the Act is wholly improper and unwarranted. It was
submitted by him that the enforcement of the right of the victims H
650 SUPREME COURT REPORTS . (1989) Supp. 2 S.C.R.

without a just, fair and reasonable procedure which is vitally necessary .
A tor representing the citizens or victims was bad. It was further utged by
him that the Bhopal gas victims have been singled out for hostile
discrimination resulting in total denial of all procedures of approach to
competent courts and tribunals. It was submitted that the Central
Government was incompetent to represent the victims in the litiga-
B tions or for enforcement of the claims. It was then submitt~d by him
that the claims of the victims must be enforced fully against the Union
Carbide Corporation carrying on commercial activities for profit
resulting in unprecedented gas leak disaster responsible for a large
number ot deaths and severe injuries to others. It was submit-
ted that the liability of each party responsible, including the Govern-
ment of India, which is a joint tort-feasor along with the. Union
C . Carbide, has to be ascertained in appropriate proceedings. It was sub-
mitted on behalf of the victinls that Union of India owned 22% of the
shares in. Union Carbide and therefore, it was incompetent to repre-
sent the victims. There was conflict of interest between the Union of
India and the Union Carbide and so Central Government was incom-
D petent. It is submitted that pecuniary interest howsoever small dis-
qualifies a person to be a judge in.his own cause. The settlement
accepted by the Union of India, according to various counsel is vitiated
by the pecuniary bias as holders of its shares to the extent of 22%.

E 50. It was submitted that the pleadings in the court of the United
States and in the Bhopal court considered in the context of the settle-
ment order of this Court accepted by the Union of India establish that
the victims' individuality were sacrificed wantedly and callously and,
therefore, there was violation, according to some of the victims, both
·in the Act and in its implementation of Articles 14, 19(l}(g) and 21 of
F the Constitution.

51. The principles of the decision of this Court in M.C. Mehta &
Anr. v. Union of India, [1987) 1SCR819 must be so interpreted that
complete justice is done and it in no way excludes the grant of punitive
damages for wrongs justifying deterrents to ensure the safety of citi-
G . zens in free India. No multinational corporation, according to Shri
Garg, can claim the privilege of the protection of Indian law to earn
profits wiihout meeting fully the demands of civil and criminal justice
administered in India with this Court functioning as the custodian. Shri
Garg urged that the liability for damages, in India and the Third World ·
· Countries, of the multinational companies cannot be less but must be
H --more because the persons affected are often without remedy for
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.) 651

reasons of inadequate facilities for protection of health or property.
A
Therefore, the damages sustainable by Indian victims against the
multinationals dealing with dangerous gases without proper security
and other measures are far greater than damages suffered by the citi-
zens of other advanced and developed countries. It is, therefore,
necessary to ensure by damages and deterrent remedies that these
multinationals are not tempted to shift dangerous manufacturing B
operations intended to advance their strategic objectives of profit and
war to the Third World Countries with little respect for the right to life
and dignity of the people of sovereign third world countries. The
strictest enforcement of punitive liability also serves the interest of the
American people. The Act, therefore, according to Shri Garg is
clearly unconstitutional and therefore, void.
c
52. It was urged that the settlement is without jurisdiction. This
Court was incompetent to grant immunity against criminal liabilities in
the manner it has purported to do by its order dated 14th/15th
February, 1989, it was strenuously suggested by counsel. It was further
submitted that to hold the Act to be valid, the victims must be heard D
before the settlement and the Act can only be valid if it is so
interpreted. This is necessary further, according to Shri Garg, to lay
down the scope of hearing. Shri Garg also drew our attention to the
scheme of disbursement of relief to the victims. He submitted that the
scheme of disbursement is unreasonable and discriminatory because
there is no procedure which is just, fair and reasonable in accordance E
with the provisions of Civil Procedure Code. He further submitted that
the Act does not lay down any guidelines for the conduct of the Union
of India in advancing the claims of the victims. There were no essential
legislative guidelines for determining the rights of the victims, the
conduct of the proceedings on behalf of the victims and for the relief
claimed. Denial of access to justice to the victims through an impartial
judiciary is so great a denial that it can only be consistent with the
situation which calls for such a drastic provision. The present circum-
stances were not such. He drew our attention to the decision of this
Court in Basheshar v. Income Tax Commissioner, AIR 1959 SC 149; in
Re Special Courts Bill, (1979) 2 SCR 476; A. R. Antulay v. R.S. Nayak
& Anr., (1988) 2 SCC 602; Ram Krishna Dalmia v. Tendulkar, [1955) G
SCR 279; Ambika Prasad Mishra etc. v. State of U.P. & Ors. etc.,
(1960] 3 SCR 1159 and Bodhan Chowdhary v. State of Bihar, (1955) 1
SCR 1045. Shri Garg further submitted that Article 21 must be read
with Article 51 of the Constitution and other directive principles. He
drew our attention to Lakshmi Kant Pandey v. Union of India, [1984) 2
SCR 795; Mis Mackinnon Machkenzie & Co. Ltd . .v. Audrey D'Costa H
652 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

and Anr., [1987] 2 SCC 469; Sheela Barse v. Secretary, Children Aid
A
Society & Ors., [1987] 1 SCR 870. Shri Garg submitted that in India,
the national dimensions of human rights and the international dimen-
sions are both congruent and their enforcement is guaranteed under
Articles 32 and 226 to the extent these are enforceable against the
State, these are also enforceable against transnational corporations
B inducted by the State on conditions of due observance of the Constitu-
tion and all laws of the land. Shri Garg submitted that in the back-
ground of an unprecedented disaster resulting in extensive damage to
life and property and the destruction of the environment affecting
large number of people and for the full protection of the interest of the
victims and for complete satisfaction of all claims for compensation,
the Act was passed empowering the Government of India to take
c necessary steps for processing of the claims and for utilisation of dis-
bursal of the amount received in satisfaction of the claims. The Central
Government was given the exclusive right to represent the victims and
to act in place of, in United States or in India, every citizen entitled to
make a claim. Shri Garg urged that on a proper reading of section 3( 1)
D of the Act read with section 4 exclusion of all victims for all purpose is
incomplete and the Act is bad. He submitted that the decree for
adjudication of the Court must ascertain the magnitude of the damages
and should be able to grant reliefs required by law under heads of strict
liability, absolute liability and punitive liability.

E 53. Shri Garg submitted that it is necessary to consider that the
Union of India is hable for the torts. In several decisions to which Shri
Garg arew our attention, it has been clarified that Government is not
liable only if the tortious act complained has been committed by its
servants in exercise of its sovereign powers by which it is meant powers
that can be lawfully exercised under sovereign nghts only vide
F Nandram Heeralal v. Union of India & Anr., AIR 1978 M.P. 209 at p.
212. There is a real and marked distinction between the sovereign
functions of the government and those which are non-sovereign and
some of the functions that fall in the latter category are those con-
nected with trade, commerce, business and industrial undertakings.
Sovereign fu:1ctions are such acts which are of such a nature as cannot
G be performed by a private individual or association unless powers are
delegated by sovereign authority of state.

54. According to Shri Garg, the Union and the State Governments
under the Constitution and as per laws of the Factories, Environment
Control, etc. are bound to exercise control on the factories in public
H interest and public purpose. These functions are not sovereign func-
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.I 653

tions, according to Shri Garg, and the Government _in this case was
guilty of negligence. In support of this, Shri Garg submitted that A
the offence of negligence on the part of the Govt. would be evident
from the fact that-

(a) the Government allowed the Union Carbide factory to be
installed in the heart of the city; B

(b) the Government allowed habitation in the front of the
factory knowing that the most dangerous and lethal gases were
being used in the manufacturing processes;
' (c) the gas leakage from this factory was a common affair and it
was agitated continuously by the people journalists and it was c
agitated in the Vidhan Sabha right from 1980 to 1984. These
features firmly proved, according to Shri Garg, the grossest
negligence of the governments. Shri Garg submitted that the gas
victims had legal and moral right to sue the governments and so it
had full right to implead all the necessary and proper parties like D
Union Carbide, UCIL, and also the then Chief Minister Shri
Arjun Singh of the State. He drew our attention to Order 2, rule
3, of the Civil Procedure Code. In suits on joint torts, according
to Shri Garg, each of the joint tort feasors is responsible for the
in jury sustained for the common acts and they can all be sued
together. Shri Garg's main criticism has been that the most E
crucial question of corporate responsibility of the people's right
to life and their right to guard it as enshrined in Article 21 of the
Constitution were sought to be gagged by the Act. Shri Garg
tried to submit that this was an enabling Act only but not an Act
which deprived the victims of their right to sue. He submitted
that in this Act, there is denial of natural justice both in the F
institution under section 3 and in the conduct of the suit under
section 4. It must be seen that 1ustice is done to all (R.
Viswanathan v. Rukh-u/-Mu/k Syed Abdul Wajid, [1963] 3 SCR
22). It was urged that it was necessary to give a reasonable notice
to the parties. He referred to M. Narayanan Nambiar v. State of
Kera/a, [1963] Supp. 2 SCR 724. G

55. Shri Shanti Bhushan appearing for Bhopal Gas Peedit
Mahila Udyog Sangathan submitted that if the Act is to be upheld, it
has to be read down and construed in the manner urged by bim. It was
submitted that when the Bhopal Gas disaster took place, which was
the worst industrial disaster in the world which resulted in the deaths H
654 SUPREME COURT REPORTS [1989) Supp. 2 S.C.R.

of several thousands of people and caused serious injuries to lakhs of
A others, there arose a right to the victims to get not merely damages
under the law of the torts but also arose clearly, by virtue of right to
life guaranteed as fundamental right by Article 21 of the Constitution a
right to get full protection of life and limb. This fundamental right
also, according to Shri Shanti Bhushan, embodied within itself a right
B to have the claim adjudicated by the established courts of law. Tt is well
settled that right of access to courts in respect of violation of their
fundamental rights itself is a funamental right which cannot be denied
to the people. Shri Shanti Bhushan submitted that there may be some
justification for the Act being passed. He said that the claim against
the Union Carbide are covered by the Act. The claims of the victims_
against the Central Government or any other party who is also liable
C under tort to the victims is not covered by the Act. The second point
that Shri Shanti Bhushan made was that the Act so far a_s it empowered
the Central Government to represent and act in place of the victims is
in respect of the civil liability arising out of disaster and not in respect
of any right in respect of criminal liability. The Central Govt., accord-
D ing to Shri Shanti Bhushan, cannot have any right or authority in
relation to any offences which arose out of the disaster and which
resulted in criminal liability. It was submitted that there cannot be any
settlement or compromise in relation to non-compoundable criminal
cases and in respect of comoundable criminal cases the legal right to
compound these could only be possessed by the victims alone and the
E Central Government could not compound those offences on their
behalf. It was submitted by Shri Shanti Bhushan that even this Court
has no jurisdiction whatsoever to transfer any criminal proceedings to
itself either under any provision of the Constitution or under any provi-
sion of the Criminal Procedure Code or under any other provision of
law and, therefore, if the settlement in question was to be treated not
F as a compromise but as an order of the Court, it would be without
jurisdiction and liable to be declared so on the principles laid down,
according to Shri flhushan, by this Court in Antulay's case (supra).
Shri Shanti Bhushan submitted that even if under the Act, the Central
Government is considered to be able to represent the victims and to
pursue the litigation on their behalf and even to enter into compromise
G on their behalf, it would be a gross violation of the constitutional rights
of the victims to enter into a settlement with the Union Carbide with-
out giving the· victims opportunities to express their views about the
fairness or adequacy of the settlement before any court could permit
such a settlement to be made.

H 56. Mr. Shanti Bhushan submitted that the suit which may be
C.L. SAHU. v. U.0.1. [MUKHARJI, CJ.] 655

brought by the Central Government against Union Carbide under
A
section 3 of the Act would be a suit of the kind contemplated by the
Explanation to Order 23, rule 3 of the Code of Civil Procedure since
the victims are not parties and yet the decree obtained in the suit
would bind them. It was, therefore, urged by Shri Shanti Bhushan that
the provisions of Section 3( 1) of the Act merely empowers the Central
Government to enter into a compromise but did not lay down the B
protedure which was to be followed for entering into any compromise.
Therefore, there is nothing which is inconsistent with the provisions of
Order 23 Rule 3-B of the CPC to which the provisions Section 11 of the
Act be applied. If, however, by any stretch of argument the provisions
of the Act could be construed so as to override the provisions of Order
23 Rule 3-B CPC, it was urged, the same would render the provisions
of the Act violative of the victims' fundamental rights and the actions c
would be rendered unconstitutional. If it empowered the Central
Government to compromise the victims' rights, without even having to
apply the principles of natural justice, then it would be unconstitu·
tional and as such bad. Mr. Shanti Bhushan, Ms. Jaising and Mr. Garg
submitted that these procedures must be construed in accordance with D
the provisions contained in Order 23 Rule 3-B CPC and an oppor-
tunity must be given to those whose claims are being compromised to
show to the court that the compromise is not fair and should not
accordingly be permitted by the court. Such a hearing in terms,
according to counsel, of Order 23 Rule 3-B CPC has to be before the
compromise is entered into. It was then submitted that section 3 of the E
Act only empowers the Central Government to represent and act in
place of the victims and to institute suits on behalf of the victims or
even to enter into compromise on behalf of the victims.

57. The Act does not create new causes of action create special
courts. The jurisdiction of the civil court to entertain suit would still F
arise out of section 9 of the CPC and the substantive cause of action
and the nature of the reliefs available would also continue to remain
unchanged. The only difference produced by the provisions of the Act
would be that instead of the suit being filed by the victims themselves
the suit would be filed by the Central Government on their behalf.
G
58. Shri Shanti Bhushan then argued that the cause of action of
each victim is separate and entitled him to bring a suit for separate
amount according to the damages suffered by him. He submitted that
even where the Central Government was empowered to file suits on
behalf of all the victims it could only ask for a decree of the same kind
as could have been asked for by the victims themselves, namely, a H
656 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

decree awarding various specified amounts to different victims whose
A
names had to be disclosed. According to Shri Shanti Bhushan, even if
all the details were not available at the time when the suit was filed,
the details of the victims' .damages had to be procured and specified in
the plaint before a proper decree could be passed in the suit. even if
the subject matter of the suit had to be compromised between the
B Central Government and the Union Carbide the compromise had to
indicate as to what amount would be payable to each victim, in.addi-
tion to the total amount which was payable by Union Carbide, submit-
ted Shri Shanti Bhushan. It was submitted that there was nothing in
the Act which permitted the Central Government to enter into any
general compromise with Union Carbide providing for the lumpsum
amount without disclosure as to how much amount is payable to each
c victim.

59. If the Act in question had not .been enacted, the victims
would have been entitled to not only sue Union Carbide themselves
but also to enter into any compromise or settlement of their claims
D with the Union Carbide immediately. The provisions of the Act, ac-
cording to Mr. Shanti Bhushan, deprive the victims of their legal right
and such deprivation of their rights and creation of a corresponding
right in the Central Government can be treated as reasonable only if
the deprivation of their rights imposed a corresponding liability on the
Central Government to continue to pay such interim relief to the
E victims as they might be entitled to till the time that the Central
Government is able to obtain the whole amount of compensation from
the Union Carbide. He submitted that the deprivation of the right of
the victims to sue for their claims and denial of access to justice and to
assert their claims and the substitution of the Central Government to
carry on the litigation for or on their behalf can only be justified, if and
F only if the Central Government is enjoined to provide for such interim
relief or continue to provide in the words of Judge Keenan, as a matter
of fundamental human decency, such interim relief, necessary to
enable the victims to fight the battle. Counsel submitted that the Act
must be so read. Shri Shanti Bhushan urged that if the Act is construed
in such a manner that it did not create such an obligation on the Central
G Governmet, the Act cannot be upheld as a reasonable provision when
it deprived the victims of their normal legal rights of immediately
obtaining compensation from Union Carbide. He referred to section
lO(b) of the Act and clause 10 and 11(1) of the Scheme to show that
the legislative policy underlying the Bhopal Act clearly contemplated
payment of interim relief to the victims from time to time till such time
H as the Central Government was able to recover from Union Carbide
C.L. SAHU v. U .O".I. [MUKHARJI, CJ.] 657

full amount of compensation from which the interim reliefs paid by the
A
Central Government were to be deducted from the amount payable to
them by way of final disbursal of the amounts recovered.

60. The settlement is bad, according to Shri Shanti Bhushan if
part of the bargain was giving up of the criminal liability against UCIL
and UCC. Shri Shanti Bhushan submitted that this Court should not B
hesitate to declare that the settlement is bad because the fight will go
on and the victims should be provided reliefs and interim compensa-
tion by the Central Government to be reimbursed ultimately from the
amount to be realised by the Central Government. This obligation was
over and above the liability of the Central Government as a joint
tort-feasor, according to Shri Shanti Bhushan.
c
61. Shri Kailash Vasdev, appearing for the petitioners in Writ
Petition No. 1551/86 submitted that the Act displaced the claimants in
the matter of their right to seek redressal and remedies of the actual
in jury and harm caused individually to the claimants. The Act in ques-
tion by replacing the Central Government in place of the victims. by D
conferment of exclusive right to sue in place _of victims, according to
him, contravened the procedure established by Jaw. The right to sue
for the wrong done to an individual was exclusive to the individual. It
was submitted that under the civil law of the country, individuals have
rights to enforce their claims and any deprivation would place them
into a different category from the other litigants. The right to enter E
into compromise, it was further.submitted, without consultation of the
victims, if that is the construction of section 3 read with section 4 of the
Act, then it is violative of procedure established by law. The proce-
dure substituted, if that be the construction of the Act, would be in
violation of the principles of natural justice and as such bad. It was
submitted that the concept of 'parens patriae' would not be. applicable F
in these cases. It was submitted that traditionally, sovereigns can sue
under the doctrine of 'parens patriae' only for. violations of their
"quasi-sovereign" interests. Such interests do not include the claims of
individual citizens. It was submitted that the Act in question is different
from the concept of parens patriae because there was no special need
to be satisfied and a class action, according to Shri Vasdev, would have G
served the same purpose as a suit brought under the statute and ought
to have been preferred because it safeguarded claimants' right to pro-
cedural due process. In addition, a suit brought under the statute
would threaten fhe victims' substantive due· process rights. It was
further submitted that in order to sustain an action, it was necessary
for the Government of India to have standing H
658 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

62. Counsel submitted that 'parens patriae' has received no judi-
cial recognition in this country as a basis for recovery of money dam-
ages for injuries suffered by individuals. He may be right to that extent
but the doctrine ot parens patriae has been used in India in varying
contexts and contingencies.

B 63. We are of the opinion that the Act in question was passed iii
recognition of the right of the sovereign to act as parens patriae as
contended by the learned Attorney General. The Government of
India in order to effectively safeguard the rights of the victims in the
matter of the conduct of the case was entitled to act as parens patriae,
which position was reinforced by the statutory provisions, namely, the
Act. We have noted the several decisions referred to hereinbefore,
c namely, Bhudhkaran Chankhani v. Thakur Prasad Shad, (supra);
Banku Behary Monda/ v. Banku Behari Hazra, (supra); Medai
Dalavoi T. Kumaraswami Mudaliar v. Medai Dalavai Rajammal,
(supra) and to the decision of this Court in Mahant Ram Saroop Dasji
v. S.P. Sahi, (supra) and the decision of the American Supreme Court
D in Alfred Schnapp v. Puerto Rico, (supra). It has to be borne in mind
that conceptually and jurisprudentially, the doctrine of pare its patriae cc
is not limited to representation of some of the victims outside the
territories of the country. It is true that the doctrine has been so
utilised in America so far. In our opinion, learned Attorney General
was right in contending that where citizens of a country are victims of a
E tragedy because of the negligence of any multinational, a peculiar
situation arises which calls for suitable effective machinery to articu-
late and effectuate the grievances and demands of the victims, for
which the conventional adversary system would be totally inadequate.
The State in discharge of its sovereign obligation must come forward.
The Indian state because of its constitutional commitment is obliged to
F take upon itself the claims of the victims and to protect them in their
hour of need. Learned Attorney General· was also right in submitting
that the decisions of the Calcutta, Madras and U.S. Supreme Court
clearly indicate that parens patriae doctrine can be invoked by
sovereign state within India, even if it be contended that it has not so
far been invoked inside India in respect of claims for damages of
G victims suffered at the hands of the multinational. In our opinion,
conceptually and jurisprudentially, there is no bar on the State to
assume responsibilities analogous to parens patriae to discharge the
State's obligations under the Constitution. What the Central Govern-
ment has done in the instant case seems to us to be an expression of its
sovereign power. This power is plenary and inherent in every
H sovereign state to do all things which promote the health, peace,
C.L. SAHU V. U.0.1. [MUKHARJI, CJ.] 659

morals, education and good order of the people and tend to increase
the wealth /and prosperity of the state. Sovereignty is difficult to A
define. See in this connection, Weaveron Constitional Law, p. 490. By
the nature of things, the state sovereignty in these matters cannot be
limited. It has to be adjusted to the conditions touching the common
welfare when covered by legislative enactments. This power is to the
public what the law of necessity is to the individual. It is compre- B
hended in the maxim salus populi suprema lex-regard for public
welfare is the highest law. It is not a rule, it is an evolution. This power
has always been as broad as public welfare and as strong as the arm of
the state, this can only be measured by the legislative will of the
people, subject to the fundamental rights and constitutional limita-
tions. This is an emanati.m of sovereignty subject to as aforesaid.
Indeed, it is the obligation of the State to assume such responsibility c
and protect its citizens. It has to be borne in mind, as was stressed by
the learned Attorney General, that conferment of power and the
manner of its exercise are two different matters. lt was submitted tha1
the power to conduct the suit and to compromise, if necessary, was
vested in the Central Government for the purpose of the Act. The D
power to compromise and to conduct the proceedings are not
uncanalised or arbitrary. These were clearly exercisable only in the
ultimate interests of the victims. The possibility of abuse of a statute
does not impart to it any element of invalidity. In this connection, the
observations of Viscount Simonds in Belfast Corporation v. O.D.
Commission, (1950) AC 490 at 520-21 are relevant where it was E
. emphasised that validity of a measure is not be determined by its
application to particular cases. This. Court in Collector of Customs,
Madras v. Nathe/la Sampathu Chetty, (1962] 3 SCR 786 at.825
emphasised that the constitutional validity of the statute would have to
be determined on the basis of its provisions and on the ambit of its
operation as reasonably construed. It has to be borne in mind that if F
upon so judged it passes the test of reasonableness, then the possibility
of the powers conferred being improperly used is no ground for pro-
nouncing the law itself invalid. See in this connection also the observa-
tions in P.J. Irani v. State of Madras, (1962) 2 SCR 169 at 178 to 181
and D.K. Trivediv. State of Gujarat, (1986) Supp. SCC 20 at 60-61
G
64. Sections 3 and 4 of the Act should be read together as con-
tended by the learned Attorney General, along with other provisions
of the Act and in particular sections 9 and 11 of the Act. These should
be appreciated in the context of the object sought to be achieved by
the Act as indicated in .the Statement of Objects and Reasons and the
Preamble to the Act. The Act was so designed that the victims of the H
660 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

disaster are fully protected and the claims or compensation or damages
A
for loss of life or personal injuries or in respect of other matters arising
out of or connected with the disaster are processed .speedily, effec;
lively, equitably ·and to the best advantage of the claimants. Section 3
of the Act is subject to other provisions of the Act which includes
sections 4 and 11. Section 4 of the Act opens with non-obstante clause,
B vis-a-vis, section 3 and therefore, overrides section 3. Learned At-
torney General submitted that the right of the Central Government
under section 3 of the Act was to represent the victims exclusively and
act in the place of the victims. The Central Government, it was urged,
in other words, is substituted in the place of the victims and is the
do minus litis. Learned Attorney General submitted that the dominus
C litis carries with it the right to conduct the suit in the best manner as it
deems fit, including, the right to withdraw and right to enter into
compromise. The right to withdraw and the right to compromise con-
ferred by section 3(2) of the Act cannot be exercised to defeat the
rights of the victims. As to how the rights should be exerci§ed is guided
by the objects and the reasons contained in the Preamble, namely, to
D speedily and effectively process the claims of the victims and to protect
their claims. The Act was passed repladng the Ordinance at a time
when many private plaintiffs had instituted complaints/suits in the
American Courts. In such a situation, the Government of India acting
in place of the victims necessarily should have right under the statute
to act in all situations including the position of withdrawing the suit or
E to enter into compromise. Learned Attorney General submitted that if
the UCC were to agree to pay a lump sum amount which would be
just, fair and equitable, but insists on a condition that the proceedings
should be completely withdrawn, then necessarily there should be
power under the Act to so withdraw. According to him, therefore, the
Act engrafted a provision empowring the Government to compromise.
F The provisions under section 3(2)(b) of the Act to enter into com-
promise was consistent with the powers of dominus litis. In this con-
nection, our attention was drawn to the definition of' Domin us Litis' in
Black's Law Dictionary, Fifth Edition, P. 437, which states as follows:

" 'Dominus litis'. The master of the suit; i.e. the person
G who was really and directly interested in the suit as a party,
as distingmshed from his attorney or advocate. But the
term is also applied to one wt.o, though not originally a
party, has made himself such, by intervention-or otherwise,
and has assumed entire control and responsibility for one
side and is treated by the Court as liable for costs. Virf{inia
H Electric & Power Co. v. Bowers, ISi Va., 542, 25 S.E. 2d
361, 263".
C.L. SAHU v. U.0.1. IMUKHARJI, CJ.] 661

65. Learned Attorney General sought to contend that the
victims had not been excluded entirely either in the conduct of pro- A
ceedings or in entering into compromise, and he referred to the pro-
ceedings in detail emphasising the participation of some of the victims
at some stage. He drew our attention to the fact that the victims had
filed separate consolidated complaints in addition to the complaint
filed by the Government of India. Judge Keenan of the Distt. Court of B
America had passed .orders permitting the victims to be represented
not only by the private Attorneys but also by the Govt. of India.
Hence, it was submitted that it could not be contended that the victims
had been excluded. Learned Attorney General further contended that
pursuant to the orders passed by Judge Keenan imposing certain con-
ditions against the Union Carbide and allowing the motion for forum
non convenience of the UCC that the suit came back to India and was c
instituted before the Distt. Court of Bhopal. In those circumstances, it
was urged by the learned Attorney General that the private plaintiffs
who went to America and who were represented by the contingency
lawyers fully knew that they could also have joined in the said suit as
• they were before the American Court along with the Govt. of India. It D
was contended that in the proceedings at any point of time or stage
including when the compromise was entered into, these private
plaintiffs could have participated in the court proceedings and could
have made their representation, if they so desired. Even in the Indian
suits, these private parties have been permitted to continue as parties
represented by separate counsel even though the Act empowers the E
Union to be the sole plaintiff. Learned Attorney General submitted
that Section 4 of the Ad clearly enabled the victims to exercise their
right of participation in the proceedings. The Central Govt. was
en joined to have due regard to any matter which such person might
require to !:le urged. Indeed, the learned Attorney General urged very
strenuously that in the instant case, Zehreeli Gas Kand Sangharsh F
Morcha and Jana Swasthya Kendra (Bhopal) had filed before the
Dist!: Judge, Bhopal, an application under Order I Rule 8 read with
Order I Rule 10 and Section 151 of the CPC for their intervention on
behalf of the victims. They had participated in the hearing before the
learned Distt. Judge, who referred to their intervention in the order. It
was further emphasised that when the UCC went up in revision to the G
High Court of Madhya Pradesh at Jabalpur against the interim com-
pensation ordered to be paid by the Dist!. Court, the intervener
through its Advocate, Mr. Vibhuti Jha had participated in the pro-
ceedings. The aforesaid Association ha.d also intervened in the civil
appeals preferred pursuant to the special leave granted by this Court
to the Union of India and Union Carbide against the judgment of the H
662 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

High Court for interim compensation. In those circumstances, it was
A submitted that there did not exist any other gas victim intervening in
the proceedings, claiming participation under Section 4. Hence, the
right to compromise provided for by the Act, could not be held to be
violative of the principles of natural justice. According to the learned
Attorney General, this Court first proposed the order to counsel in
B court and after they agreed thereto, dictated the order on 14th
February, 1989. On 15th February, 1989 after the Memorandum of
Settlement was filed pursuant to the orders of the court, further orders
were passed. The said Association, namely, Zehreeli Gas Kand
Sangharsh Morcha was present, according to the records, in the Court
on both the dates and did not apparently object to the compromise. Mr.
Charanlal Sahu, one of the petitioners in the writ petition, had
c watched the proceedings and after the Court had passed the order on
15th February, 1989 mentioned that he had filed a suit for Rs. JOO
crores. Learned At~orney General submitted that Mr. Sahu neither
protested against the settlement nor did he make any prayer to be
heard. Shri Charan Lal Sahu, in the petition of opposition in one of
D these matters have prayed that a sum of Rs. JOO million should be paid
over to him for himself as well as on behalf of those victims whom he
claimed to represent. In the aforesaid background on the construction
of the Sectii:Jn, it was urged by the learned Attorney General that
Section 3 of the Act cannot be held to be unconstitutional. The same
provided a just, fair and reasonable procedure and enabled the victims
E to participate in the proceedings at all stages-those who were
capable and willing to do so. Our attention was drawn to the fact that
Section 11 of the Act provides that the provisions of the Act shall have
effect notwithstanding anything inconsistent therewith contained in
any other enactment other than the Act. It was, therefore, urged th~t
the provisions of the Civil Procedure Code stood overridden in respect
F of the areas covered by the Act, namely, (a) representation, (b)
powers of representation; and (c) compromise.
,
66. According to the learned Attorney General, the Act did not
violate the principles of natural justice. The provisions of the CPC
could riot be read into the Act for Section 11 of the Act provides that
G the application of the provision of the Civil Procedure Code in so far as
those were inconsistent with the Act should be construed as overrid-
den in respect of areas covered by it. Furthermore, inasmuch as
Section 4 had given a qualified right of participation to the victims,
there cannot be any question of violation of the principles of natural
justice. The scope of the application of the principles of natural justice
H cannot be judged by any strait jacket formula. According to him, the
C.L. SAHU v. U.0.1. {MUKHARJI, CJ.] 663

extension of the principles of natural justice beyond what is provided
A
by the Act in Sections 3 & 4, was unwarranted and would deprive the
privisions of the Statute of their efficacy in relation to the achievement
of 'speedy relief', which is the object intended to be achieved. He
emphasised that the process of notice, consultation and exchange of
information, informed decision-making process, the modalities of
assessing a consensus of opinion would involve such time that the B
Govt. would be totally unable to act in the matter efficiently, effec-
tively and purposefully on behalf of the victims for realisation of the
just dues of the victims. He further urged that the Civil Procedure
Code before its amendment in 1976 did not have the provisions of
Order !"Rules 8(4), (5) & (6) and Explanatiol)S etc. nor Order XXIII
Rules 3A and 3B. Before the amendment the High Court had taken a
view against the requirement of hearing the parties represented in the
c
suit under Order 1, Rule 8 before it before settling or disposing of the
suit. Our attention was drawn to the decision of the Calcutta High
Court in Chintaharan Chose & Ors. v. Gujaraddi Sheik & Ors., AIR
1951 Cal. 456 at 457-459, wherein it was held by the lerned Single
Judge that the plaintiff in a representative suit had right to com- D
promise subject to the conditions that the suit was properly filed in
terms of the provisions of that Rule and the settlement was agreed
bona fide. Learned Attorney General in that context contended that
when the suit was validly instituted, the plaintiff had a right to com-
promise the suit and there need not be any provision for notice to the
parties represented before entering into any compromise. Reliance E
was placed on the decision of the Allahabd High Court in Ram Sarup
v. Nanak Ram, AIR 1952 Allahabad 275, where it was held that a
compromise entered into in a suit filed under Order I Rule 8 of the
CPC was binding on all persons as the plaintiffs who had instituted the
suit in representative capacity had the authority to compromise. He
further submitted that most, if not all, of the victims had given their F
powers of attorney which were duly filed in favour of the Union of
India. These powers of attorney have neither been impeached nor
revoked or withdrawn. By virtue of the powers of attorney the Union
of India, it was stated, had the authority to file the suits and to com-
promise the interests of the victims if so required. The Act in question
itself contemplates settlement as we have noted, and a settlement G
would need a common spokesman.

67. It was submitted that the Govt. of India as the statutory
representative discharged its duty and is in a centralised position of
assessing the merits and demerits of any proposed course of action. So
far as the act of compromise, abridging or curtailing the ambit of the H
664 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

A rights of the victims, it was submitted that in respect of liabihttes of
UCC & UCIL, be it corporate, criminal or tortious, it was open to an
individual to take a decision of enforcing the liability to its logical
extent or stopping short of it and acceding to a compromise. Just as an
individual can make an election in the matter of adjudication of lia-
bility sci can a statutory representative make an election. Therefore,
B it is wholly wrong to contend, it was urged, that Section 3(ii)(b) is
inconsistent with individual's right of election and at the same time it
provides the centralised decision-making processes to effectively ad-
judge and secure the common good. It was only a central agency like
the Govt. of India, who could have a perspective of the totality of the
claims and a vision of the problems of individual plaintiffs in enforcing
these, it was urged. It was emphasised that it has to be borne in mind
c that a compromise is a legal act. In the present case, it is a part of the
conduct of the suit. It is, therefore, imperative that the choice of
compromise is made carefully, cautiously and with a measure of dis-
cretion, it was submitted. But if any claimant wished to be associated
with the conduct of the suit, he would necessarily have been afforded
D an opportunity for that p\lrpose, according to the learned Attorney
General. In this connection, reference was made to Section 4 of the
Act. On the other hand, an individual who did pot participate in the
conduct of the suit and who is unaware of the various intricacies of
the case, could hardly be expected to meaningfully partake in the legal
act of settlement either in conducting the proceedings or entering into
E compromise, it was urged. In those circumstances, the leai:ned
Attorney General submitted that the orders of 14-15th February, 1989
and the Memorandum of Settlement were justified both under the Act
and the Constitution. According to him, the terms of Settlement might
be envisaged as pursuant to Section 3(ii)(b) of the Act, which was filed
according to him pursuant to judical direction. He sought more than
F once to emphasise, that the order was passed by the highest Court of
the land in exercise of extraordinary jurisdiction vested in it under the
Constitution.

68. Our attention was drawn to several decisions for the power
of this Court under Articles 136 and 142 of the Constitution. Looked
G closely at the provisions of the Act, it was contended that taking
into consideration all the factors, namely, possibilities of
champerty, exploitation, unconscionable agreements and the need to
represent the dead and the disabled, the course of events would reveal
a methodical and systematic orotection and vindication of rights to
the largest possible extent. It was observed that the rights are indis-
H pensably valuable possessions, but the rights is something which a
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 665

man can stand on, something which must be demanded or insisted
A
upon without embarrassment or shame. When rights are curtailed,
permissibility of such a measure can be examined only upon the
strength, urgency and the pre-eminence of rights and the largest good
of the largest number sought to be served by curtailment. Under the
circumstances which were faced by the victims of Bhopal gas tragedy,
the justifying basis, according to the learned Attorney General, or B
ground of human rights is that every person morally ought to have
something to which be or she is entitled. It was emphasised that the
Statute aimed at it. The Act provides for assumption of rights to sue
with the aim of securing speedy, effective and equitable results to the
best advantage of the claimants. The Act and the scheme, according to
the learned Attorney General, sought to translate that profession into
a system of faith and possible association when in doubt. Unless such a
.c
profession is shown to be uncouscionable under the circumstances
or strikes judicial conscience as a subversion of the objects of the Act, a
declaredly fair, just and equitable exercise of a valid power would not
be open to challenge. He disputed the submission that the right to
represent victims postulated as contended mainly by the counsel on D
behalf of the petitioners, a pre-determination of each individual claim
as a sine qua non for proceeding with the action. Such a construction
would deplete the case of its vigour, urgency and sense of purpose, be
urged. In this case, with the first of the cases having been filed in U.S.
Federal Court on December 7, 1984 a settlement would have been
reached for a much smaller sum to the detriment of the victims. E
Learned Attorney General emphasised that this background has to be
kept in mind while adjudging the validity of the Act and the
appropriateness of the conduct of the suit in the settlement entered
into.

69. He submitted that it has to be borne in mind that if the F
contentions of the petitioners are entertained, the rights theoretically
might be upheld but the ends of justice would stand sacrificed. It is id
those circumstances that it was emphasised that the claimant is an
individual and is the best person to speak about his injury. The
knowledge in relation to bis injury is relevant for the purpose of
compensation, whose distribution and disbursement is the secondary G
stage. It is fallacious to suggest that the plaint was not based upon
necessary data. He insisted that the figures mentioned in the plaint
although tentative were not mentioned without examination or
analysis.

70. It was further submitted by the learned Attorney General H
666 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A that while the Govt. of India had proceeded against the UCC, it had to
represent the victims as a class and it was not possible to define each
individual's right after careful scrutiny, nor was it necessary or possible
to do so in a mass disaster case. The settlement was a substitute for
adjudication since it involved a process of reparation and relief. The
relief and reparation cannot be said to be irrelevant for the purpose of
B the ,Act. It was stated that the alleged liability of the Govt. of India or
any claim asserted against the a)leged joint tort-feasor should not be
allowed to be a constraint on the Govt. of India to protect the interests
of its own citizens. Any counter-claim by UCC or any claim by a
citizen against the Govt. cannot vitiate the action of the State in the
collective interest of the victims, who are the citizens. Learned
Attorney General submitted that any industrial activity, normally, has
C to be licensed. The mere regulation of any activity does not carry with
it legally a presumption of liability for injury caused by the activity in
the event of a mishap occurring in the course of such an activity. In any
event, the learned Attorney General submitted the Govt. of India
enjoys sovereign immunity in accordance with settled law. If this were
D not the case, the Sovereign will have to abandon all regulatory func-
tions including the licensing of drivers of automobiles. Hence, we have
to examine the question whether even on the assumption that there
was negligence on the part of the Govt. oflndia in permitting/licensing
of the industry set up by the Union Carbide in Bhopal or permitting
t~e factory to grow up, such permission or conduct of the Union of
E India was responsible for the damage which has been suffered as a
result of Bhopal gas leakage. It is further to be examined whether such
conduct was in discharge of the sovereign functions of the Govt., and as
such damages, if any, resulting. therefrom are liable to be proceeded
against the Govt. as a joint tort-feasor or not. In those circumstances,
it was further asserted on behalf of the Union of India that though
F calculation of damages in a precise manner is a logical consequence of
a suit in progress it cannot be said to be a condition precedent for the
purpose of settling the matter. Learned Attorney General urged that
the accountability to the victims should be through the court. He urged
that the allegation that a large number of victims did not give consent
to the settlement entered into, is really of no relevance in the matter of
G a compromise in a mass tort action. It was highlighted that it is possible
that those who do not need urgent relief or are uninformed of the
issues in the case, may choose to .deny consent and may place the flow
of relief in jeopardy. 1,'hus, consent based upon individual subjective
opinion can never be correlated to the proposal of an overall settle-
ment in an urgent matter. Learned Attorney General urged further
H that if indeed consent were to be insisted upon as a mandatory
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 667

requirement of a Statute, it would not necessarily lead to an accurate
reflection of the victims' opinion as opinions may be diverse. No indi- A
vidual would be in a position to relate himself to a lump sum figure and
would not be able to define his expectations on a global criteria. In
such circumstances the value of consent is very much diminished. It
was urged that if at all consent was to be insisted it should not be an
expression of the mind without supporting information and response. B
To make consent meaningful it is necessary that it must be assertion of
a right to be exercised in a meaningful manner based on information
and comprehension of collective welfare and individual good. In a
matter of such dimensions the insistence upon consent will lead to a
process of enquiry which might make effective consideration of any
proposal impossibl~. For the purpose of affording consent, it would
also be necessry that each individual not only assesses the damages to c
himself objectively and places his opinion in the realm of fair expecta-
tion, but would also have to do so in respect of others. The learned
Attorney General advanced various reasons why it is difficult now or
impossible to have the concurrence of all.
D
71. In answer to the criticism by the petitioners, it was explained
on behlf of the Union of India that UCIL was not impleaded as a party
in the suit because it would have militated against the plea of multi-
national enterprise liability and the entire theory of the case in the
plaint. It was highlighted that the power to represent under the Act
was exclusive, the power to compromise for t!ie Govt. of India is E
without reference to the victims, yet it is a power guided by the sole
object of the welfare of the victims. The presence and ultimately the
careful imprimatur of the judicial process is the best safeguard to the
victims. Learned Attorney General insisted that hearing the parties
after the settlement would also not serve any purpose. He urged that it
can never be ascertained with certainty whether the victims or groups F
have authorised what was being allegedly spoken on their behalf; and
that the victims would be unable to judge a proposal of this nature. A
method of consensus need not be evolved like in America where every
settlement made by contingency fee lawyers who are anxious to obtain
their share automatically become adversaries of the victims and the
court should therefore be satisfied. Here the Court arrived at the G
figure and directed the parties to file a settlement on the basis of its
order of February 14, i985 and the intervenprs were heard, it was
urged. It was also urged that notice to the victims individually would
have been a difficult exercise and analysis of their response time-
consuming.
H
668 SUPREME COURT REPORTS [1989) SuPJI. 2 S.C.R.

A 72. The learned Attorney General urged that neither the Cent-
ral Govt. nor the State Govt. of Madhya Pr;idesh is liable for the claim
?f the victims. He asserted that, on the facts of the present case, there
is and can be no liability on their part as joint tort-feasors. For the
welfare of the community several socio-economic activities will have to
be permitted by the Govt. Many of these activities may have to be
B regulated by licensing provisions contained in Statutes made either by
Parliament or by State Legislatures. Any injury caused to a person, to
his life or liberty in the conduct of a licensed authority so as to make
the said licensing authority or the Govt. liable to damages would not
be in conformity with jurisprudencial principle. H in such circums-
tances it was urged on behalf of the Govt., the public exchequer is
made liable, it will cause great public injury and may result in drainage
C of the treasury. It would terrorise the welfare state from acting for
development of the people, and will affect the sovereign governmental
activities which are beneficial to the community not being adequately
licensed and would thereby lead to public injury. In any event, it was
urged ou behalf of the Govt., that such licensing authorities even
D assuming without admitting could be held to be liable as joint tort
feasors, it could be so held only on adequate allegations of negligence
with full particulars and details of the alleged act or omission of the
licensing authority alleged and its direct nexus to the injury caused to
the victims. It had to be proved by cogent and adequate evidence. On
some conjecture or surmise without any foundation on facts, Govt's
E right to represent the victims cannot be challenged. It w:is asserted
that even if the Govt. is considered to be liable as a joint tort feasor, it
will be entitled to claim sovereign immunity on the law as it now
stands.

73. Reference was made to the decision of this Court in Kasturi-
F la/ Kalia Ram Jain v. The State of U.P., [1965) 1 SCR 375 where the
conduct of some police officers in seizing gold in exercise of their
statutory powers was held to be in discharge of the sovereign functions
of the State and such activities enjoyed sovereign immunities. The
liability of the Govt. of India under the Constitution has to be referred
to Article 300, which takes us to Sections 15 & 18 of the Indian Inde-
G pendence Act, 1947, and Section 176( 1) of the Govt. of India Act,
1935. Reference was also made to the observations of this Court in The
State of Rajasthan v .. Mst. Vidhyawati, & Anr., [1962) 2 Supp. SCR
989.

74. We have noted the shareholding ofUCC. The circumstances
H that financial institutions held shares in the UCIL would not disqualify
C.L SAHU v. U.0.1. [MUKHARJI, CJ.) 669

the Govt. of India from acting as parens patriae and in discharging of its
stafutory duties under the Act. The suit was filed only against the UCC A
and not against UCIL. On the basis of the claim made by the Govt. of
India, UCIL was not a necessary party. It was suing only the multi-
national based on several legal grounds of liability of the UCC, inter
alia. on the basis of enterprise liability. H the Govt. of India had
instituted a suit against UCIL to a certain extent it would have B
weakened its case against UCC in view of the judgment of this Court in
M. C. Mehta's case (supra). According to learned Attorney General,
the Union of India in the present case was not proceeding on the basis
of lesser liability of UCC predicated in Mehta's case but on a different
jurisprudential principle to make UCC strictly and absolutely liable for
the entire damages.
c
75. The learned Attorney General submitted that even assuming
for the purpose of argument without conceding that any objection can
be raised for the Govt. of India representing the victims, to the present
situation the doctrine of necessity applied. The UCC had to be sued
before the American courts. The tragedy wa• treated as a national o
calamity, and the Govt. of India had the right, and indeed the duty, to
take care of its citizens, in the exercise of its parens patriae jurisdiction
or on principle analogous thereto. After having statutorily armed itself
in recognition of such parens patraie right or on principles analogous
thereto, it went to the Americ;m courts. No other person was properly
designed for representing the victims as a foreign court had to reco- E
gnise a right of representation. The Govt. of India was permitted to
represent the victims before the American courts. Private plaintiffs
were also represented by their attorneys. A Committee of three
attorneys was formed before the case proceeded before Judge Keenan.
It was highlighted that the order of Judge Keenan permitted the Govt.
of India to represent the victims. H there was any remote conflict of F
interests between the Union of India and the victims from the theoreti-
cal point of view the doctrine of necessity would override the possible
violation of the principles of natural justice-that no man should be
Judge in his own case. Reference may be made to Halsbury's Laws of
England, Vol. 1, 4th Edn., page 89, para 73, where it was pointed that
that if all the members of the only tribunal competent to determine a G
matter are su\>ject to disqualification, they may be authorised and
obliged to hear that matter by virtue of the operation of the common
law doctrine of necessity. Reference was also made to De Smith's
Judicial Review of Administrative Action (4th Edn. pages 276-277.
See also G.A. Flick-Naturallustice, (1879) pages 13S-141. Reference
was also made to the observations of this Court in J. Mohapatra & Co. H
670 SUPREME COURT REPORTS [1989) Supp. 2 S.C.R.

A & Anr. v. State of Orissa & Anr., [1984) 4 SCC 103, where at page 112
of the report, the Court recognised the principle of necessity. It was
submitted that these were situations where on the principle of doctrine
of necessity a person interested was held not disqualified to adjudicate
on his rights. The present is a case where the Govt. of India only
represented the victims as a party and did not adj'!dicate between the
B victims and the UCC. It is the Court which would adjudicate the rights
of the victims. The representation of the victims by the Govt. of India
cannot be held to be bad, and there is and there was no scope of
violation of any principle of natural justice. We are of the opinion in
the facts and the circumstances of the case that this contention urged
by Union of India is right. There was no scope of violation of the
C principle of natural justice on this score.

76. It was also urged that the doctrine of de facto representation
will also apply to the facts and the circumstances of the present case.
Reliance was placed on the decision of this Court in Gokaraju
Rangaraju etc. v. State of A.P., [1981] 3 SCR 474, where it was held
D that the doctrine of de facto representation envisages that acts
performed within the scope of assumed official authority in the interest
of public or third persons and not for one's own benefit, are generally
to be treated as binding as if they were the acts of officers de jure. This
doctrine is founded on good sense, sound policy and practical expe-
diency. It is aimed at the prevention of public and private mischief and
E protection of public and private interest. It avoides endless confusion
and needless chaos. Reference, was made to the observations of this
Court in Pushpadevi M. Jatia v. M.L. Wadhawan, [1987] 3 SCC 367 at
389-390 and Mis. Beopar Shayak (P) Ltd. & Ors. v. Vishwa Nath &
Ors., [ 1987] 3 SCC 693 at 702 & 703. Apart from the aforesaid
doctrine, doctrine of bona fide representation was sought to be
F resorted to in the circumstances. In this connection, reference was
made to Dharampal Singh v. Director of Small Industries Services &
Ors., AIR i980 SC 1888; N.K. Mohammad Sulaiman v. N.C. Moham-
mad Ismail & Ors., [ 1966] 1 SCR 937 and Malkarjun Bin Shigramappa
Pasara v. Narhari Bin Shivappa &Anr., 27IA 216.

G 77. It was further submitted that the initiation of criminal pro-
ceedings and then quashing thereof, would not make the Act ultra
vires so far as it concerned. Learned Attorney General submitted that
the Act only authorised the Govt. of India to represent the victims to
enforce their claims for damages under the Act. The Govt. as such
had nothing to do with the qu.ashing of the criminal proceedings and it
H was not representing the victims in respect of the criminal liability of
C.L. SAHU v. U.0.1. IMUKHARJI, CJ.) 671

the UCC or UCIL to the victims. He further submitted that quashing
of criminal proceedings was done by the Court in exercise of plenary
A
powers under Articles 136 and 142 of the Constitution. In this connec-
tion, reference was made to State of UP. v. Poosu & Anr., [1976] 3
SCR 1005; K.M. Nanavati v. The State of Bombay, [1961] 1SCR497.
According to the learned Attorney General, there is also power in the
Supreme Court to suggest a settlement and give relief as in Ram Gopal B
v. Smt. Sarubai & Ors., [1981] 4 SCC 505; India Mica & Micanite
Industries Ltd. v. State of Bihar & Ors., [ 1982] 3 SCC 182.

'78. Learned Attorney General urged that the Supreme Court is
empowered to act even outside a Statute and give relief in addition tv
what is contemplated by the latter in exercise of its plenary power.
This Court acts not only as a Court of Appeal but is also a Court of c
Equity. See Roshanlal Kuthiala & Ors. v. R.B. Mohan Singh Oberoi,
[ 1975] 2 SCR 491. During the course of hearing of the petitions, he
informed this Court that the Govt. of India and the State Govt. of
Madhya Pradesh refuted and denied any liability, partial or total, of
any sort in the Bhopal gas Leak disaster, and this position is supported D
by the present state of law. It was, however, submitted that any claim
against the Govt. of India for its alleged tortious liability was outside
the purview of the Act and such claims, if any, are not extinguished by
reason of the orders dated !4th &.15th February, 1989 of this Court. •
79. Learned Attorney General further stated that the amount of E
$ 470 million which was secured as a result of the memorandum of
settlement and the said orders. of this Court would be meant exclu-
sively for the benefit of the victims who have suffered on account of
the Bhopal gas leak disaster. The Govt. of India would not seek any
reimburseme.nt on account of the expenditure incurred suo motu for
relief and rehabilitation of the Bhopal victims nor will the Govt. or its F
instrumentality make any claim on its own arising from this disaster.
He further assured this Court that in the event of disbursement of
compensation being initiated either under the Act or under the orders
of this Court, a notification would be instantaneously issued under
Section 5(3) of the Act authorising the Commissioner or any other
officers to discharge functions and exercise all or any powers which the G
Central Govt. may exercise under Section 5 to enable the victims to
place before the Commissioner or the Dy. Commissioner any addi-
tional evidence that th~y would like to be considered.

80. The Constitution Bench of this Court presided over by the
learned Chief Justice has pronounced an order on 4th May, 1989 giving H
672 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A reasons for the orders passed on 14th-15th February, 1989. Inasmuch
as good deal of criticism was advanced before this Court during the
hearing of the arguments on behalf of the petitioners about the pro-
priety and validity of the settlement dated 14th-15th February, 1989
even though the same was not directly in issue before us, it is necessary
to refer briefly to what the Constitution Bench has stated in the said
B order dated 4th May, 1989. After referring to the facts leading to the
settlement, the Court has set out the brief reason on the following
points:

(a) How did the Court arive at the sum of 470 million US dollars
for an overall settlement!? (b) Why did the Court consider the
sum of 470 millions US dollars as 'just, equitable and reason-
c able'? (c) Why did the Court not pronounce on certain important
legal questions of far-reaching importance said to arise in the
appeals as to the principles of liability of monolithic, economi-
cally entrenched multinational companies operating with
inherently dangerous technologies in the developing countries of
D the third world? These questions were said to be of great con-
temporary relevance to the democracies of the third world. This
Court recognised that there was another aspect of the review
pertaining to the part of the settlement which terminated the
criminal proceedings. The questions raised on the point in the
review-petitions, the Court was of the view, prima facie merit
E consideration and therefore, abstained from saying anything
which might tend to pre-judge this issue one way or the other.

81. The basic consideration, the Court recorded, motivating the
conclusion of the settlement was the compelling need for urgent relief,
and the Court set out the law's delavs duly considering thilt there was a
F compelling duty both judicial and hwnane, to secure immediate relief
to the victims. In doing so, the Court did not enter upon any forbidden
ground, the court stated. The Court noted that indeed efforts had
already been made in this direction by Judge Keenan and the learned
District Judge of Bhopal. Even at the opening of the arguments in the
appeals, the Court had suro:ested to learned counsel to reach a just and
G fair settlement. And when counsel met for re-scbednling of the hearings
the suggestion was reiterated. The Court recorded that the
response of learned counsel was positive in attempting a settlement
but they expressed a certain degree of uneasiness and scepticism at the
prospects of success in view of their past experience of such negota-
tions when, as they stated, there had been uninformed and even
H irresponsible criticism of the attempts at settlement.
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 673

82. Learned Attorney General \lad made available to the Court
the particulars of offers and counter-offers made on previous occasions A
and the history of settlement. In those circumstances, the Court
examined the prima facie material as the basis of quantification of a
sum which, having regard to all the circumstances including the
prospect of delays inherent in the judicial process in India and there-
after in the matter of domestication of the decree in the U.S. for the B
purpose of execution and directed that 470 million US dollars, which
upon immediate payment with interest over a reasonable period,
pending actual distribution amongst the claimants, would aggregate to
nearly 500 million- US dollars or its rupee equivalent of approximately
Rs.750 crores which the learned Attorney General had suggested, be
made the basis of settlement, and both the parties accepted this
direction. c

83. The Court reiterated that the settlement proposals were con-
sidered on the premise that the Govt. had the exclusive statutory
authority to represent and act on behalf of the victims and neither
counsel had any reservation on this. The order was also made on the D
premise that the Act was a valid law. The Court declared that in the
event the Act is declared void in the pending proceedings challenging
its validity, the order dated 14th February, 1989 would require to be
examined in the. light of that decision. The Court also reiterated that if
any material was placed before it from which a reasonable inference
was possible that the UCC had, at any time earlier, offered to pay any E
sum higher than an outright down payment of US 470 million dollars,
this Court would straightway initiate suo motu action requiring the
concerned parties to show cause why the order dated 14th February'89
should not be set aside and the parties relegated to their original
positions. The Court reiterated that the reasonableness of the sum was
based not only on independent quantification but the idea of reason- F
ableness for the present purpose was necessarily a broad and general
estimate in the context of a settlement of the dispute and not on the
basis of an accurate assessment by adjudication. The Court stated that
the question was, how good or reasonable it was as a settlement, which
would avoid delay, uncertainties'and .assure immediate payment. An
estimate in the very nature of things, would not have the accuracy of G
an adjudication. The Court recorded the offers, counter-offers,
reasons and the numbers of the persons treated and the claims already
made. The Court found that from the order of the High Court and the
admitted position on the plaintiff's side, a reasonable prima facie esti-
mate of the number of fatal cases and serious personal injury cases,
was possible to be made. The Court referred to the High Court's H
674 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A assessment and procedure to examine the task of assessing the
quantum of interim compensatibn. The Court referred to M. C Mehta's
case reiterated by the High Court, bearing in mind the factors that if
the suit proceeded to trial the plaintiff-Union of India would obtain
judgment in respect of the claims relating to deaths and personal
injuries in the following manner:-
B (a) Rs.2 lakhs.in each case of death; (b) Rs.2 lakh in each case of
total permanent disability; (c) Rs. I lakh in each case of per-
manent partial disablement; and (d) Rs.50,000 in each case of
temporary partial disablement.

84. Half of these amounts were awarded as interim compensa-
tion by the High Court.
c
85. The figures adopted by the High Court in regard to the
number of fatal cases and cases of serious personal injuries did not
appear to have been disputed by anybody before the High Court, this
Court observed. From those figures, it came to the conclusion that the
D total number of fatal cases was about 3,000 and of grievous and serious
personal injuries, as verifiable from the records was 30,000. This Court
also took into consideration that about 8 months after the occurrence a
survey had been conducted for the purpose of identification of cases.
These figures indicated less than 10,000. In those circumstances, as a
rough and ready estimate, this Court took into consideration the prima
E facie findings of the High Court and estimated the number of fatal
cases of 3,000 where compensation could range from Rs. l lakh to Rs.3
lakhs. This would account for Rs. 70 crores, nearly 3 times higher than
what would have otherwise been awarded in comparable cases in
motor vehicles accident claims.

F 86. The Court recognised the effect of death and ,reiterated
· that loss of precious human lives is irreparable. The law can onty hope
to compensate the estate of a person whose life was lost by the wrong-
ful act of another only in the way the law was equipped to compensate
i.e. by monetary compensation calculated on certain well-recognised
principles. "Loss to the estate" which is the entitlement of the estate
G and the 'loss of dependency' estimated on the basis of capitalised
present value awardable to the heirs and dependants, this Court con-
sidered, were the main components in the computation of compensa-
tion in fatal accident actions, but the High Court adopted a higher
basis. The Court also took into account the personal injury cases, and
stated that these apportionments were merely broad coqsiderations
H generally guiding the idea of reasonableness of the overall basis of
C.L. SAHU v. U.0.1. [MUKHARJJ, CJ.] 675

settlement, and reiterated that this exercise was not a pre-determina-
tion of the quantum of compensation amongst the claimants.either
individually or catagory-wise, and that the determination of.the actual
quantum of compensation payable to the claimants has to be done by
the authorities under the Act. These were the broad assessments and
on that basis the Court made the assessment. The Court believed that
this was a just and reasonable assessment based on the materials avail- B
able at that time. So far as the other question, namely, the vital juristic
principles of great contemporary relevance to the Third World gener-
ally, and to India in particular, touching problems emerging from the
pursuit of such dangerous technologies for economic gains by multi-
nationals in this case, the Court recognised that these were great pro-
blems and reiterated that there was need to evolve a national policy to
protect national interests from such ultra-hazardous pursuits of c
economic gain; and that Jurists, technologists and other experts in
economics, environmentology, futurology, sociology and public
health should identify the areas of common concern and help in evolv-
ing proper criteria which might receive judicial recognition and legal
sanction. The Court reiterated that some of these problems were refer- D
red to in M.C. Mehta's case (supra). But in the present case, the
compulsions of the need for immediate relief to tens of thousands of
suffering victims could not wait till these questions vital though these
be, were resolved in due course of judicial proceeding~; and the
tremendous suffering of thousands of persons compelled this Court .to
move into the direction of immediate relief which, this Court thought, E
should not be subordinated to the uncertain promises of the law, and
when the assessment of fairness of the amount was based on certain
factors and assumptions not disputed even by the plaintiffs.

87. Before considering the question of constitutional validity of
the Act, in the light of the background ·of the facts and circumstances F
of this case and submissions made, it is necessary to refer to the order
dated 3rd March, 1989 passed by the Constitution Bench in respect of
writ petitions Nos. 164/86 and 268/89, consisting of 5 learned Judges
presided over by the Hon'ble the Chief Justice of India. The order
stated that these matters would be listed on 8th March, 1989 before a
Constitution Bench for decision "on the sole question whether the G
Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 is ultra
vires". This is a judicial order passed by the said Constitution Bench.
This is not an administrative order. Thus, these matters are before this
Court. the question, therefore, arises; what are these mattern? The
aforesaid order specifically state~ that these matters were placed
before this Bench on the "sole question" whether the Act is ulta vires. H
676 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A Hence, these matters are not before this Bench for disposal of these
writ petitions. If as a result of the determination, one way or the other,
it is held, good and bad, and that some relief becomes necessary, the
same cannot be given or an order cannot be passed in respect thereof,
except declaring the Act or any portion of the Act, valid or invalid
constitutionally as the decision might be.
B
88. In writ petition No. 268/89 there is consequential prayer to
set aside the order dated 14/15th February, 1989. But since the order
dated 3rd March, 1989 above only snggests that these matters have
been placed before this Bench 'on the sole question' whether the
Bhopal Act is ultra vires or no<, it is not possible by virtue of that order
to go into the question whether the settlement is valid or liable to be
C set aside as prayed for in the prayers in these applications.

89. The provisions of the Act have been noted and the. rival
contentioµs of the parties have been set out before. It is, however,.
necessary to reiterate .that the Act does not in any way circumscribe
o the liability of the UCC, UCIL or even the Govt. of India or Govt. of
Madhya Pradesh if they are jointly or severally liable. This follows
from the construction of the Act, from the language that is apparent.
The context and background do not indicate to the contrary. Counsel
for the victims plead that that is so. The learned Attorney General
accepts that position. The liability of the Government is, however,
E disputed. This Act also does not deal with any question of criminal
liability of any of the parties concerned. On an appropriate reading of
the relevant provisions of the Act, it is apparent that the criminal
liability arising out of Bhopal gas leak disaster is not the subject-
matter of this Act and cannot be said to have been in any way affected,
abridged or modified by virtue of this Act. This was the contention of
F learned counsel on behalf of the victims. It is also the contention of the
learned Attorney General. In our opinion, it is the correct analysis and
consequence of the relevant provisions of the Act. Hence, the submis-
sions made on behalf of some of the victims that the Act was bad as it
abridged or took away the victims' right to proceed criminally against
the delinquent, be it UCC..or UCIL or jointly or severally the Govt. of
G India, Govt. of Madhya Pradesh or Mr. Arjun Singh, the erstwhile
Chief Minister of Madhya Pradesh, is on a wrong basis. There is no
curtailment of any right with respeCt to any criminal liability. Criminal
liability is not the subject-matter of the Act. By the terms of the Act
and also on the concessions made by the learned Attorney GeneraCif
that be so, then can non-prosecution in criminal liability be a conSi'
R deration or valid consideration for settlement of claims under the Act?
C.L. SAHU v. U.0.1. [MUKHARJI, CT.] 677
·•
This is a question which has been suggested and articulated by learned
A
counsel appearing for the victims. On the other hand, it has been
asserted by the learned Attorney General that that part of the order
dated 14/15th February, 1989 dealing with criminal prosecution or the
order of this Court was by virtue of the inherent power of this Court
under Articles 136 & 142 of the Constitution. These, the learned
Attorney General said, were in the exercise of plenary powers of this B
Court. These are not considerations which induced the parties to enter
into settlement. For the purpose of determination of constitutional
validity of the Act, it is however necessary to say that criminal liability
of any of the delinquents or of the parties is not the subject-matter of
this Act and the Act does not deal with either claims or rights arising
out of such criminal liability. This aspect is necessary to be reiterated
on. the question of validity of the Act.
c
90. We have set out the language and the purpose of the Act,
and also noted the meaning of the expression 'claim' and find that the
Act was to secure the claims connected with or arising out of the
disa.ster so that these claims might be dealt with speedily, affectively, D
equitably and to the best advantage of the claimants. In our opinion,
Clause (b) of Section 2 includes all claims of the victims· arising out of
and connected with the disaster for compensation and damages or loss
of life or personal injury or loss to the busines and flora and fauna.
What, however, is the extent of liability, is another question. This Act
does not purport to or even to deal with the extent of liability arising E
out of the said gas leak disaster. Hence, it would be improper or
incorrect to contend as did Ms. Jaising, Mr Garg and other learned
counsel appearing for the victims, that the Act circumscribed the
liability-criminal, punitive or absolute of the parties in respect of the
leakage. The Act provides for a method or procedure for the establish-
ment and enforcement of that liability. Good deal of argument was F
advanced before this Court· on the question that the settlement has
abridged the liability and this Court has lost the chance of laying down
the extent of liability arising out of disaster like the Bhopal Gas Leak
disaster. Submissions were made that we should lay down clearly the
extent of liability arising out of these types of disasters and we should
further hold that the Act abridged such liability and as such curtailed G
the rights of the victims and was bad on that score. As mentioned
hereinbefore, this is an argument under a misconception. The Act
does not in any way except to the extent indicated in the relevant provi-
sions of the Act circumscribe or abridge the extent of the rights of the
victims so far as the liability of the delinquents are concerned. What-
ever are the rights of the victims and whatever claims arise out of the H
678 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

gas leak disaster for compensation, personal injury, loss of life and
A property, suffered or.likely to be sustained or expenses to be incurred
or any other loss are covered by the Act and the Central Govt. by
operation of Section 3 of the Act has been given the exclusive right to
represent the victims in their place and stead. By the Act, the extent of
liability is not in any way abridged and, therefore, if in case of any
B industrial disaster like the Bhopal Gas Leak disaster, there is right in
victims to recover damages or compensation on the basis of absolute
liability, then the same is not in any manner abridged or curtailed.

91. Over 120 years ago Rylands v. Fletcher, [1868] Vol. 3 LR E
& I Appeal Cases 330 was decided in England. There A, was the lessee
of certain mines. B, was the owner of a mill standing on land adjoining
c that under which the mines were worked. B, desired to construct a
reservoir, and employed competent persons, such as engineers and a
contractor, to construct it. A, had worked his mines up to a spot where
there were certain old passages of disused mines; these passages were
connected with vertical shafts which communicated with the land
D above, and which had also been out of use for years, and were appa-
rently filled with marl and the earth of the surrounding land. No care
had been taken by the engineer or the contractor to block up these
crafts, and shortly after water had been introduced into the reservoir it
broke through some of the shafts, flowed through the old passage and
flooded A's mine. It was held by the House of Lords in England that
E where the owner of land, without wilfulness or negligence, uses his
land in the ordinary manner of its use, though mischief should thereby
be occasioned to his neighbour, he will not be liable in damages. But if
he brings upon his land any thing which would not naturalty come
upon it, and which is in itself dangerous, and may become mischievous
if not kept under proper control, though in so doing he may act with-
F out personal wilfulness or negligence, he will be liable in damages for
any mischief thereby occasioned. In the background of the facts it was
held that A was entitled to recover damages from B, in respect of the
injury. The question of liability was highlighted by this Court in M.C.
Mehta's case (supra) where a Constitution Bench of this Court had to
deal with the rule of strict liability. This Court held that the rule in
G Rylands v. Fletcher, (supra) laid down a principle that if a person who
brings on his land and collects and keep there anything likely to do
harm and such thing escapes and does damage to another, he is liable
to compensate for the damage caused. This rule applies only to non-
natural user of the land and does not apply to thin~s naturally on the
land or where the escape is due to an act of God and an act of a stranger
H or the default of the person injured or where the things which escape
C.L. SAHU v: U.0.I. [MUKHARJI, CJ.] 679

are present by the consent of the person injured or in certain cases
where there is a statutory authority. There, this Court observed that A
the rule in Rylands v. Fletcher, (supra) evolved in the 19th century at a
time when all the developments of science and technology had not
taken place, and the same 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. In a modem B
industrial society with highly developed scientific knowledge and tech-
. nology where hazardous or inherently dangerous industries are neces-
sary to be carried on as part of the developmental process, Courts
should not feel inhibited by this rule merely because the new law does
not recognise the rule of strict and absolute liability in case oCan
enterprise engaged in hazardous and dangerous activity. This Court
noted that law has to grow in order to satisfy the needs of the fast- c
changing society and keep abreast with the economic developments
taking place in the country. Law cannot afford to remain static. This
Court reiterated there that if it is found necessary to construct a new
principle of liability to deal with an unusual situation which has
arisen and which is likely to arise in future on account of hazardous or D
inherently dangerous industries which are concomitant to an industrial
economy, the Court should not hesitate to evolve such principle of
liability merely because it has not been so done in England. According
to this Court, an enterprise which is engaged in a hazardous or
inherently dangerous industry which poses potential threat to the
health and safety of the persons working in the factory and residing in E
the surrounding areas owes an absolute and non-delegable duty to the
community to ensure that no harm results to anyone. The enterprise
must be held to be under an obligation to provide that the hazardous
or inherently dangerous activity in which it is engaged must be con-
ducted with the highest standards of safety and if any harm results to
anyone on account of an accident in the operation of such activity F
resulting, for instance, in escape of toxic gas the enterprise is strictly
and absolutely liable to compensate all those who were affected by the
accident as part of the social cost for carrying on such activity, regard-
less of whether it is carried on carefully or not. 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. If the G
·enterprise is permitted to carry on a hazardous or dangerous 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 activity as an appropriate item of its overheads. The
enterprise alone has the resources to discover and guard against
hazards or dangers and to provide wami~_against potential hazards. H
680 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

This Court reiterated that the measure of compensation in these kinds
A of cases must be correlated 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 for the harm caused on
account of an accident in the carrying on of the hazardous or
B inherently dangerous activity by the enterprise. The determination of
actual damages payable would depend upon various facts and cir-
cumstances of the particular case.

92. It was urged before us that there was an absolute and strict
liability for an enterprise which was carrying on dangerous operations
with gases in this country. It was further submitted that there was
c evidence on record that sufficient care and attention had not been
given to safeguard against the dangers of leakage and protection in
case of leakage. Indeed, the criminal prosectution that was launched
against the Chairman of Union Carbide Shri Warren Anderson and
others, as indicated before, charged them along with the defendants in
D the suit with delinquency in these matters and criminal negligence in
conducting the, toxic gas operations in Bhopal. As in the instan't
adjudication, this Court is not concerned with the determination of the
actual extent of liability, we will proceed on the basis that the law
enunciated by this Court in M.C. Mehta's case (supra) is the decision
upon the basis of which damages will be payable to the victims in this
E case. But then the practical question arises: what is the extent of actual
damages payable, and how would the quantum of damages be com-
puted? Indeed, in this connection, it may be appropriate to refer to the
order passed by this Court on 3rd May, 1989 giving reasons why the
settlement was arrived at at the figure indicated. This Court had
reiterated that it had proceeded on certain prima fade undisputed
figures of death and substantially compensating personal injury. This
Court has referred in the fact that the High Court had proceeded on
the broader principle in M.C. Mehta's case (supra) and on the basis of
the capacity of the enterprise because the compensation must have
deterrent effect. On that basis the High Court had proceeded to
estimate the damages on the basis of Rs.2 lakhs for each case of death
and of total permanent .disability, Rs. I lakh for each case of partial
G
permanent disability and Rs.50,000 for each case of temporary partial°
disability. In this connection, the controversy as to what would have been
the damages if the action had proceeded, is another matter. Normally,
in measuring civil liability, the law has attached more importance to
the principle of compensation than that of punishment. Peria! redress,
H however, involve both compensation to the person injured and punish-
I
. C.L. liAHU v. U.0.1. [MUKHARJI, CI.) 681
\.
I
ment as deterrence. These problems were highlighted by the House of
. Lords in England ill Rookes v. Barnard, \U964l] AC 1129, which A
in die·~ the difference between aggravated and exemplary damages.
Salmond on the Law of Torts, 15th Edition at p. 30 emphasises that the
function of'damages is compensation rather than punishment, but.
punishment cannot· always be ignored. There are views which are
against exemplary damages on the ground that these infringe in princi- B
ple the object oflaw of torts, namely. compensation and not punish-
·, ' 1.mentand these tend to impose something equivalent to fine in criminal
law without the safeguards provided by the criminal law. In Rookes v .
. Barnard (supra), the House of Lords in England recognised three
classes of cases in -which the award of exemplary damages was con-
sidered to be justifiable". Awards must not only, it is said, compensate C
the parties but also deter the wrong doers and others from similar
conduct in future .. Th·e question of awarding exemplary or deterrent
.damages is said to have often confused civil and criminal functions.of.
·Jaw. -Though it is considered by many that it is a legitimate. encroach-
. ment ofpunishment in the realm of civil liability, as it operates as a
restraint on the transgression of law which is for the ultimate benefit of D
the societf. Perhaps, in this case, had the action proceeded, one would
I have realised that the fall out of this gas disaster might have been
formulation of a concept of damages, blending both civil and criminal
liabilities. There-are, however, serious difficulties in evolving such an
· : actual concept of punitive damages in respect of a civil action which
can be integrated and enforced by the judicial process. It would have E
· ·.raised serious problems of pleading, proof and discovery, and interest-
. ing and challenging as the task might have been, it is still very uncer-
far
. tain how decision based on such a concept would have been a
decision according to 'due process' of law acceptable by international
, standards; There were difficulties in that attempt. But as the provi-
."--... sions stand these considerations do not make the Act constitutionally F
invalid. These are matters on the validitv of settlement. The Act, as
such.does not abridges or curtail damages or liability whatever that
might be~ SO the challenge to the Act-ori-the.ground that there has
been curtailm.ent or deprivation of the rights of the victims which is
unr~asonable in the situation is u~warran,ed and cannot be sustained.
• •· I
G
93. Mr. Garg tried to canvass before us the expanding of hori~·
I zo~s of human rights. He contended that the conduct of the multina-
'-....tional corporations dealing with dangerous gases for the purpose of
development specially in the conditions prevailing under the Third
world countries requires closer scrutiny and vigilance on the part of •
emerging nations. He submitted that unless courts are alert and active H
682 SUPREME COURT REPORTS (1989] Supp. 2 S.C.R.

in preserving the rights of the individuals and in enforcing criminal and
A strict liability and in setting up norms compelling the Govt. to be more
vigilant and enforcing the sovereign will of the people of India to
oversee that such criminal activities which endanger even for the sake
of developmental work, economy and progress of the country, the health
and happiness of the people and damage the future prospects of
B health, growth and affect and pollute the environment, shou\d be
curbed and, according to him, these could only be curbed by insisting
th'rough the legal adjudication, punitive and deterrent punishment in
the form of damages. He also pleaded that norms should be set up
indicating how these kinds of dangerous operations are to be permit-
ted under conditions of vigilance and survillence. While we appreciate
the force of ihese arguments, and endorse his plea that norms and
c deterrence should be aspired for, it is difficult to correlate that aspect
with the present problem in this decision.

94. We do reiterate, as mentioned in the Universal Declaration
of Human Rights that people are born free and the dignity of the
D persons must be recognised and an effective remedy by competent
tribunal is one of the surest method of effective remedy. If, therefore,
as a result of this tragedy new consciousness and awareness on the part
of the people of this country to be more vigilant about measures and
the necessity of ensuring more strict vigilance for permitting the opera-
tions of such dangerous and poisonous gases dawn, then perhaps the
E tragic experience of Bhopal would not go in vain.

95. The main question, however, canvassed by all learned
counsel for the victims was that so far as the Act takes away the right of
the victims to fight or establish their own rights, it is a denial of access
to justice, and it was contended that such denial is so great a depriva-
F tion of both human dignity and right to equality that it cannot be
justified because it would be affecting right to life, which again cannot
be deprived without a procedure established by law which is just, fair
and reasonable.

96. On this aspect, Shri Shanti Bhushan tried to urge before us
G that sections 1 & 4 of the Act. in so far as these enjoin and empower
the Central Govt. to institute or prosecute proceedings was only an
enabling provision for the Central Govt. and not depriving or disabling
provisions for the victims. Ms. Jaising sought to urge in addition, that
in order to make the provisions constitutionally valid, we should elimi-
nate the concept of exclusiveness to the Central Govt. and give the
H victims right to sue along with the Central Govt. We are unable to
accept these submissions.
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.) 683

97. In our opinion, Sections 3 & 4 are categorical and clear.
A
When the expression is explicit, the expression is conclusive, alike in
what it says and in what it does not say. These give to the Central
Government an exclusive right to act in place of the persons who are
entitled to make claim or have already made claim. The expression
'exclusive' is explicit and significant. The exclusivity cannot be whit-
tled down or watered down as suggested by counsel. The said expres- B
sion must be given its full meaning and extent. This is corroborated by
the use of the expression 'claim' for all purposes. If such duality of
rights are given to the Central Govt. along with the victims in institut-
ing or proceeding for the realisation or the enforcement of the claims
arising out of Bhopal gas leak disaster, then that would be so cumber-
some that it would not be speedy, effective or equitable and would not
be the best or more advantageous procedure for securing the claims c
arising out of the leakage. In that view of the matter and in view of the
language used and the purpose intended to be achieved, we are unable
to accept this aspect of the arguments advanced on behalf of the
victims. It was then contended that by the procedure envisaged by the
Act, the victims have been deprived and denied their rights and pro- D
perty to fight for compensation. The victims, it has been asserted, have
been denied access to justice. It is a great deprivation, it was urged. It
was contended that the procedure evolved under the Act for the
victims is peculiar and having good deal of disadvantages for the
victims. Such special disadvantageous procedure and treatment is
unequal treatment, it was suggested. It was, therefore, violative of E
Article 14 of the Constitution, that is the argument advanced.

98. 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 F
enormity of the disaster the victims of the Bhopal gas leak disaster, as
they were placed against the multinational and a big Indian corpora-
tion and in view of (.he presence of foreign contingency lawyers to
whom the victims were exposed, the claimants and victims can legiti-
mately be described as a class by themselves different and distinct,
sufficiently separate_llnd_indentifiable to be entitled to special treatment G
for effective, speedy, equitable and best advantageous settlement of
their claims. There indubitably is differentiation. But this differentia-
tion 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 disas-
ters situated as the victims were against a mighty multinational with H
684 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

the presence of foreign contingency lawyers looming on the scene, in
A 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
B accept this criticism of the Act.

99. The second aspect canvassed on behalf of the victims is that
the procedure envisaged is unreasonable and as such not warranted by
the situation and cannot be treated as a procedure which is just, fair
and reasonable. The argument has to be judged by the yardstick, as
mentioned hereinbefore, enunciated by this Court in State of Madras
C v. V.G. Rao, (supra). Hence, both the restrictions or limitations on
the substantive and procedural rights in the impugned legislation will
have to be judged from the point of view of the particular Statute in
question. No abstract rule or standard of reasonableness can be
applied. That question has to be judged having regard to the nature of
o the rights alleged to have been infringed in this case, the extent and
urgency of the evil sought to be remedied, disproportionate imposi-
tion, prevailing conditions at the time, all these facts will have to be
taken into consideration. Having considered the background, the
plight of the impoverished, the urgency of the victims' need, the pre-
sence of the foreign contingency lawyers, the procedure of settlement
E in USA in mass action, the strength for the foreign multinationals, the
nature of injuries and damages, and the limited but significant right of
participation of the victims as contemplated by s.4 of the Act, the Act
cannot be condemned as unreasonable.

100. In this connection, the concept of 'parens patriae' in
F jurisprudence may be examined. It was contended by the learned
Attorney General that the State had taken upon itself this onus to
effectively come in as parens patriae, we have noted the long line of
Indian decisions where, though in different contexts, the concept of
State as the parent of people who are not quite able to or competent to
fight for their rights or assert their rights, have been utilised. It was
G contended that the doctrine of parens patriae cannot be applicable to
the victims. How the concept has been understood in this.country as
well as iii America has been noted. Legal dictionaries have been refer-
red to as noted before. It was asserted on behalf of the victims by
learned counsel that the concept of 'parens patriae' can never be
invoked for the purpose of suits in domestic jurisdiction of any
H country. This can only be applied in respect of the claims out of the
C.L. SAHU v. U.0.1. lMUKHARJI, CJ.] 685

country in foreign jurisdiction. It was further contended that this con-
cept of 'parens patraie' can only be applied in case of persons who are A
under disability and would not be applicable in respect of those who
are able to assert their own rights. It is true that victims or their
representatives are sui geizeris and cannot as such due to age, mental
capacity or other reason not legally incapable for suing or pursuing
the remedies for the rights yet they are at a tremendous disadvantage B
in the broader and comprehensive sense of the term. These victims
cannot be considered to be any match to the multnational companies
or the Govt. with whom in the conditions that the victims or their
representatives were after the disaster physically, mentally, finan-
cially, economically and also because of the position of litigation
would have to contend. In such a situation of predicament the victims
can legitimately be considered io be disabled. They were in no position c
by themselves to look after their own interests effectively or purpose-
fully. In that background, they are .people who needed the State's
protection and should come within the umbrella of State's sovereignty
to assert, establish and maintain their rights against the wrong doers in
this mass disaster. In that perspective, it is jurisprudentially possible to D
apply the principle of parens patriae doctrine to the victims. But quite
apart from that, it has to be borne in mind that in this case the State is
acting on the basis of the Statute itself. For the authority of the Central
Govt. to sue for and on behalf of or instead in place of the victims, no
other theory, concept or any jurisprudential principle is required than
the Act itself. The Act empowers and substitutes the Centrai Govt. It E
displaces the victims by operation of Section 3 of the Act and substi-
tutes 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 F
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 jurisdic-
tion 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 G
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 Indi_an people. As we have noted the Act is an
exercise of the sovereign power of the State. It is an appropriate evolu-
tion of the expression of sovereignty "iii the situation that had arisen.
We must recognize and accept it as such. H
686 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

A 101. But this right and obligation of the State has another aspect.
Shri Shanti Bhushan has argued and this argument has also been
adopted by other learned counsel appearing for the victims that with
the assumption by the State of the jurisdiction and power as a parent to
fight for the victims in the situation there is an imcumbent obligation
on the State, in the words of Judge Keenan, 'as a matter of fundamen-
B ta! human decency' to maintain the victims until the claims are
established and realised from the foreign multinationals. The major
inarticulate premise apparent from the Act and the scheme and the
spirit of the Act is that so long as the rights of the victims are pro-
secuted the State must protect and preserve the victims. Otherwise the
object of the Act would be defeated, its purpose frustrated. Therefore,
continuance of the payments of the interim maintenance for the con-
e tinued sustenance of the victims is an obligation arising out of State's•
assumption of the power and temporary deprivation of the rights of the
victims and divestiture of the rights of the victims to fight for their own
rights. This is the only reasonable interpretation which is just, fair and
proper. Indeed, in the language of the Act there is support for this
D interpretation. Section 9 of the Act gives power to the Central Govt.
to frame by noti:fication, a scheme for carrying into effect the purposes
of the Act. Sub-section (2) of Section 9 provides for the matters for
which the scheme may provide. Amongst others, clause (d) of Section
9(2) provides for creation of a fund for meeting expenses in connection
with the administration of the Scheme and of the provisions of the Act;
E and clause (e) of Section 9(2) covers the amounts which the Central
Govt. "may after due appropriation made by Parliament by law in that
behalf, credit to the fund referred to in clause (d) and any other
amounts which may be credited to such fund". Clause (f) of Section
9(2) speaks of the utilisation, by way of disbursal (including apportion-
ment) or otherwise, of any amounts received in satisfaction of the
p claims. These provisions are suggestive but not explicit. Clause (b) of
Section 10 which provides that in disbursing under the scheme the
amount received by way of compensation or damages in satisfaction of
a clahn as a result of the adjudication or settlement of the claim by a
court or other authority, deduction shall be made from such amount of
the sums, if any, paid to the claimant by the Govt. before the disbursal
G of such amount. The Scheme framed is also significant. Clause 10 of
the Scheme provides for the claims and relief funds and includes
disbursal of amounts as relief including interim relief to persons
affected by the Bhopal gas leak disaster and Clause 11( 1) stipulates
that disbursal of any amounts under the scheme shall be made by the
Deputy Commissioner to each claimant through credit in a bank or
H postal saving account, stressing that the legislative policy underlined
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 687

the Bhopal Act contemplated payment of interim relief till such time
A
as the Central Govt. was able to recover from the Union Carbide full
amount of compensation from which the interim reliefs already paid
were to be deducted from the amount payable to them for the final
disbursal. The Act should be construed as creating an obligation on
the Central Govt. to pay interim relief as the Act deprives the victims
of normal and immediate right of obtaining compensation from the B
Union Carbide. Had the Act not been enacted, the victims could have
and perhaps would have been entitled not only to sue the Union
Carbide themselves, but also to enter into settlement or compromise
of some sort with them. The provisions of the Act deprived the viciims
of that legal right and opportunity, and that deprivation is substantial
deprivation because upon immediate relief depends often the survival
of these victims. In that background, it is just and proper that this c
deprivation is only to be justified if the Act is read with the obligation
of granting interim relief or maintenance by the Central Government
until the full amount of the dues of the victims is realised from the
Union Carbide after adjudication or settlement and then deducting
therefrom the interim relief paid to the victims. As submitted by D
learned Attorney General, it is true that there is no actual expression
used in the Act itself which expressly postulates or indicates such a
duty or obligation under the Act. Such an obligation is, however,
inherent and must be the basis of properly construing the spirit of the
Act. In our opinion, this is the true basis and will be in consonance
with the spirit of the Act. It must be, to use the well-known phrase 'the E
major inarticulate premise' upon which though not expressly stated,
the Act proceeds. It is on this promise or premise that the State would
be justified in taking upon itself the right and obligation to proceed
and prosecute the claim and deny access to the courts of law to the
victims on their own. If it is only so read, it can only be held to be
constitutionally valid. It has to be borne in mind that the language of the F
Act does not militate against this construction but on the contrary,
Sections 9, 10 and the scheme of the Act suggest that the Act contains
such an obligation. If it is so read, then only meat can be put into the
skeleton of the Act making it meaningful and purposeful. The Act
must, therefore, be so read. This approach to the interpretation of the
Act can legitimately be called the 'constructive intuition' which, in our G
opinion, is a permissible mode of viewing the Acts of Parliament. The
freedom to search for 'the spirit of the Act' or the quantity of the
mischief at which it is aimed (both synonymous for the intention of the
parliament) opens up the possibility of liberal interprecation "that
delicate and important branch of judicial power, the concession of
which is dangerous, the denial ruinous". Given this freedom it is a rare H
688 SUPREME COURT REPORTS [ 1989) Supp. 2 S.C.R.

opportunity though never to be misused and challenge for the Judges
A
to adopt and give meaning to the Act, articulate and inarticulate, and
thus translate the intention of the Parliament and fulfil the object of
the Act. After all, the Act was passed to give relief to the victims who,
it was thought, were unable to establish their own rights and fight for
themselves. it is common knowledge that the victims were poor and
impoverished. How could they survive the long ordeal of litigation and
ultimate execution of the decree or the orders unless provisions be
made for their sustenance and maintenance, especially when they have
been deprived of the right to fight for these claims themselves? We,
therefore, reiid the Act accordingly.

102. It was, then, contended that the Cental Govt. was not com-
c petent to represent the victims. This argument has been canvassed on
various grounds. It has been urged that the Central Govt. owns 22%
share in UCIL and as such there is a conflict of interest between the
Central Govt. and the victims, and on that ground the former is disen-
titled to represent the latter in their battle against UCC and UCIL. A
D large number of authorities on this aspect were cited. However, it is
not necessary in the view we have taken to deal with these because
factually the Central Govt. does not own any share in UCIL. These are
the statutory independent organisations, namely, Unit Trust of India
and Life Insurance Corporation, who own 20 to 22% share in UCIL.
The Govt. has certain amount of say and control in LIC and UT!.
£ Hence, it cannot be said, in our opinion, that there is any conflict of
interest in the real sense of the matter in respect of the claims of Bho~al
gas leak disaster between the Central Govt. and the victims. Secondly,
in a situation of this nature, the Central Govt. is the only authority
which can pursue and effectively represent the victims. There is no
other organisation or Unit which can effectively represent the victims.
F Perhaps, theoretically, it might have ,been possible to constitute
another independent statutory body by the Govt. under its control and
supervision in whom the claim of the victims might have been vested
and substituted and that Body could have been entrusted with the task
of agitating or establishing_the same claims in the same manner as the
Central Govt. has done under the Act. But the fact that that has not
G been done, in our opinion, does not in any way affect the position.
Apart from that, lastly, in our opinion, this concept that where there is
a conflict of interest, the person having the conflict should not be
entrusted with the task of this nature, does not apply in the instant
situation. In the instant case, no question of violation of the principle
of natural justice arises, and there is no scope for the application of the
H principle that no man should be a Judge in his own cause. The Central
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 689

Govt. was not judging any claim, but was fighting and advancing. the
claims-of the victims. In those circumstances, it cannot be said that A
there was any violation of the principles of natural justice and such
entrustment to the Central Govt. of the right to ventilate for the
vfotims was improper or bad. The adjudication would be done by the
courts, and therefore there is no scope of the violation of any principle
of:natural justice. B

103. Along with this submission, the argument was that the
power and the right given to the Central Govt. to fight for the claims of
the victims, is unguided and uncanalised. This submission cannot be
accepted. Learned Attorney General is right that the power conferred
on the Central Govt. is not uncanalised. The power is circumscribed by c
the purpose of the Act. If there is any improper exercise or transgres-
sion of the power then the exercise of that power can be called in
question and set aside, but the Act cannot be said to be viol~tive of the
rights of the victims on that score. We have noted the relevant
authorities on the question that how power should be exercised is D
different and separate from the question whether the power is valid or
not. The next argument on behalf of the victims was that there.was
conflict of interest between the victims and the Govt. viewed from
another aspect of the matter. It has been urged that the Central Govt.
as well as the Govt. of Madhya Pradesh along with the erstwhile Chief
Minister of the State of Madhya Pradesh Shri Arjun Singh were guilty E
of negligence, malfeasance and non-feasance. and as such were liable
for damages along with Union Carbide and UCIL. In other words,
ii has been said that the Govt. of India and the Govt. of Madhya
Pradesh along with Mr. Arjun Singh are joint tort-feasors and joint
wrong doers. Therefore. it was urged that there is conflict of interest in
respect of the claims arising out oI the gas leak disaster between F
the Govt. of India and the victims and in such a conflict, it is improper,
rather illegal and unjust to vest in the Govt. of India the rights and
claims of the victims. As noted before, the Act was passed in a parti-
cular background and, in our opinion, if read in that background, only
covers claims against Union Carbide or UCIL. "Bhopal gas leak disas-
ter" or "disaster" has been defined in clause (a) of Section (2) as the G
occurrence on the 2nd and 3rd days of December, 1984 which involveo
the release of highly noxious and abnormally dangerous gas from a
plant in Bhopal (being a plant of the UCIL, a subsidiary of the UCC of
U.S.A.) and which resulted in loss of life and damage to property on
an extensive scale.
.H
690 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

104. In this context, the Act has to be understood that it is in
A
respect of the person responsible, being the person in-charge-of the
UCIL and the parent company UCC. This interpretation of the Act is
further strengthened by the fact that a "claimant" has been defined in
clause (c) .of Section 2 as a person who is entitled to make a claim and
the expression "person" in Section 2(e) includes the Govt. Therefore,
B the Act proceeded on the assumption that the Govt. could be a clai-
mant being a person as such. Furthermore, this construction and the
perspective of the Act is strengthened if a reference is made to the
debate both in the Lok Sabha and Ra jya Sabha to which references
have been made.

105. The question whether there is scope for the Union of India
c being responsible or liable as a joint tort feasor is a difficult and diffe-
rent question. But even assuming that it was possible that the Central
Government might be liable in a case of this nature, the learned
Attorney General was right in contending that it was only proper that
the Central Government should be able and authorised to represent
D the victims. In such a situation, there will be no scope of the violation
of the principles of natural justice. The doctrine of necessity would be
applicable in a situation of this nature. The doctrine has been
elaborated, in Halsbury's Laws of England, 4th Edition, p. 89, para-
graph 73, where it was reiterated that even if all the members of the
Tribunal competent to determine a matter were subject to disqualifica-
E tion, they might be authorisied and obliged to hear that matter by
virtue of the operation of the common law doctrine of necessity. An
adjudicator who is subject to disqualification on the ground of bias or
interest in the matter which he has to decide may in certain circum-
stances be required to adjudicate if there is no other person who is
competent or authorised to be adjudicator or if a quorum cannot be
F formed without him or if no other competent tribunal can be con-
stituted. In the circumstances of the case, as mentioned hereinbefore,
the Government of India is only capable to represent the victims as a
party. The adjudication, however, of the claims would be done by the
Court. In those circumstances, we are unable to accept the challenge
on the ground of the violation of principles of natural justice on this
G score. The learned Attorney General, however, sought to advance, as
we have indicated before, his contention on the ground of de facto
validity. Hereferred to certain decisions. We are of the opinion that
this principle will not be applicable. We are also not impressed by the
plea of the doctrine of bona fide representation of the interests of
victims in all these proceedings. We are of the opinion that the
H doctrine of bona fide representation would not be quite relevant and as
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 691

such the decisions cited by the learned Attorney General need not be
A
considered.

106. There is, however, one other aspect of the matter which
requires consideration. The victims can be divested of their rights i.e .
.these can be taken away from them provided those rights of the victims
are ensured to be established and agitated by the Central Govt. follow- B
ing the procedure which would be just, fair and reasonable. Civil
Procedure Code is the guide which guides civil proceedings in this
country and in other countries procedure akin to Civil Procedure
Code. Hence, these have been 'ecognised and accepted as being in
consonance with the fairness of the proceedings and in conformity with
the principles of natural justice. Therefore, the procedure envisaged
'under the Act has to be judged whether it is so consistent. The Act, as c
indicated before. has provided the procedure under sections 3 and 4.
Section 11 provides that the provisions of the Act and of any Scheme
framed thereunder shall have effect notwithstanding anything inconsis-
tent therewith contained in any enactment other than the Act or any
instrument having effect by virtue of any enactment other than the D
Act. Hence, if anything is inconsistent with the Act for the time being,
it will not have force and the Act will override those provisions to the
extent it does. The Act has not specifically contemplated any proce-
dure to be followed in the action to be taken pursuant to the powers
conferred under section 3 except to the extent indicated in section 4 of
the Act. Section 5, however, authorises the Central Government to E
have the powers of a civil court for the purpose of discharging the
functions pursuant to the authority vested under sections 3 and 4 of the
Act. There is no question of Central Government acting as a court in
respect of the claims which it should enforce for or on behalf or instead
of the victims of the Bhopal gas leak disaster. In this connection, it is
necessary to note that it was submitted that the Act, so far as it deals F
with the claims of the victims, should be read in conformity with Civil
Procedure Code and/or with the principles of natural justice; and
unless the provisions of /the Act are so read it would be violative of
Articles 14 and 21 of the Constitution in the sense that there will be
deprivation of rights to 1life and liberty without following a prncedure
which is just, fair and reasonable. That is the main submission and G
contention of the different counsel for the victims who have appeared.
The different view points from which this contention has been canvas-
sed have been noted before. On the other hand, on behalf of the
Government, the learned Attorney General has canvassed before us
that there were sufficient safeguards consistent with the principles of
natural justice within this Act and beyond what has been provided for H
692 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.

in a situation for which the Act was enacted, nothing more could be
A
provided and further reading down the provisions of the Act in the
manner suggested would defeat the purpose of the Act. The aforesaid
section 3 provides for the substitution of the Central Government with
the· right to represent and act in place of (whether within or outside
India) every person who has made, or is entitled to make, a claim in
B respect of the disaster. The State has taken over the rights and claims
of the victims in the exercise of sovereignty in order to discharge the
constitutional obligations as the parent and guardian of the victims
who in the situation as placed needed the umbrella of protection.
Thus, the State has the power and jurisdiction and for this purpose
unless the Act is otherwise unreasonable or violative of the constitu-
C tional provisions, no question of giving a hearing to the parties for
taking over these rights by the State arises. For legislation by the
Parliament, no principle of natural justice is attracted provided such
legislation is within the competence of the legislature, which indeed the
present Act is within the competence of the Parliament. We are in
agreement with the submission of the learned Attorney General that
D section 3 makes the Central Government the dominus litis and it has
the carriage of the proceedings, but that does not solve the problem of
by what procedure the proceedings should be carried.

107. The next aspect is that section 4 of the Act, which, accord-
ing to the learned Attorney General gives limited rights to the victims
E in the sense that it obliges the Central Government to have due regard
to any matters which such person may require to be urged with respect
to his claim and shall, if such person so desires, permit at the expense
of such person, a legal practitioner of his choice to be associated in the
conduct of any suit or other proceeding relating to his claim". There-
fore, it obliges the Central Government to have 'due regard' to any
F matters, and it was urged on behalf of the victims that this should be
read in order to make the provisions constitutionally valid as providing
that the victims will have a say in the conduct of the proceedings and as
such must have ari opportunity of knowing what is happening either by
instructing or giving opinions to the Central Government and/or pro-
viding for such directions as to settlement and other matters. In other
G words, it was contended on behalf qf the victims that the victims
should be given notice of the proceedings and thereby an opportunity,
if they so wanted, to advance their view: and that to make the provi-
sions of s. 4 meaningful and effective unless notice was given t_o the
victim, disabled as he is, the assumption upon which the Act has been
enacted, could not come and make suggestion in the proceedings. If
H the victims are not informed and given no opportunity, the purpose of
s. 4 cannot be attained.
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 693

168. Qn the other hand, the learned Attorney General sugges- A
ted that s. 4 has neen complied with, and contended that the victims
had notice of the proceellings_, They had knowledge of the suit in
America, and of the order passed by Judge Keenan. The private
plaintiffs who had gone to America were represented by foreign con-
tingency lawyers who knew fully well what they were doing and they
had also joined the said suit along with the Government of India . B
.Learned Attorney General submited thats. 4 of the Act clearly enabled
the victims to exercise their right of participation in the proceedings.
According to him, there was exclusion of victims from the process of
adjudication but a limited participation was provided and beyond that
participation no further participation was warranted and no further
notice was justified either by the provisions of the Act as read with the
constitutional requirements or under the general principles of natural
c
justice. He submitted that the principles of natural justice·cannot be
put into strait jacket and their application would depend upon the
p~ricular facts and the circumstances of a situation. According to the
learned Attorney General, in the instant case, the legislature had
formulated the area where natural justice could be applied, and upto D
.what area or stage there would be association of the victims with the
suit, beyond that no further application of any principle of natural
justice was contemplated.

109. The fact that the provisions of the principles of natural
justice have to be complied with, is undisputed. This is well-settled by E
the various decisions of the Court. The Indian Constitution mandates
that "clearly, otherwise the Act and the actions would be violative of
Article 14 of the Constitution and would also be destructive of Article
"l9Jl)(g) and negate Article 21 of the Constitution by denying a proce-
dure which is just, fair and reasonable. See in this conneciion, the
observations of this Court in Maneka Gandhi's case (supra) and Olga F
Tellis's case (supra). Some of these aspects were noticed in the deci-
sion of this Court·in Swadeshi Cotton Mills v. Union of India (supra).
That was .a decision 'Which d~alt with the question of taking over of the
industries under the Industries (Development and Re_gulation) Act,
1951. The question that arose was whether it was necessary to observe
the rules of natural justice before issuing a notification under section G
18A( 1) of the Act. It was held by the majority of Judges that in the
facts of that case there had been non-complilmc.e with the implied
requirement of the audi alteram partem rule of naturatjustice at the
pre-decisional stage. The order in that case could be struck down as
invalid on that score but the court found that in view of the concession
that a hearfug would be afforded to the company, the case was remitted H
'1
I
694- .SUPREME COURT REPORTS (1989) Supp. 2 S.C.R.
I
'
- r -
to the Central Government to give a full, fair and effective hearing. It
was held. that the phrase 'natural justice' is not capable of static and
precise definition. It could not be imprisoned in the straight-jacket or a
cast-iron formula. Rules of naturaljustice are not embodied rules.
Hence, it was not possible to make an exhaustive catalogue of such
'' rules. This Court reiterated that audi ateram partem is a highly effec-
B tive rule de.vised by the C'Ollrts to ensure that a statutory authority
arrives at a just decision and it is. calculated to act as a healthy check on
the abuse or misuse of power. The rules of ri:rtiualjustice can operate
only in areas not covered by any law validly made. The g-eiteral princi-
ple as -
distinguished from an abwlute rule of uniform application
seems to be that where a statute does not in terms exclude this rule of
C - -• prior hearing but contemplates a post-decisional hearing amounting to
a full review of the original order on merits then such a statute would
be -construed as excluding· the audi alteram partem rule at the
· pre-decisional stage: If the statute conferring the power is silent with
regard to the giving of a pre-decisional hearing to the person affected
··the administrative decision after post-decisional hearing was good.
D ~10. The principles of natural' justice have been examined by
this Court in Union of India & Anr. v. Tulsi Ram Patel & Ors.,
(supra). It wa's reiterated, that -the principles of natural jusiice are not
the creation of Article 14 of the Constitution. Art. 14 is not the beget-
ter of the principles of natural justice but their constitutional guardian.
E . The principles ot natural justice consist, inter alia,' of the requirement
that no man should be oondemned unheard. If, however. a legislation
or a Statute expressly or by necessary implication excludes the applica-
tion of any particular principle of natural justice then it requires close
. _ scrutiny of the Court.
" ""·F ·111. It has been canvassed on behalf of the victims that the Code
'·,of Civil Procedure,,is an instant example of what is a ju5t, fair and
reasonable procedure, at least the principles embodied therein and the
Act would be umeasonable if there is exclusion of the victims to vindi-
-·cate properly their views and rights. This exclusion may amount to
denial of justice. In any case, it has bi!en suggested and in our opinion,
_G there is good deal of force in this contention, that if a part of the claim,
for good reasons cir bad, is sought to be compromised or adjusted
_without at least considering the views of the victims that would be
~- - unreasonable deprivation of the rights of the victims. After all, it has
to be borne in mind that injustice consists in the sense in the minds of •
the people· affected by any act ·or inaction a feeling that their grie-
H . vances, views or claims have gone 'unhee-ded or not considered. Such a
C.L. SAHU v. U-0.L {MUKHARJI, CJ.J 695

feeling is in itself an injustice or a wrong. The law mustbe so construed
and implemented that such a feeling does not generate among the A
people for whose benefit the law is made. R.ight to a hearing or
representation before entering into a compromise seems to be
embodied in the due process of law understood in .the sense the term
has been used in the con~titutional jargon of this country though
perhaps not originally intended. In this connection, reference may be B
made to the decision of this Court in San gram Singh v. Election
Tribunal, Kotah, [1955] 2 SCR 1. The Representation of the People
Act, 1951 contains section 90 and the procedure of Election Tribunals
under the Act was governed by the said provision. Sub-section (2) of
section 90 provides that "Subject to the provisions of this Act and of
any rules made thereunder, every election petition shall be tried by the
Tribunal, as nearly as may be, in accordance with the procedure ap- c
plicable under the Code of Civil Procedure, 1908 to the trial of suits".
Justice Bose speaking for the court said that it is procedure, something
designed to facilitate justice and further its ends, and cannot be con-
sidered as a penal enactment for punishment or penalties; not a thing
designed to trip people up rather then help them. It was reiterated that D
our laws of procedure are grounded on the principle of natural justice
which requires that men should not be condemned unheard, that deci-
sions should not be reached behind their backs, that proceedings that
affect their lives and property should not continue in their absence and
that they should not be precluded from participating in them. Of
course, there may be exceptions and where they are clearly defined E
these must be given effect to. But taking by and large, and subject to
that proviso, our laws of procedure should be construed, wherever that
is reasonably possible, in the light of that principle. At page 9 of the
report, Justice Bose observed as under:

"But that a law of natural justice exists in the sense that a F
party must be heard in a Co1,1rt of Jaw, or at any rate be
afforded an opportunity to appear and defend himself,
unless there is express provision to the contrary, is, we
think, beyond dispute. See the observations of the Privy
Council in Balakrishna Udayar v. Vasudeva Ayyar, (ILR 40
Mad. 793, 800) and especially in T.M. Barret v. African G
Products Lta .. (AIR 1928 PC 261) where Lord Buck-
master said "no forms or procedure should ever be permit-
ted to exclude the presentation of a litigant's defence".
Also Hari Vishnu's case which we have just quoted.

In our opinion, Wallace J. was right in Venkatasubbiah v. H
696 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.
t
Lakshminarasimham, (AIR l92S Mad. 1274) in holding that
A
"One cardinal principle to be observed in trials by a Court
obviously is that a party has a right to appear and plead his
cause on all occasions when that cause comes on for hear-
ing", and that "It follows that a party should not be
deprived of that right and in fact the Court has no option to
B. refuse that right, unless the Code of Civil Procedure dep-
rives him of it".

112. All civilised countries accept the right to be heard as part of
the due process of law where questions affecting their rights, privileges
or claims are considered or adjudicated.
c 113. In S.L. Kapoor v. Jagmohan & Ors., [1981] 1 SCR 746 at
765, Chinnappa Reddy, J. speaking for this Court observed that the
concept that justice must not only be done but must manifestly be
seen to be done, is basic to our system. It has been reiterated that the
principles of natural justice know of no exclusionary rule dependent
D on whether it would have made any difference if natural justice had
been observed. The non-observance of natural justice is itself
prejudice to any man and proof of prejudice independently of proof of
denial of natural justice is unnecessary and it has been said that it will
come from a person who has denied justice that the person who has·
been denied justice, is not prejudiced. Principles of natural justice
E must, therefore, be followed. That is the normal requirement.

114. In view of the principles settled by this Court and accepted
all over the world, we are of the opinion that in case of this magnitude
and nature, when the victims have been given some say by Section 4 of
the Act, in order to make that opportunity contemplated by section 4
F of the Act, meaningful and effective, it should be so read .that the
victims have to be given an opportunity of making their representation
before the court comes ~o any conclusion in respect of any settlement.
How that opportunity should be given, would depend upon the
particular situation. Fair procedure should be followed in a represen-
tative mass tort action. There are instances and some of these were
G also placed before us during the hearing of these matters indicating
how the courts regulate giving of the notice in respect of a mass action
where large number of people's views have to be ascertained. Such
procedure should be evolved by the court when faced with such a
situation.

H 115. The Act does not expressly exclude the application of the
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 697

Code of Civil Procedure. Section 11 of the Act provides the overriding
A
effect indicating that anything inconsistent with the provisions of the·
Act in other law including the Civil Procedure Code should be ignored
<1nd the Act should prevail. Our attention was drawn to the provisions
of Order 1 Rule 8(4) of the Code. Strictly speaking, Order 1 Rule 8
will not apply to a suit or a proceeding under the Act. It is not a case of
one having common interest with others. Here the plaintiff, the Cent- B
ral Govt. has replaced and divested the victims.

116. Learned Attorney General submitted that as the provisions
of the Code stood before 1976 Amendment, the High Courts had
taken the view that hearing of the parties represented in the suit, was
not necessary, before compromise. Further reference was made to
proviso to Order XXIII Rule 1. As in this case there is no question, in c
our opinion, of abandonment as such of the suit or part of the suit, the
provisions of this Rule would also not strictly apply. However, Order
XXIII Rule 3B of the Code is an important and significant pointer and
the principles behind the said provision would apply to this case. The
said rule 3B provides that no agreement or compromise in a rep- D
resentative suit shall be entered into without the leave of the court
expressly recorded in the proceedings; and sub-rule (2) oi rule 3B
enjoins that befor~ granting such leave the court shall give notice in
such manner as it may think fit in a representative action. Representa-
tive suit, again, has been defined under Explanation to the said rule
vide clause (d) as any other suit in which the decree passed may, by E
virtue of the provisions of this Code or of any other law for the time
being in force, bind any person who is not named as party to the suit.
In this case, indubitably the victims would be bound by the settlement
though not named in the suit. This is a position conceded by all. If that
is so, it would be a representative suit in terms of and for the purpose
of Rule 3B of Order XXIII of the Code. If the principles of this rule F
are the principles of natural justice then we are of the opinion that the
prineiples behind it would be applicable; and also that section 4 should
be so cbnstrued in spite of the difficulties of the process of notice and
other difficulties of making "informed decision making process cum-
bersome", as canvassed byH1e learned Attorney General.
G
117. 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 cas·e 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
698 SUPREME COURT REPORTS [1989) Supp. 2 S.C.R.
(

A Govt. only to have "due regara to any matters which such person may
requ!fe 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
B require consent of all the victims. The Central Govt. as the representa-
tive 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 settle- '
ment indeed is an important stage in the proceedings, opportunities
must be given to the victims. Individual notices may not be necessary.
C 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.

118. Our attention was drawn to similar situations in other lands
D where in mass disaster actions of the present type or mass calamity
actions affecting large number of people, notices have been given in
different forms and it may be possible to invite the views of the victims
by announcement in the media, Press, Rad10, and TV etc. intimating
the victims that a certain settlement is proposed or contemplated and
inviting views of the victims within a stipulated period. And having
E regard to the views, the Central Govt. may proceed with the settle-
ment of the action. Consent of all is not a pre-condition as we reacj the
Act under Section 4. Hence, the difficulties suggested by the learned
Attorney General in having the consent of all and unanimity, do not
really arise and should not deter us from construing the section as we
have.
F
119. The next aspect of the matter is, whether in the aforesaid
light Section 4 has been complied with. The fact that there was no
specific notice given to the victims as such in this case, is undisputed.
Learned Attorney General, however, sought to canvas the view that
the victims had notice and some of them had participated in the pro-
G ceedings. We are, however, unable to accept the position that the
victims had notice of the nature contemplated under the Act upon the
under.lying principle of Order XXIII Rule 3B of the Code. It is not
enough to say that the victims must keep vigil and watch the proceed-
ing. One assumption under which the Act is justified is that the victims
were disabled to defend themselves in an action of this type. If that is
H so, then the Court cannot presume that the victims were a lot, capable
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.] 699
' and informed to be able to have comprehended or contemplated the
settlement. In the aforesaid view of the matter, in our opinion, notice A
was necessary. The victims at large did not have the notice.

120. The question, however, is that the settlement had been
arrived at after great deal of efforts to give immediate relief to the
victims. We have noticed the order dated 4th May, 1989 passed by this B
Court indicating the reasons which impelled the Court to pass the
orders on 14/15th February, 1989 in terms and manner as it did. It has
been urged before us on behalf of some of the victims that justice has
not been done to their views and claims in respect of the damages
suffered by them. It appears to us by reading the reasons given by this
Court on 4th May, 1989 that justice perhaps has been done but the
question is, has justice appeared to have been done and more pre· c
cisely, the question before this Court is: does the Act envisage a proce-
dure or contemplate a procedure which ensures not only that justice is
done but justice appears to have been done. If the procedure does not
ensure that justice appears to have been done, is it valid? Therefore, in
our opinion, in the background of this question we must hold that D
Section 4 means and entail.s that before entering into any settlement
affecting the rights and claims of the victims some kind of notice or
information should be given to the victims; we n~eed not now spell out
the actual notice and the manner of its givil)g to be consistent with the
mandate and purpose of section 4 of the Act.
E
121. This Court in its order dated 4th May, 1989 had stated that
in passing orders on 14th/15th February, 1989, this Court was impelled
by the necessity of urgent relief to the victims rather than to depend
upon the uncertain promise of law. The Act, as we have construed,
" requires notice to be. given in what form and in what manner, it need
not be spelled out, before entering into any settlement of the type w.ith · F
which we are concerned. It further appears that that type of notice
which is required to be given had not b.een given. The question, there-
fore, is what is to be done and what is the consequence? The Act
would be bad if it is not construed in the light that notice before any
settlement under S. 4 of the Act was required to be given. Then arises
the question of consequences of not giving the notice. In this adjudica- G
tion, we are not strictly concerned witQ, the validity or otherwise of the
settlement, as· we have indicated hereinbefore. But constitutional
adjudication cannot be divorced from the reality of a situation, or the
impact of an adjudication. Constitutional deductions are never made
in the vacuum. These deal with life's problems in the reality of a given
- situation. And no constitutional ad.iudication is also possible unless H
700 SUPREME COURT REPORTS [1939] Supp. 2 S.C.R.

one is aware of the consequences of such an ad1udication. One hesi-
A tates in matters of this type where large consequences follow one way
or the other to put as under what others have put together. It is well to
remember, as did Justice Holmes, that time has upset many fighting
faiths and one must always wagar one's salvation upon some prophecy
based upon imperfect knowledge. Our knowledge changes; our
B perception of truth also changes. It is true that notice was required to
be given and notice has not been given. The notice which we have
contemplated is. a notice before the settlement or what is known in
legal terminology as 'pre-decisional notice'. But having regard to the
urgency of the situation and having regard to the need for the victims
for relief and help and having regard to the fact that so much effort has
C gone in finding a basis for the settlement, we, at one point of time,
thought that a post-decisional hearing in the facts and circumstances of
this case might be considered to be sufficient compliance with the
requirements of principles of natural justice as embodied under s. 4' of
the Act. The reasons that impelled this Court to pass the orders of
14th/15th February, 1989 are significant and compelling. If notice was
D given, then what would have happened? It has been suggested on
behalf of the victims by counsel that if the victims had been given an
opportunity to be heard, then they would have perhaps pointed out,
inter alia, that the amount agreed to be paid through the settlement
was· hopelessly inadequate. We have noted the evidence available to
this Court which this Court has recorded in Its order dated 4th May,
E 1989 to be the oasis for the figure at which the settlement was arrived
at. It is further suggested that if an opportunity had been given before
the settlement, then the victims would have perhaps again pointed out
that criminal liability could not be absolved in the manner in which this
Court has done on the 14th/15th February, 1989. It was then con-
tended that the Central Government was itself sued as a joint tort
F feasor. The Central Government would still be liable to be proceeded
in respect of any liability to the victims if such a liability is established;
that liability is in no way abridged or affected by the Act or the settle-
ment entered into. It was submitted on behalf of the victims that if an
opportunity had been given, they would have perhaps pointed out that
the suit against the Central Government, Government of Madhya
G Pradesh and UCIL could not have been settled by the compromise. It is
further. suggested that if giv'"'1 an opportunity, it would have been
pointed out that the UCIL should have also been sued. One of the
important requirements of justice is that people affected by an action
or inaction should have opportunity to have their say. That oppor-
tunity the victims have got when these applications were heard and
H they were heard after utmost publicity and they would have further -
C.L. SAHU v. U.0.1. IMUKHARJI, CJ.] 701

opportunity when review application against the settlement would he
A
heard.

122. On behalf of the victims; it was suggested thaf the basis
of damages in view of the observations made by this Court in M. C.
Mehta's case (supra) against the victims ofUCC or UCIL would be
much more than normal damages suffered ·1n similar case against any B
other company or party which is financially not so solvent or capable.
It was urged that it is time in order to make damages deterrent the
damages must be computed on the basis of the capacity of a delinqueni
'". made liable to pay such damages and on the monetary cayacity of the
delinquen·t the quantum of the damages awaraed would vary and not Jn
the basis of actual consequences suffered by the victims. This is an
uncertain promise of law. On the basis of evidence available and on
the basis of the principles so far established, it is difficult to foresee
any reasonable possibility of acceptance of this yardstick. And even if
it is accepted, there are numerous difficulties of getting that view
accepted internationally as a just basis in accordance with law. These,
however, are within the realm of possibility. D

123. It was contended further by Shri Garg, Shri Shanti Bhushan
and Ms. Jaising that all the further particulars upon which the settle-
ment had been entered into should have been given in the notice which
was required to be given before a settlement was sanctified or accepted.
We are unable to accept this position. It is not necessary th.at all other E
particulars for the basis of the proposed settlement should be disclosed
in a suit of this nature before the final decision. Whatever data was
already there have been disclosed, that, in our opinion, would have
been sufficient for the victims to be able to give their views, if they
want to. Disclosure of further particulars are not warranted by the
requirement of principles of natural justice. Indeed, such disclosure in F
this case before finality might jeopardise futher action, if any, neces-
sary so consistent with justice of the case.

124. So on the materials available, the victims would have to
express their views. The victims have not been able to show at ail any
other point or material which would go to impeach the validity of the G
settlement. Therefore, in our opinion, though settlement without
notice is not quite proper, on the materials so far available, we are of
the opinion that justice has been done to the victims but justice has not
appeared to have been done. In view of the magnitude of the misery
involved and the problems in this case, we are also of the opinion that
~ the setting aside of the settlement on this ground in view of t.he facts , H'
702 SUPREME COURT REPORTS [ 1989] Supp. 2 S.C.R.
I
and the circumstances of this case keeping the settlement in abeyance
A and giving notice to the victims for a post-decisional hearing would riot
be in the ultimate interest of justice. It is true that not giving notice,
was not proper because principles of natural justice are fundamental in
the constitutional set up of this country. No man or no man's right
should be affected without an opportunity to ventilate his views. We
B are also conscious that justice is a psychological yearning, in which
men seek acceptance of their view point by having an opportunity of
vindication of their view point before the forum or the authority
enjoined or obliged to take a decision affecting their right. Yet, in the
particular situations, one has to bear in mind how an infraction of that
should be sought to be removed is accordance with justice. In the facts
and the circumstances of this case where sufficient opportunity is avail-
c able when review application is heard on notice, as directed by Court,
no further opportunity is necessary and it cannot be said that injustice
has been done. "To do a great right" after all, it is permissible some-
times "to do a little wrong". In the facts and circumstances of the case,
this is one of those rare occasions. Though entering into a settlement
D without the required notice is wrong, in the facts and the circums-
tances of this case, therefore, we are of the opinion, to direct that
notice should be given now, would not result in dain justice in the
situati<:m. In the premises, no further consequential order is necessary
by this Court. Had it been necessary for this Bench to have passed such
a consequential order, we would not have passed any such consequen-
E tial order in respect of the same.

125. The sections and the scheme dealing with the determina-
tion of damages and distribution of the amount have also been assailed
as indicated before. Our attention was drawn to the provisions of the
Act dealing with the payment of compensation and the scheme framed
.F therefor. It was submitted that section 6 of the Act enjoins appoint-
ment by the Central Government of an officer known as the Commis-
sioner for the welfare of the victims. It was submitted that this does not
give sufficient judicial authority to the officer and would be really
leaving the adjudication under the scheme by an officer of the execu-
tive nature. Learned Attorney General has, however, submitted that
G for disbursement of the compensation contemplated under the Act or
under the orders of this Court, a notification would be issued under
section 6(3) of the Act authorising the Commissioner or other officers
to exercise all or any of the powers which the Central Government
may exercise under section 6 to enable the victims to place before the
Commissioner or Deputy Commissioner any additional evidence that
H they would like to adduce. We direct so, and such appropriate notifica-
C.L. SAHU V, U.0.1. [MUKHARJI, CJ.] 703
',
tion be issued. We further direct that in the scheme of categorisation to
be done by the Deputy Commissioner should be appealable to an A
appropriate judicial authority and the Scheme should be modified
accordingly. We reiterate that the basis of categorisation and the
. actual categorisation should be justiciable and judicially reviewable-
the provisions in the Act and the Scheme should be so read. There
were large number of submissions made on behalf of the victims about B
amending the scheme. Apart from and to the extent indicated above,
in our opinion, it would be unsafe to tinker with the scheme piecemeal.
The .scheme is an integrated whole and it would not be proper to amend
it piecemeal. We, however, make it clear that in respect ofcategorisa'
tion and claim, the authorites must act on principles of natural justice
and act quasi-judicially.
,.., c
"l 126. As mentioned hereinbefore, good deal of arguments were
advanced before us as to whether the clause in the settlement that
J
criminal proceedings would not be proceeded with and the same will
remain quashed is valid or invalid. We have held that these are not
part of the proceedings under the Act. So the orders on this aspect in D

.. the order of 14th/ 15th February, 1989 are not orders under the Act.
Therefore, on the.question of the validity of the Act, this aspect does
not arise whether the settlement of criminal proceedings or quashing
the criminal proceedings could be a valid consideration for settlement
or whether if it was such a consideration or not is a matter which the
court reviewing the settlement has to decide. E

127. In the premise, we hold that the Act is constit]Jtionally valid
f'
I in the manner we read it. It proceeds on the hypothesis that until the
claims of the victims are realised or obtained from the delinquents,
namely, UCC and UCIL by settlement or by adjudication and until the
proceedings in respect thereof continue the Central Government must F
pay interim compensation or maintenance for the victims. In entering
upon the settlement in view of s. 4 of the Act, regard must be had to
the views of the victims and for the purpose of giving regard to these,
appropriate notices before arriving at any settlement, was necessary.
In some cases, however, post-decisional notice might be sufficient but
in the facts and the circumstances of this case, no useful purpose would G
be served by giving a post-decisional hearing having regard to the
circumstances mentioned in the order of this Court dated 4th May,
1989 and having regard to the fact that there are no further additional
data and facts available with the·victims which can be profitably and
meaningfully presented to controvert the basis of the settlement and
further having regard to the fact that the victims had their say or on H
704 SUPREME COURT REPORTS [1989) Supp. 2 S.C.R.
(

A thelf behalf their views had been agitated in these proceedings and will
have further opportunity in the pending review proceedings. No
further order on this aspect is necessary. The sections dealing with the
payment of compensation and categorisation should be implemented
in the manner indicated before.

B 128. The Act was conceived on the noble promise of giving relief
and succour to the dumb, pale, meek and impoverished victims of a
tragic industrial gas leak disaster, a concomitant evil in this industrial
age of technological advancement and development. The Act had
kindled high hopes in the hearts of the weak and worn, wary and
forlorn. The Act generated hope of humanity. The implementation of
the Act must be with justice. Justice perhaps has been done to the
C victims situated as they were, but it is also true that justice has not
appeared to have been done. That is a great infirmity. That is due
partly to the fact that procedure was not strictly followed as we have
understood it and also partly because of the atmosphere that was
created in the country, attempts were made to shake the confidence of
D the people in the judicial process and also to undermine the credibility
of this Court. This was unfortilnate. This was perhaps due to misin-
formed public opinion and ·also due to the fact that victims were not
initially taken into confidence in reaching the settlement. This is a •
factor which emphasises the need for adherence. to "the principles of
natural justice. The credibility of judiciary is as important as the alle-
E viation of the suffering of the victims, great as these were. We hope
these adjudications will restore that credibility. Principles of natural
justice are integrally embedded in our constitutional framework and
their pristine glory and primacy cannot and should not be allowed to
be submerged by the exigencies of particular situations or cases. This
Court must always assert primacy of adherence to the principles of
F natural justice in all adjudications. But at the same time, these must be
applied in a particular manner in particular cases having regard to the
particular circumstances. It is, therefore, necessary to reiterate that
the promises made to the victims and hopes raised in their hearts and
minds can only be redeemed in some measure if attempts are made
vigorously to distribute the amount realised to the victims in accor-
G dance with the scheme as indicated above. That would be a redemp-
tion to a certain extent. It will also be necessary to reiterate that
attempts should be made to formulate the principles of law guiding the
Government and the authorities to permit carrying on of trade dealing
with materials and things which have dengerous consequences within
sufficient specific safeguards especially in case of multinational corpo-
H rations trading in India. An awareness on these lines has dawned. Let
C.L. SAHU v. U.0.1. [MUKHARJI, CJ.I 705

action follow that awareness. It is also necessary to reiterate that the
A
law relating to damages and payment of interim damages or compensa'
tion to the victims of this nature should be seriously and scientifically
examined by the appropriate agencies.

129. The Bhopal Gas Leak disaster and its aftermath of that
emphasise the need for laying down certain norms and standards B
the Government to follow before granting permissions or licences for
the running of industries dealing with materials which are of dangerous
potentialities. The Government should, therefore, examine or have
the problem examined by an expert committee as to what should be
the conditions on which future licences and/or permission for running
industries on Indian soil would be granted and for ensuring enforce-
ment of those conditions, sufficient safety measures should be for- c
mulated and scheme of enforcement indicated. The Government
should insist as a condition precedent to the grant of such licences or
permissions, creation of a fund in anticipation by the industries to be
available for payment of damages out of the said found in case of
leakages or damages in case of accident or disaster flowing from negli- D
gent working of such industrial operations or failure to ensure mea-
sures preventing such occurrence. The Government should also ensure
that the parties must agree to abide to pay such damages out of the said
•. -- damages by procedure separately evolved for computation and pay-
ment of damages without exposing the victims or sufferers of the negli-
gent act to the long and delayed procedure. Special procedure must be E
provided for and the industries must agree as a condition for the grant
of licence to abide by such procedure or to abide by statutory arbitra-
tion. The basis for damages in .case of leakages and accident should
also be statutorily fixed taking into consideration the nature of
damages inflicted, the consequences thereof and the ability and capa-
city of the parties to pay. Such should also provide for deterrent or F
punitive damages, the basis for which should be formulated by a
proper expert committee or by the Government. For this purpose, the
Government' should have the matter examined by such body as it
considers necessary and proper like the Law Commission or other
competent bodies. This is vital for the future.
G
130. This case has taken some time. It was argued extensively. We
are grateful to counsel who have assisted in all these matters. We have
reflected. We have taken some time in pronouncing our decision. We
wanted time to lapse so that the heat of the moment may calm down
and proper atmosphere restored. Justice, it has been said, is the con-

- stant and perpetual disposition to render every man his due. But what H:
706 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

A is a man's due in a particular situation and in a particular circums-
tances is a matter for appraisement and adjustment. It has been said
that justice is balancing. The balances have always been the symbol of
even-handed justice. But as said Lord Denning in Jones v. National
Coal Board Ltd., [1957] 2 QB 55, at 64-let the advocates one after the
other put the weights into the scales-the 'nicely calculated less or
B more'-but the judge at the end decides which way the balance tilts, be
it ever so slightly. This is so in every case and every situation.

131. The applications are disposed of in the manner and with the
direction, we have indicated above.

SINGH, J. I have gone through the proposed judgment of my
C learned brother, Sabyasachi Mukharji, CJI. I agree with the same but I
consider it necessary to express my opinion on certain aspects.

Five years ago between the night of December 2-3, 1984 one of
the most tragic industrial disasters in the recorded history of mankind
D occurred in the city of Bhopal, in the State of Madhya Pradesh, as a
result of which several persons died and thousands were disabled and
physically incapacitated for life. The ecology in and around Bhopal
was adversely affected and air, water and the atmosphere was pol- ---.r.
luted, its full extent has yet to be determined. Union Carbide India/
Limited (UCIL) a subsidiary of Union Carbide Corporation (a Trans-
E national Corporation of United States) has been manufacturing
pesticides at its plant located in the city of Bhopal. In the process of
mannfacture of pesticide the UCIL had stored stock of Methyl Iso-
cyanate commonly known as MIC a highly toxic gas. On the night of
the tragedy, the MIC leaked from the plant in substantial quantity
causing death and misery to the people working in the plant and those
F residing around it. The unprecedented catastrophe demostrated the
dangers inherent in the production of hazardous chemicals even
though for the purpose of industrial development. A number of civil
suits for damages against the UCC were filed in the United States of
America and also in this Country. The cases filed in USA were refer-
red back to the Indian courts by Judge Keenan details of which are
G contained in the judgment of my learned brother Mukharji, CJI. Since
those who suffered in the catastrophe were mostly poor, ignorant,
illiterate and ill-equipped to pursue their claims for damages either
before the courts in USA or in Indian courts, the Parliament enacted
the Bhopal Gas Leak Disaster (Processing of Claims) Act 1985

--
(hereinafter referred to as 'the Act') conferring power on the Union of
H India to take over the conduct of litigation in this regard in place of the
C.L. SAHU v. U.0.1. [SINGH, J. [ 707

individual claimants. The facts and circumstances which led to the
A
settlement of the claims before this Court have already been stated in
detail in the judgment of Mukharji, CJI, and therefore, I need not
refer to those facts and circumstances. The constitutional validity of
the Act has been assailed before us in the present petitions. If the Act
is declared unconstitutional, the settlement which was recorded in this
Court, under which the UCC has already deposited a sum of Rs. 750 B
crores for meeting the claims of Bhopal Gas victims, would fall and the
amount of money which is already in deposit with the Registry of this
Court would not be available for relief to the victims. Long a'!d
detailed arguments were advanced before us for a number of days and
on an anxious consideration and having regard to the legal and con-
stitutional aspects and especially the need for immediate help and
relief to the victims of the gas disaster, which is already delayed, we c
have upheld the constitutional validity of the Act. Mukharji, CJI has
rendered a detailed and elaborate judgment with which I respectfully
agree. However, I consider it necessary to say few words with regard
to the steps which should be taken by the Executive and the Legisla-
ture to prevent such tragedy in future and to avoid the prolonged D
misery of victims of in industrial disaster.

We are a developing country, our national resources are to be
developed in the field of sceince, technology, industry and agriculture.
The need for industrial development has led to the· establishment of a
number of plants and factories by the domestic companies and under- E
takings as well as by Trasnational Corporations. Many of these
industries are engaged in hazardous or inherently dangerous activities
which pose potential threat to life, health and safety of persons work-
ing in the factory, or residing in the surrounding are.is. Though work-
ing of such factories and plants is regulated by a number of laws of our
country, i.e. the Factories Act, Industrial Development and Regula- F
tion Act and Workmen's Compensation Act etc. there is no special
legislation providing for compensation and damages to outsiders who
may suffer on account of any industrial accident. As the law stands
to-day, affected persons have to approach civil courts for obtaining
compensation and damages. In civil courts, the determination of
amount of compensation or damages as well as the liability of the G
enterprise has been bound by the shackles of conservative principles
lai<! down by the House of Lords in Ryland v. Fletcher, [1868] LR 3 HL
page 330. The principles laid therein made it difficult to obtain
adequate damages from the enterprise and that too only after the
negligence of the enterprise was proved. This continued to be the
position of law, till a Constitution Bench of this Court in M.C. Mehta H
708 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.
( .
v. Union of India, [1987] 1 SCC 420, commonly known as Sriram
A Oleum Gas Leak case evolved principles and laid down new norms to
deal adequately with the new problems arising in a highly industria-
lised economy. This Court made judicial innovation in laying down
principles with regard to liability of enterprises carrying hazardous or
inherently dangerous activities departing from the rule laid down in
B Ryland v. Fletcher. The Court held as under:

"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
c community to ensure that no harm results to any one on
account of hazardous or inherently dangerous nature of the
activity which it has undertaken. The enterprise must be
held to be under an obligation to provide that the hazar-
dous or inherently dangerous activity in which it is engaged
D 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. Since the
persons harmed on account of the hazardous or inherently )
E
dangerous activity carried on by the enterprise would not
be in a position to isolate the process of operation from the
hazardous preparation of substance or any other related
element that caused the harm the enterprise must be held
strictly liable for causing such harm as a part of the social
F cost of carrying on the hazardous or inherently dangerous
activity. If the enterprise is permitted to carry on an
hazardous or inherently dangerous 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
G activity as an appropriate item of its overheads. Such
hazardous or inherently dangerous 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 on account of the carrying
on of such hazardous or inherently dangerous activity
H regardless of whether it is carried on carefully or not. This
.. C.L. SAHU v. U.0.1. [SINGH, J.l 709
).

principle is also sustainable on the ground that the enter-
A
prise alone has the resource to discover and guard against
hazards or dangers and to provide warning against poten-
ti al hazards. We would therefore hold that where an
enterprise is engaged m a h,'!z;irdous or inherently dan-
gerous activity and harm results to anyone on account of an
accident in the operation of such hazardous or inherently B
dangerous activity resulting, for example, in escape of toxic
gas the enterprise is strictly and absolutely liable to com-
pensate all those who are affected by the accident and such
liability is not subject to any of the exceptions which
i
operate vis-a-vis the tortious principle of strict liability
under the rule in Rylands v. Fletcher."
c
The law so laid down made a land-mark departure from the conserva-
tive principles with regard to the liability of an enterpris.e carrying on
hazardous or inherently dangerous activities.

In the instant cases there is no dispute that UCIL a subsidiary of D
UCC was carrying on activity of manufacturing pesticide and in that
process it had stored MIC a highly toxic and dangerous gas which
_leaked causing vast damage not only to human life but also to the flora
and fauna .and ecology in and around Bhopal. In view of this Court's
decision in M.C. Mehta's case there is no scope for any doubt regard-
ing the liability of the UCC for the damage caused to the human beings E
and nature in and around Bhopal. .While entering into the settlement
the UCC has accepted its liability and for that reason it has deposited a
sum of Rs. 750 crores in this Court. The inadequacy of the amount of
compensation under the settlement was assailed by the counsel for the
petitioners but it is not necessary for us to express any opinion on that
question as review petitions are pending before another Constitution F
B.ench and more so as in the present cases we are concerned only with
the constitutional validity of the Act.

The Bhopal Gas tragedy has raised several important questions
regarding the functioning of multi-nationals in third world countries.
After the Second World War colonial rule came to end in several G
parts of the globe, as a number of natives secured independence from
foreign rule. The political domination was over but the newly born
nations were beset with various problems on account of lack of
finances and development. A number of multi-nationals and transna-
tional corporations offered their services to the under-developed and
~ developing countries to provide finances and technical know-how by H

•
710 SUPREME COURT REPORTS (1989] Supp. 2 S.C.R.

A
setting up their own industries in those countries on their own terms '
that brought problems with regard to the control over the functioning
of the transnational corporations. Multi-national companies in many
cases exploited the underdeveloped nations and in some cases they
influenced political and economic policies of host countries which sub-
verted the sovereignty of those countries. There has been complaints
B against the multi-nationals for adopting unfair and corrupt means to
advance their interests in the host countries. Since this was a world-
wide phenomena the United Nations took up the matter for considera-
tion. The Economic and Social Council of the United Nations
established a Commission on Transnational Corporations to conduct
research on various political, economic and social aspects relating to
transnational corporations. On a careful and detailed study the
c Commission submitted its Report in 1985 for evolving a Code of Con-
duct for Transnational Corporations. The Code was adopted in 1986 to
which large number of countries of the world are signatories.
Although it has not been fully finalised as yet, the Code presents a
comprehensive instrument formulating the principles of Code of
D Conduct for transnational corporations carrying on their enterprises in
under developed and developing countries. The Code contains provi-
sions regarding ownership and control designed to strike balance bet-
ween the competing interests of the Transnational Corporation and
the host countries. It extensively deals with the political, economic;
financial, social and legal questions. The Code provides for disclosure
E of information to the host countries and it also provides guidelines for
nationalisation and compensation, obligations to international law and
jurisdiction of courts. The Code fays down provisions for settlement of
disputes between the host States and an affiliate of a Transnational
Corporation. It suggests that such disputes should be submitted to the
national courts or authorities of host countries unless amicably settled
F between the parties. It provides for the choice of law and means for
dispute settlement arising out of contracts. The Code has also laid
down guidelines for the determination of settlement of disputes arising
out of accident and disaster and also for liability of Transnational
Corporations and the jurisdiction of the courts. The Code is binding
on the countries which formally accept it. It was stated before us that
G India has accepted the Code. If that be so, it is necessary that the
Government should take effective measures to translate the provisions
of the Code into specific actions and policies backed by appropriate
legislation and enforcing machinery to prevent any accident or disaster
and to secure the welfare of the victims of any industrial disaster.

H In the context of our national dimensions of human rights, right f

•
C.L. SAHU v. U.0.1. (SINGH, J.] 711

' )
.to life, liberty, pollution free air and water is guaranteed by the Con-
A
stitution under Articles 21, 48A and 5 J(g), it is the duty o1 the State to
take effective steps to protect the guaranteed constitutional rights.
These rights must be integrated and illumined by the evolving interna-
tional dimensions and standards, having regard to our sovereignty, as
highlighted by Clauses 9 and 13 of U .N. Code of conduct on Transna-
tional Corporations. The evolving standards of international obliga- B
tions need to be respected, maintaining dignity and sovereignty of our
people, the State must take effective steps to safeguard the constitu-
tional rights of citizens by enacting laws. The laws so made may pro-
vide for conditions for granting licence to Transnational Corporations,
prescribing norms and standards for running industries on Indian soil
ensuring the constitutional rights of our people relating to life, liberty,
as well as safety to environment and ecology to ·enable the people to c
lead a healthy and clean life. A Transnational Corporation should be
made liable and subservient to laws of our country and the liability
.should not be restricted to affiliate company only.but the parent corpo-
ration should also be made liable for any damage caused to the human
being or ecology. The law must require transnational corporations to D
agree to· pay such daml)ges as may be determined. by the statutory
agencies and forum constituted under it without exposing the victims
to long drawn litigation. Under the existing civif law damages are
determined by the Civil Courts, after a long drawn litigation, which
destroys the very purpose of awarding damages. In order to meet the
situation, to avoid delay and to ensure immediate relief to the victims E
we would suggest that the law made by the Parliament should provide
for constitution of tribunals regulated by special procedure for
determining compensation to victims of industrial disaster or accident,
appeal against which may lie to this Court on limited ground of ques-
tions of law only after depositing the amount determined by the Tri-
bunal. The law should also provide for interim relief to victims during F
the pendency of proceedings. These steps· would minimise the misery
and agony of victims of hazardous enterprises.

There is yet another aspect which needs consideration by the
Government and the Parliament. Industrial development in our
country and the hazards involved therein, pose a mandatory need to G
constitute a statutory "Industrial Disaster Fund", contributions to
which may be made by, the Government, the industries whether they
are transnational corporations or domestic undertakings, public or
private. The extent of contribution may be worked out having regard
to the extent of hazardous nature of the enterprise and other allied
matters. The Fund should be permanenUn nature, so that money is H
712 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

readily available for providing immediate effective relief to the
A victims. This may avoid delay, as has happened in the instant case in
providing effective relief to the victims. The Government and the
Parliament should therefore take immediate steps for enacting laws,
having regard to these suggestions, consistent with the international
norms and guidelines as contained in the United Nations Code of
B Conduct on Transnational Corporations.

With these observations, I agree with the order proposed by my
learned brother, SabyasachiMukharji, CJI.

RANGANATHAN, J. Five years ago, this country was shaken to
•
its core by a national catastrophe, second in magnitude and disastrous
c effects only to the havoc wrought by the atomic explosions in
Hiroshima and Nagasaki. Multitudes of illiterate and poverty-stricken
people in and around Bhopal suffered damage to life and limb due to
the escape of poisonous Methyl Isocyanate (MIC) gas from one of the
storage tanks at the factory of the Union Carbide (India) Limited
D (UCIL) in Bhopal, a wholly owned subsidiary of the multinational
giant, the Union Carbide Corporation {UCC). A number of civil suits
claiming damages from the UCC were filed in the United States of
America and similar litigation also followed in Indian courts. Fearing
the possibilities of the exploitation of the situation by vested interests,
the Government of India enacted, the Bhopal Gas Leak Disaster
E (Processing of Claims) Act, 1985 {'the Act') to regulate the course of
such litigation. Briefly speaking, it empowered the Union of India to
take over the conduct of all litigation in this regard and conduct it in
place of, or in association with, the individual claimants. It also enab-
led the Union to enter into a compromise with the UCC and UCIL and
arrive at a settlement. The writ petitions before us have been filed
F challenging the constitutional validity of this statute on the ground that
the divestiture of the claimants' individual rights to legal remedy
against the multinational for the consequences of carrying on dan-
gerous and hazardous activities on our soil violates the fundamental
rights guaranteed under article 14, 19 and 21 of the Constitution.

G In consequence of certain proceedings before Judge Keenan of
the U.S. District Courts, the venue of the litigation shifted to India.
In the principal suit filed in India by the Union (Civil Suit No. 1113/86)
orders were passed by the trial court in Bhopal directing the UCC to
deposit Rs.370 crores (reduced to Rs.250 crores by the Madhya
Pradesh High Court) as interim payment to the gas victims pending
H disposal of the suit. There were appeals to this Court in which the
C.L. SAHU v. U.O.l. [RANGANATHAN, J.] 713
)
UCC contested the Court's jurisdiction to pass an order for an interim
payment in a suit for money, while the Union pleaded that a much A
higher interim payment should have been granted. When the matter.
was being argued in this Court, a settlement was arrived at between
the Union and the UCC under which a sum of Rs.750 crores has been
~ received by the Union in full settlement of all the claims of all victims
of the gas leak against the UCC. The Union also agreed to withdraw B
certain prosecutions that had been initiated against the officials of the
UCC and UCIL in this ·connection. This settlement received the
imprimatur of this Court in its orders dated 14th & 15th February,
1989.

It is unfortunate that, though the writ petitions before us were
pending in this Court at that time-, neither their contents nor the need c
for considering first the issue of the validity of the Act before thinking
of a settlement in pursuance of its provisions seem to have been effec-
tively brought to the notice of the Bench which put an end to all the
litigation on this topic in terms of the settlement. The settlement thus
stood approved while the issue of validity of the Act under which it was D
effected stood undecided. When this was brought to the notice of the
above Bench, it directed these writ petitions to be listed before a
different Bench to avoid any possible feeling that the same Bench may
be coloured in its views on the issue by reason of the approval it had
given to the fait accompli viz. the settlement. That is now these matters
came before us. E

The petitioners, claiming to represent a section of the victims
are, firstly, against any settlement at all being arrived at with the UCC.
According to them, it is more important to ensure by penal action that
multinational corporations do not play with the lives of people in
developing and under developed countries than to be satisfied with F
mere compensation for injury and ·that the criminal prosecutions
initiated in this case should have been pursued. Secondly, they are of
the view that the amount for which the claims have been settled is a
pittance, far below the amount of damages they would have been
entitled to, on the principles of strict, absolute and punitive liability
eununciated by this Court in Mehta's case [1987] I S.C.R. 819. G
Thirdly, their grievance is that no publicity at all was given, before this
court passed its order, to enable individual claimants or groups of
them to put forward their suggestions or objections to the settlement
proposed. Their interests were sealed, they ·say, without complying
with elementary principles of natural justice. They contend that the
provisions of an Act which has made such a settlement possible cannot H
be constitutionally valid.
714 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.
(

A The arguments before us ranged over a very wide ground,
covered several issues and extended to several days. This Bench bas
been placed in somewhat of a predicament as it bas to pronounce on
the 'ialidity of the provisions of the Act in the context of an implemen-
tation of its provisions in a particular manner and, though we cannot •
(and do not) express any views regarding the merits of the settlement,
B we are asked to consider whether such settlement can be consistent
with a correct and proper interpretation of the Act tested on the touch-
stone of the fundamental rights guaranteed under the Constitution.
Mukharji, C.J., bas outlined the issues, dealt elaborately with the
contentions urged, and given expression to his conclusions in a
learned, elaborate and detailed judgment which we have had the
C advantage of perusing in draft. Our learned brother K.N. Singh, J.,
has also highlighted certain aspects in his separate judgment. We are,
in large measure, in agreement with them, bEt should like to say a few
words on some of the issues in this case, particularly those in regard to
which our approach has been somewhat different:
D

1. The issue regarding the validity of the Act turns principally
on the construction of sections 3 and 4 of the Act. We are inclined
to hold that the fact that a settlement bas been effected, or the
circumstances in which or the amount for which the claims of the
E victims have been settled, do not have a bearing on this question
of interpretation and have to be left out of account altogether
except as providing a contextual background in which the question
arises. Turning therefore to the statute and its implications, the
position is this. Every person who suffered as a consequence of
the gas leak had a right to claim compensation from the persons who,
F according to him, were liable in law for the injury caused to him
and also a right to institute a suit or proceeding before any court or
allthority with a view to enforce his right to claim damages. In the
normal course of events, such a claimant who institute a suit or pro-
ceeding would have been at complete liberty to withdraw the said suit
or proceeding or enter into any compromise he may choose in that
G regard. Section 3 undoubtedly takes away this right of the claimant
altogether: (a) except to the limited extent specified in the proviso
to S. 3(3) and (b) subject to the provisions of S. 4, for this section
clearly states that it is the Central Government and the Central
Government alone which has the right to represent and act in place of
the claimants, whether within or outside India, for all P.urposes in
H
•
C.L. SAHU v. U.0.1. [RANGANATHAN, J.] 715
)

. connection with the enforcement of his claims. We may first consider A
how far the main provision in S. 3 (leaving out of account the proviso
as well as section 4) is compatible with the Constitution

The first question that arises is whether the legislature is justified
in depriving the claimants of the right and privilege of enforcing their B
claims and prosecuting them in such manner as they deem fit and in
compulsorily interposing or substituting the Go,ernment in their
place. We think that, to this question, there can be only one answer.
As pointed out by our learned brother, the situation was such that the
victims of the tragedy needed to be protected against themselves as
their adversery was a mighty multi-national corporation and proceed-
ings to a considerable extent had been initiated in a foreign country,
c
where the conduct of the cases was entrus.ted to foreign lawyers under
a system of litigation which is unfamiliar to us here. In the stark reality
of the situation, it cannot even be plausibly contended that the large
number of victims of the gas leak disaster should have been left to fend
for itself and merely provided with some legal aid of one type or D
another. It is necessary to remember that, having regard to the identity
of the principal ground of claim of all the victims, even if a single
victim was not diligent in conducting his suit or entered into a com-
promise or submitted to a decree judging the issues purely from his
individual point of view, such a decision or decree could adversely
affect the interests of the innumerable other victims as well. In fact, it E
appears that a settlement between one set of claimants and the
adversary corporation was almost imminent and would perhaps have
been through out for the timely intervention of the Govenment of
India. The battle for the enforcement of one's rights was bound to be
not only prolonged but also very arduous and expensive and the deci-
sion of the legislature that the fight against the adversary should be F
consolidated and its conduct handed over to the Government of
India-it may perhaps have been better if it had been handed over to
an autonomous body independent of the Government but, as pointed
out by our learned brother, the course adopted was also not
objectionable-was perhaps the only decision that could have been
taken in the circumstances. This is mdeed a unique sitouation in which G
the victims, in order to realise to the best advantage their rights against
UCC, had to be helped out by transposing that right to be enforced by
the Government.

We did not indeed understand any learned counsel before us to
~·
say that the legislature erred in entrusting the Government of India H
'
716 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.
(
with the respqnsibility of fighting for the victims. The only grievance is
A that in the process their right to take legal proceedings should not have
been completely taken away and that they should also have had the
liberty of participating in the proceedings right through. In fact,
though the Act contemplates the Central Government to completely
act in place of the victims, the Government of India has not in fact
B displaced them altogether. In all the proceedings pending in this
country, as well as those before Judge Keenan, the Government of
India has conducted the proceedings but the other victims or such of
them as chose to associate themselves in these proceedings by becom-
ing parties were not shut out from taking part in the proceedings. In
fact, as the learned Attorney General pointed out, one of the groups of
litigants did give great assistance to the trial judge at Bhopal. But even
c if the provisions of S. 3 had been scrupulously observed and the names
of all pa,rties, other than the Central Government, had been got
deleted from the array of parties in the suits and proceedings pending
in this country, we do not think that the result would have been fatal to
the interests of the litigants. On the contrary, it enabled the litigants to
o obtain the benefit of all legal expertise at the command of the Govern-
ment of India in exercising their rights against the Union Carbide
Corporation. Such representation can well be justified by resort to a
principle analogous to, if not precisely the same as that of, "parens
patriae". A victim of the tragedy is compelled to part with a valuable
right of his in order that it might be more efficiently and satisfactory
E exploited for his benefit than he himself is capable of. It is of course
possible that there may be an affluent claimant or lawyer engaged by
him, who may be capable of fighting the litigation better. It is possible
that the. Government of India as a litigant may or may not be able to
pursue the litigation with as much determination or capability as such a
litigant. But in a case of the present type one should not be con-
F founded by such a possibility. There are more indigent litigants than
affluent ones. There are more illiterates than enlightened ones. There
are very few of the claimants, capable of finding the financial where-
withal required for fighting the litigation. Very few of them are cap-
able of prosecuting such a litigation in this country not to speak of the
necessity to run to a foreign country. The financial position of UCIL
G was negligible compared to the magnitude of the claim that could arise
and, though eventually the battle had to be pitched on our own soil, an
initial as well as final recourse to legal proceedings in the U.nited States
was very much on the cards, indeed inevitable. In this situation, the
legislature was perfectly justified in coming to the aid of the victims
with this piece of legislation and in asking the Central Government to
H shoulder the responsibility by substituting itself in place of the victims
C.L. SAHU v. U.0.1. [RANGANATHAN, J.J 717

for all purposes connected with the claims. Even if the Act had pro-
vided for a total substitution of the Government of India in place of A
the victims and had completely precluded them from exercising their
rights in any manner, it could perhaps have still been contended that
such deprivation was necessary in larger public interest.

But the Act is not so draconian in its content. Actually, as we B
have said a little earlier, the grievance of the petitioners is not so much
that-
the Government
-
was entrusted with the functions. of a ·dominus
lifts in this litigation. Their contention is that the whole object and
purpose of the litigation is to promote the interests of the claimants, to
enable them to fight the UCC with greater strength and determination,
to help them overcome limitations of time, money and legal assistance
and to realise the best compensation possible consistent not only with c
the damage suffered by them but also consistent with national honour
and prestige. It is suggested that the power conferred on the Govern-
ment should be construed as one hedged in by this dominant object. A
divestiture of the claimant's rightin this situation would be reasonable,
it is said, only if the claimant's rights are supplemented by the .Govern- D
ment and not supplanted by it .
.,
Assuming the correctness of the argument, the provisions of the
proviso to S. 3(3) and of section 4 furnish an answer to this contention.
While the provision contained in the main part of section 3 may be
sufficient to enable the Government of India to claim to r_epresent the E
claimants and initiate and conduct suits or proceeding on their behalf,
the locus standi of th_e Government of India in suits filed by other
claimants before the commencement of the Act outside India would
naturally depend upon the discretion of the court enquiring into the
matter. That is why the proviso to section 3 makes the right of the
Government of India to represent and act in place of the victims in F
such proceedings subject to the permission of the court or authority
where the proceedings are pending. It is of course open to such court
to permit the Central Government even to displace the claimants if it is
satisfied that the authority of the Act is sufficientto enable it to do so.
In the present case it is common ground that the proceedings before
Judge Keenan were being prosecuted by the Central Government G
along with various individual claimants. Not only did Judge Keenan
permit the association of the Government of India in these proceed-
ings but the Government of India did have a substantial voice in the
course of those proceedings as well. •

Again section 4 mandates that, notwithstanding anything H
718 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.
<
A contained in section 3, the Central Government, in representing and
acting in place of any person in relation to any claim, shall have due
regard to any matters which such person may require to be urged with
respect to his claim. It also stipulates that if such person so desires, the
Central Government shall permit, at the expense of such person, a
legal practitioner of his choice to be associated in the conduct of any
B suit or other proceeding relating to his claim. In other words, though,
perhaps, strictly speaking, under section 3 the Central Government
can totally exclude the victim himself or his legal practitioner from
taking part in the proceedings (except in pending suits outside India),
section 4 keeps the substance of the rights of the victims in tact. It
enables, and indeed obliges, the Government to receive assistance
c Iffrom individual claimants to the extent they are able to offer the same.
any of the victims or their legal advisers have any specific aspect
which they would like to urge, the Central Government shall take it
into account. Again if any individual claimant at his own expense
retains a legal practitioner of his own choice, such legal practitioner
will have to be associated with the Government in the conduct of any
D suit or proceeding relating to his claim. Sections 3 and 4 thus combine
together the interests of the weak, illiterate, helpless and poor victims
as well as the interests of those who could have managed for ,.
themselves, even without. the help of this enactment. The combination
thus envisaged enables the Government to fight the battle with the
foreign adversary with the full aid and assistance of such of the victims
E or their legal advisers as are in a position to offer any such assistance.
Though section 3 denies the claimants the benefit of being eo nominee
parties in such suits or proceedings, section 4 preserves to them sub-
stantially all that they can achieve by proceeding on their own. In
other words, while seeming to deprive the claimants of their right to
take legal action on .their own, it has preserved those rights, to be
F exercised indirectly. A conjoint reading of sections 3 and 4 would, in
our opinion, therefore show that there has been no real total depriva-
tion of the right of the claimants to enforce their claim for damages in
appropriate proceedings before any appropriate forum. There is only a
restriction of this right which, in the circumstances, is totally reason-
able and justified. The validity of the Act is, therefore, not liable to be
G challenged on this ground.

The next angle from which the validity of the provmon is
attacked is that the provision enabling the Government to enter into a
compromise is bad. The argument runs thus: The object of the legisla-
tion can be furthered only if it permits the Government to prosecute
H the litigation more effectively and not if it enables the Government to
C.L. SAHU v. U.0.1. {RANGANATHAN, J.] 719

withdraw it or enter into a compromise. According to them, the Act
A
fails the impecunious victims in this vital aspect. The authority confer-
red by the Act on the Government to enter into a :;ettlement or com-
promise, it is said, amounts to an absolute negation of the rights of the
claimants to compensation and is capable of being so exercised to
render such rights totally valueless, as in fact, it is said, has happened.
B
It appears to us that this contention proceeds on a misapprehen-
sion. It is common knowledge that any authority given to conduct a
litigation cannot be effective unless it is accompanied by an authority
to withdraw or settle the same if the circumstances call for it. The
vagaries of a litigation of this magnitude and intricacy could not be
fully anticipated. There were possibilities that the litigation may have
to be fought out to the bitter finish. There were possibilities that the c
UCC might be willing to adequately compensate the victims either on
their own· or at the insistence of the Government concerned. There
was also the possibility, which had already been in evidence before
Judge Keenan, that the proceedings might ultimately have to end in a
negotiated settlement. One notices that in most of the mass disaster D
cases reported, proceedings finally end in a compromise if only to
avoid an indefinite prolongation of the agonies caused by such litiga-
tion. The legislation, therefore, cannot be considered to be unreason-
able _merely because in addition to the right to institute a suit or other
proceedings it also empowers the Government to withdraw the
proceedings or enter into a compromise. E

Some misgivings were expressed, in the course of the hearing, of
the legislative wisdom (and, hence the validity) of entrusting the car-
riage of these proceedings and, in particular, the power of settling it
out of Court, to the Union of India. It was contended that the union is
itself a jointtort-feasor (sued as such by some of the victims) with an F
interest (adverse to the victims) in keeping down the amount of com-
pensation payable to the minimum so as to reduce its own liability as a
joint tort-feasor. It seems to us that this contention in misconceived.
As pointed out by Mukharji, C.J., the Union of India itself is one of
the entities affected by the gas leak and has a claim for compensation
from the UCC quite independent of the other victims. From this point G
of view, it is in the same position as the other victims and, in the
litigation with the UCC, it has every interest in securing the maximum
amount of compensation possible for itself and the other victims. It is,
therefore, the best agency in the circumstances that could be looked
up to for fighting the UCC on its own as well as on behalf of the
1' victims. The suggestion that the Union is a joint tort-fessor has been H
720 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.
<
stoutly resisted by the learned Attorney General. But, even assuming
A that the Union has some liability in the matter, we fail to see-how it can
derive any benefit or advantage by entering into a low settlement with
the UCC. as is pointed out later in this judgment and by Mukharji,
C.J., the Act and Scheme thereunder have provided for an objective
and quasi-judicial determination of the amount of damages payable to
B the victims of the tragedy. There is no basis for the fear expressed
during the hearing that the officers of the Government may not be
objective and may try to cut down the amounts of compensation, so as
not to exceed the amount received from the UCC. It is common
ground and, indeed, the learned Attorney General fairly conceded, ,
that the settlement with the UCC only puts an end to the claims against
the UCC and UCIL and does not in any way affect the victims' rights,
c if any, to proceed against the Union, the State of Madhya Pradesh or
the ministers and officers thereof, if so advised. If the Union and these
officers are joint tort-fessors, as alleged, the Union will not stand to
gain by allowing the claims against the UCC to be settled for a low
figure. On the contrary it will be interested in settling the claims
D against the UCC at as high a figure as possible so that its own liability
as a joint to<t-feasor (if made out) can be correspondingly reduced.
We are, therefore, unable to see any vitiating element in the legisla-
tion insofar as it has entrusted the responsibility not only of carrying
on but also of entering ;nto a settlement, 1f thought fit.

,E Nor is there basis for the contention that the Act enables a settle-
ment to be arrived at without a proper opportunity to the claimants to
express their views on any proposals for settlement that may be
mooted. The right of the claimant under section 4 to put forward his
suggestions or to be represented by a legal practitioner to putforth his
own views in the conduct of the suit or other proceeding certainly
F extends to everything connected with the suit or other proceeding. If,
in the course of the proceedings· there should arise any question of
compromise or settlement, it is open to the claimants to oppose the
same and tiJ urge the Central Government to have regard to specific
aspects rn arriving at a settlement. Equally it is open to any claimant to
employ a legal practitioner to ventilate his opinions in regard to such
G proposals for settlement. The provisions of the Act, read by them-
selves, therefore, guarantee a complete and full protection to the
rights of the claimants in every respect. Save only that they cannot file
a suit themselves, their right to acquire redress has not really been
abridged by the provisions of the Act. Sections 3 and 4 of the Act
properly read, in our opinion, completely vindicate the objects and
H reasons which compelled Parliament to enact this piece of legislation.
C.L. SAHU v. U.0.1. [RANGANATHAN, J.] 721
)·

Far from abridging the rights of the claimants in any manner, these
A
provisions are so worded as to enable the Government to prosecute
the litigation with the maximum amount of resources, efficiency and
competence at its command as well as with all the assistance and help
that can be extended to it by such of those litigants and claimants as
are capable of playing more than a mere passive rule in the litigations
B
But then, it is contended, the victims have had no opportunity of
considering the settlement proposals mooted in this case before they
were approved by the Court. This aspect is dealt with later.

2. One of the contentions before·us was that the UCC and UCIL
are accountable to the public for the damages caused by their indus-
trial activities not only on a basis of strict liability but also on the basis c
that the damages to be awarded against them should inclu.de an
element of punitive liability and that this has been lost sight of while
approving of the proposed settlement. Reference was made in this
context to M.C. Mehta's case (supra). Whether the settlement should
have taken into account this factor is, in the first place, a moot ques- D
lion. Ml!kharji, C.J. has pointed out-arid we are inclined to agree-
that this is an "uncertain province of the law" and it is premature to
say whether this yardstick has been, or will be, accepted in this
country, .not to speak of its international acceptance which may be
necessary should occasion arise for executing a decree based on such a
yardstick in another country. Secondly, whether the settlement took E
this into account and, if not, whether it is bad for not having kept this
basis in view are questions that touch the merits of the settlement with
which we are not concerned. So we feel we should express no opinion
here op this issue. It is too far-fetched, it seems to us, to contend that
the provisions of the Act permitting the Union of India to enter into a
compromise should be struck down as unconstitutional because they F
have· been construed by the Union of India as enabling it to arrive at
sucb a settlement.

The argument is that the Act confers a discretionary and enabl-
ing power in the Union to arrive at a settlement but Jays down no
guidelines or indications as to the stage at which, or circumstances in G
which, a settlement can be reached or the type of settlement that can
be arrived at; the power conferred should, therefore, be struck down
as unguided, arbitrary and uncanalised. It is difficult to accept this
contention. The power to conduct a litigation, particularly in a case of
this type, must, to be effective, necessarily carry with it a power to
._." _settle it at any stage. It is impossible to provide statutorily any detailed H
722 SUPREME COURT REPORTS [1989) Supp. 2 S.C.R.

A catalogue of the situations that would justify a settlement or the basis
or terms on which a settlement can be arrived at. The Act, moreover,
cannot be said to have conferred any unguided or arbitrary discretion
to the Union in conducting proceedings under the Act. Sufficient
guidelines emerge from the Statement of Objects and Reasons of the
Act which makes it clear that the aim and purpose of the Act is to secure
B speedy and effective redress to the victims of the gas leak and that all
steps taken in pursuance of the Act should be for the implementation
of the object. Whether this object has been achieved by a particular
settlement will be a different question but it is altogether impossible to
say that the Act itself is bad for the reason alleged. We, therefore,
think it necessary to clarify, for our part, that we are not called upon to
express any view on the observations in Mehta's case and should not be
c understood as having done so.

3. Shri Shanti Bhushan, who supported the Union's stand as to
the validity of the Act, however, made his support conditional on
reading into its provisions an obligation on the part of the Union to
D make interim payments towards their maintenance and other needs
consequent on the tragedy, until the suits filed on their behalf ulti·
mately yield tangible results. That a modem welfare State is under an
obligation to give succour and all kinds of asistance to people in <
distress cannot at all be gainsaid. In point of fact also, as pointed out
by the learned Chief Justice, the provisions of the Act and scheme
E thereunder envisage interim payments to the victims; so, there is
nothing objectionable in.this Act on this aspect. However, our learned
brother has accepted the argument addressed by Shri Shanti Bhushan .
which goes one step further viz. that the Act would be unconstitutional
unless this is read as "a major inarticulate promise" underlying the
Act. We doubt whether this extension would be justified for the
F hypothesis underlying the argument is, in the words of Sri Shanti
Bhushan, that had the victims been left to fund for themselves, they
would have had an "immediate and normal right oi obtaining compen-
sation from the Union Carbide" and, as the legislation has vested their
rights in this regard in the Union, the Act should be construed as
creating an obligation on the Central Government to provide interim
G relief. Though we would emphatically reiterate that grant of interim
relief to ameliorate the plight of its subjects in such a situation is a
matter of imperative obligation on the part of the State and not merely
'a matter of fundamental human decency' as Judge Keenan put it, we
think that such obligation flows ·from its character as a welfare State
and would exist irrespective of what the statute may or may not pro-
H vide. In our view the validity of the Act does not depend upon its -
C.L. SAHU v. U.0.I. IRANGANATHAN. J.] 723

expliCitly or implicitly providing for interim payments. We say this for
. two reasons. In the first place, it was, and perhaps still is, a moot A
question whether a plaintiff suing for damages in tort would be entitled
to advance or interim payments in anticipation of a decree. That was,
indeed, the main point on which the interim orders in this case were
.challenged before this Court and, in the context of the events that took
place, remains undecided. It may be mentioned here that no decided B
case was brought to our notice in which interim payment was ordered
pending disposal of an action in tort in this oountry. May be there is a
strong case for ordering interim payments in such a case but, in the
absence of full and detailed consideration, it cannot be assumed that,
left to themselves, the victims would have been entitled to a "normal
and immediate" right to such payment. Secondly, even assuming such
right exists, all that can be said is that the State, which put itself in the C
place of the victims, should have raised in the suit a demand for such
interim compensation-which it did-and that it should distribute
among the victims such interim compensation as it may receive from
the defendants. To say that the Act would be bad.if it does not provide
for payment of such compensation by the Government irrespective of D
what may happen in the suit is to impose on the State an obligation
higher than what flows from its being subrogated to the rights of the
victims. As we agree that the Act and the scheme thereunder envisage
interim relief to the victims, the point is perhaps only academic. But
we felt that we should mention this as we are not in full agreement with
Mukharji, C.J., on this aspect on the case. E

4. The next important aspect on which much debate took place
before us was regarding the validity of the Act qua the procedure
envisaged by ii for a compromise or settlement. It was argued that if
the suit is considered as a representative suit no compromise or settle-
ment would be possible without notice in some appropriate manner to F
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 G
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 rep-
resentative action envisaged in the Code of Civil procedure. The Act H
724 SUPREME COURT REPORTS 11989] Supp. 2 S.C.R.

A deals with a class of action which is sui generis and for which a special
formula has been found and encapsuled in S. 4. The Act divests the
individual claimants of their right to sue and vests it in the Union. In
relation to suits in India, the Union is the sole plaintiff, none of the
others are envisaged as plaintiffs or respondents. The victims of the
tragedy were so numerous that they were never defined at the stage of
B filing the plaint nor do they need to be defined at the stage of a
settlement. The litigation is carried on by the State in its capacity, not
exactly the same as but somewhat analogous to that of a "parens
patriae". In the case of a litigation by karta of a Hindu Undivided
Family or by a guardian on behalf of a ward, who is non-sui juris, for
example, the junior members of the family or the wards, are not to be
consulted before entering into a settlement. In such cases, the Court
C acts as guardian of such persons to scrutinise the settlement and satisfy
itself that it is in the best interest of all concerned. It is later discovered
that there has been any fraud or collusion, it may be open to the junior
membel'S of the family or the wards to call the karta or guardian to
account but, barring such a contingency, the settlement would be
D effective and binding. In the same way, the Union as "parens patriae"
would have been a! liberty to enter into such settlement as it con-
sidered b.est on its own and seek the Court's approval therefor.

However, realising that the litigation is truly fought on behalf
and for the benefit of innumerable, though not fully identified victims
E the Act has considered it necessary to assign a definite role to the
individual claimants and this is spelt out in S. 4. This section directs:

(i) that the union shall have due regard to any matters which
such person may require to be urged with respect to his claim;
and
F
(ii) that the Union shall, if such person so desires, permit at the
expense of such person, a legal practitioner of his choice to be
associated in the conduct of any suit or other proceeding relating
to his claim.

G This provision adequately safeguards the interests of individual
victims. It enables each one of them to bring to the notice of the Union
any special features or circumstances which he would like to urge in
respect of any matter and if any such features are brought to its notice
the Union is obliged to take it into account. Again, the individual
claimants are also at liberty to engage their own counsel to associate
H with the State counsel in conducting the proceedings. If the suits in this
C.L. SAHU v. U.0.1. [RANGANATHAN, J.J 725

case had proceeded, in the normal course, either to the stage of a
decree or even to one of settlement the claimants could have kept A
themselves abreast of the developments and the statutory provisions
would have been more than adequate to ensure that the points of view
of all the victims are presented to the court. Even a settlement or
compromise could not have been arrived at without the court being
apprised of the views or any of them who chose to do so. Advisedly, B
the statute has provided that though the Union of India will be the
dominus titi.< in the suit, the interests of all the victims and their .claims
should be safeguarded by giving them a voice in the proceedings to the
extent indicated above. This provision of the statute is an adaptation
of the principle of 0. I. r. 8 and of Or. XXIII r. 3 of the Code of Civil
Procedure in its application to the suits governed by it and, though the
extent of participation allowed to the victims is somewhat differently c
enunciated in the legislation, substantially speaking, it does incorpo-
rate the principles of natural justice to the extent possible in the
circumstances. The statute cannot, therefore, be faulted, as has been
pointed out earlier also, on the ground that it denies the victims an
opportunity to present their views or places them at any disadvantage D
in the matter of having an effective voice in the matter of settling the
suit by way of compro1llise.

The difficulty in this case has arisen, as we see it, because of a
fortuitous circumstance viz. that the talks of compromise were
mooted and approved in the course of the hearing of an appeal from E
an order for interim payments. Though compromise talks had been in
the air right from the beginning of this episode, it is said that there was
an element of surprise when they were put forward in Court in
February, 1989. This is not quite correct. It has been pointed outthat
even when the issue regarding the interim relief was debated in the
courts below, attempts were made to settle the whole litigation. The F
claimants were aware of this and they could-perhaps should-have
anticipated that similar attempts would be made in this Court also.
Though certain parties had been associated with the conduct of the
proceedings in the trial court-and the trial judge did handsomely
acknowledge their contribution to the proceedings-they were appa-
rently not alert enough to keep a watching brief in the Supreme Court, G
may be under the impression that the appeal here 'Vas concerned only
with the quantum of interim relief. One set of parties was present in
th.e Court.but, apart from praying that he should be forthwith paid.a
share in the-amount that would be deposited in Court by the UCC in
pursuance of the settlement, no attempt appears to have been made to
put forWard a contention that the amount of settlement was .inade' H
726 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.

quate or had not taken into account certain relevant considerations.
A
The Union also appears to have been acting on the view that it could
proceed ahead on its own both in its capacity as "parens patraie" as
well as in view of the powers of attorney held by it from a very large
number of the victims though the genuineness of this claim is now
contested before us. There was a day's interval between the enuncia-
B tion of the terms of the settlement and their approval by the Court.
Perhaps the Court could have given some more publicity to the prop-
osed settlement in the newspapers, radio and television and also
permitted some time to lapse before approving it, if only to see
whether there were any other points of view likely to emerge. Basi- r•

cally speaking, however, the Act has provided an adequate opportu-
nity to the victims to speak out and if they or the counsel engaged by
c some of them in the trial court had kept in touch with the proceedings
in this court, they could have most certainly made themselves heard. If
~ feeling has gained ground that their voice has not been fully heard,
the fault was not with the statute but was rather due to the develop-
ments leading to the finalisation of the settlement when the appeal
D against the interim order was being heard in this Court.

One of the points of view on which considerable emphasis was
laid in the course of the arguments was that in a case of this type the
offending parties should be dealt with strictly under the criminal law of
the Land and that the inclusion, as part of the settlement, of a term
E requiring the withdrawal of the criminal prosecutions launched was
totally unwarranted and vitiates the settlement. It has been pointed
out by Mukharji, C.J.,-and we agree-that the Act talks only of the
civil liability of, and the proceedings against, the UCC or· UCIL or
others for damages caused by the gas leak. It has nothing to say about
the criminal liability of any of the parties involved. Clearly, therefore,
F this part of the settlement comprises a term which is outside the
purview of the Act. The validity of the Act cannot, therefore,. be
. impugn~d on the ground thar it permits-and should not have per-
mitted~the withdrawal of criminal proceedings against the delin-
quents. Whether in arriving at the settlement, this aspect could also
have been taken into account and this term included in it, is a question
G concerning the validity of the settlement. This is a question outside the
terms of reference to us and we, therefore, express no opinion in
regard thereto.

5. A question was mooted before us as to whether the actual
settlement-if not the statutory provision-is liable to be set aside on
H the grounds that the principles of natural justice have been flagrantly
C.L. SAHU v. U.0.1. [RANGANATHAN, J.] 727

violated. The merits of the settlement as such are not in issue before us
A
and nothing we say can or should fetter the hands of the Bench hear-
ing a review petition which has already been filed, from passing such
orders thereon as it considers appropriate.

Our learned brother, however, has, while observing that the
question referred to us is limited to the validity of the Act alone and B
not· the settlement, incidentally discussed this aspect of the case too.
He has pointed out that justice has in fact been done and that all facts
and aspects relevant for a settlement have been considered. He has
pointed out that the grievance of the petitioners that the order of this
Court did not give any basis for the settlement has since been sought to
be met by the order passed on 4th May, 1989 giving detailed reasons.
This shows that the Court had applied its mind fully to the terms of the
c
settlement in the light of the data as well as all the circumstances
placed before it and had been satisfied that the settlement proposed
was a fai; ,and reasonable one that could be approved. In actions of this
type, th{;! Court's approval is the true safety valve to prevent unfair
settlements and the fact i.s that the highest Court of the land has given D
thought to the matter and seen it fit to place its seal of approval to the
settlement. He has also pointed out that a post-decisional hearing in a
matter like this will not be of much avail. He has further pointed out
that a review petition has already been filed in the case and is listed for
hearing. The Court has already given an assuranGe in its order of May
4, 1989, that it will only be too glad to consider any aspects that may E
have been overlooked in considering the terms of the settlement. Can
it be said, in the circumstances, that there has been a failure of justice
which compels us to set aside the settlement as totally violative of
fundamental rights? Mukharji, C.J., has pointed out that the answer
to this question should be in the negative. It was urged that there is a
feeling that the maxim: "Justice must not only be done but must also F
appear to be done" has not been fully complied with and that perhaps,
if greater publicity had attended the hearing, many other facts and
aspects could have been highlighted resulting in a higher settlement or
no settlement at all. That feeling can be fully ventilated and that defi-
ciency can be adequately repaired, it has been pointed out by
Mukharji, C.J., in the hearing on the review petition pending before G
this Court. Though we are prima facie inclined to agree with him that
there are good reasons why the settlement should not be set aside on
the ground that the principles of natural justice have been violated,
quite apart from the practical complications that may arise as the result
of such an order, we would not express any final opinion on the vali-·
dity of the settlement but would leave it open to be agitated, to the H
728 SUPREME COURT REPORTS [1989] Supp. 2 S.C.R.
-(
extent permissible in law, in the review petition pending before this
A
Court.

There is one more aspect which we may perhaps usefully refer to
in this context. The scheme of the Act is that on the one hand the
Union of India pursues the litigiation against the UCC and the UCIL;
B on the other all the victims of the tragedy are expected to file their
claims before the prescribed authority and have their claims for com-
pensation 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
c prescriptions of the amounts of compensation by categorising the
nature of injuries) with an appeal to an officer who has judicial qualifi-
cations. 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
D processed. A correct picture as to whether the amount of compensa-
tion 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
E for settlement.

For these reasons, it would seem more correct and proper not to
disturb the orders of 14-15 February, 1989 on the ground that the rules
of natural justice have not been complied with, particularly in view of
the pendency of the review petition.
F
6. Before we conclude, we would like to add a few words on the
state of the law of torts in this country. Before we gained indepen-
dence, on account of our close association with Great Britain, we were
governed by the common law principles. In the field of torts, under the
commori law of England, no action could be laid by the dependants or
G heirs of a person whose death was brought about by the tortious act of
another on the maxim actio persona/is moritur cum person.a, although
a person injured by a similar act could claim damages for the wrong
done to him. In England this situation was remedied by the passing of
the Fatal Accidents Act, 1846, popularly known as Lord Campell's
Act. Soon thereafter the Indian Legislature enacted the Fatal acci-
H dents Act, 1855. This Act is fashioned on the lines of the English Act
C.L. SAHU v. U.0.1. [RANGANATHAN, J.] 729

of 1846. Even though the English Act has undergone a substantial
change, our law has remained static and seems a trifle archaic. The A
magnitude of the gas leak disaster in which hundreds lost their lives
and thousands were maimed; not to speak of the damage to livestock,
flora and fauna, business and property, is an eye opener. The nation
must learn a lesson from this traumatic experience and evolve safe-
guards atleast for the future. We are of the view that the time is ripe to B
take a fresh look at the outdated century old legislation which is out of
tune with modern concepts.

While it may be a matter for scientists and technicians to find
solutions to avoid such large scale disasters, the law must provide an
effective and speedy remedy to the victims of such torts. The Fatal
Accidents Act, on account of its limited and restrictive application, is c
hardly suited to meet such a challenge. We are, therefore, of the
opinion that the old antiquated Act should be drastically amended or
fresh legislation should be enacted which should, inter a/ia, contain
appropriate provisions in regard to the following matters:
D
(i) The payment of a fixed minimum compensation on a
"no-fault liability" basis (as under the Motor Vehicles Act),
pending final adjudication of the claims by a prescribed forum;

(ii) The creation of a special forum with specific power to grant
interim relief in appropriate cases; E

'(iii) The evolution of a procedure to be followed by such forum
which will be conducive to the expeditious determination of
claims and avoid the high degree of formalism that attaches to
proceedings in regular courts; and
F
(iv) A provision requiring industries and concerns engaged in
hazardous activities to take ciut compulsory insurance against
third party risks.

In addition to what we have said above, we should like to say that
the suggestion made by our learned brother, K.N. Singh J., for the G
creation of an Industrial Disaster Fund (by whatever name called)
deserves serious consideration. We would also endorse his suggestion
that the Central Government will be well advised if, in future, it insists
on certain safeguards before permitting a transnational company to do
business in this country. The necessity of such safeguards, atleast in the
..... following two directions, is highlighted in the present case: H
730 SUPREME COURT REPORTS (1989) Supp. 2 S.C.R.

A (a) Shri Garg has alleged that the processes in the Bhopal Gas
Plant were so much shrouded in secrecy that neither the com-
position of the deadly gas that escaped nor the proper antidote
therefor were known to anyone in this country with the result
that the steps taken to combat its effects were not only delayed
but also totally inadequate and ineffective. It is necessary that
B
this type of situation should be avoided. The Government should
therefore insist, when granting licence to a transnational com-
pany to establish its industry here, on a right to be informed of
the nature of the processes involved so as to be able to take
prompt action in the event of an accident.

c (b) We have seen how the victims in this case have been consi-
derably handicapped on account of the fact that the immediate
tort-feasor was the subsidiary of a multi-national with its Indian
assets totally inadequate to satisfy the claims arising out of the
disaster. It is, therefore, necessary to evolve, either by interna-
tional consensus or by unilateral legislation, steps to overcome
D these handicaps and to ensure (i) that foreign corporations seek-
ing to establish an industry here, agree to submit to the jurisdic-
tion of the Courts in India in respect of actions for tortious acts in
this country; (ii) that the liability of such a corporation is not
limited to such of its assets (or the assets of its affiliates) as may
be found in this country, but that the victims are able to reach
E out to the assets of such concerns an}'where in the world; (iii)
that any ·decree obtained in Indian Courts in compliance with due
process of law is capable of being executed against the foreign
corporation, its affiliates and their assets without further pro-
cedural hurdles, in those other countries.
F Our brother, K.N. Singh, J., has in this context dealt at some -.
length with the United Nations Code of Conduct for multi-national
Corporations which awaits approval of various countries. We hope
that calamities like the one which this country has suffered will serve as
catalysts to expedite the acceptance of an international code on such
matters in the near future.
G
With these observations, we agree with the order proposed by
the learned Chief Justice.

G.N. Petitions disposed of.

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