Holding

The Supreme Court ordered Union Carbide Corporation to pay US$470 million to the Union of India as full and final settlement, transferred all civil proceedings to its jurisdiction, and quashed all criminal proceedings related to the Bhopal gas disaster.

Summary

The Supreme Court heard a civil appeal concerning the Bhopal gas leak disaster, where Union Carbide Corporation (UCC) sought to resolve all claims arising from the tragedy. After reviewing extensive evidence, including data from U.S. courts and settlement negotiations, the Court deemed a comprehensive settlement appropriate. It ordered UCC to pay US$470 million to the Union of India as full and final settlement for all civil and criminal liabilities. The Court transferred all pending civil suits to its jurisdiction for disposition under the settlement and quashed all criminal proceedings related to the disaster. It also discharged prior undertakings by UCC and directed that the payment be made in specified installments by 31 March 1989. The order effectively extinguished all present and future claims against UCC and its affiliates, providing a final resolution to the victims' compensation.

Issues considered

Whether the Supreme Court can sanction a full and final settlement of all civil and criminal claims arising from the Bhopal gas disaster.
Whether the Court can order the transfer and dismissal of all pending civil suits and the quashing of criminal proceedings.
Whether the Court can direct a specific monetary payment by the corporate defendant as settlement.
Whether prior undertakings and orders in lower courts can be discharged upon settlement.

Subjects

Bhopal gas disasterfull and final settlementcivil proceduretransfer of suitsquashing criminal proceedingscompensationSupreme Court of Indiainternational litigation

Judgment

x-~

A UNION CARBIDE CORPORATION
v.
UNION OF INDIA AND 01HERS, ETC.

FEBRUARY 14-15, 1989
)C -<
B [R.S. PATHAK, CJ, E.S. VENKATARAMIAH,
RANGANATH MISRA, M.N. VENKATACHALIAH AND
N.D. OJHA, JJ.]

Having carefully considered the facts and circumstances of the ~
/ .
case, the mass of data placed before It, the material relatin1; to the
proceedings in the Courts in the U.S.A., the offers and counter-offers
c made between the parties at different stages during the varnous pro-
ceedings, the complex issues of law and fact raised before it: s1nd the -+
submissions made thereon, and in particular, the enormity ~if human
suffering occasioned by the Bhopal Gas Leak Disaster and the pressing
urgency to provide Immediate and substantial relief to victims of the
D disaster, the Court was of opinion that the case was fit for an overall
settlement between the parties covering all litigations, claims, rights
and liabilities related to and arising out of the Disaster and HELD that
it was just, equitable and reasonable to order as follows:
-t·
(1) That the Union Carbide Corporation shall, on or before
E 23.3.1989, pay a sum of U.S. Dollars 470 millions to the Union of
India as claimant and for the benefit of all victims of the Bhopal ,.,
Gas Leak Disaster under the Bhopal Gas Leak Disaster (IRE'l!istra-
tlon and processing of claims) Scheme 1985 and not a1: fines,
penalties or punitive damages, in full settlement of all •claims,
rights and liabilities related to and arising out of the Bhopal Gas ~I ·~
F Leak Disaster; [733F-G]

(2) That all civil proceedings related to and arising out of the
Disaster shall stand transferred to this Court and shall stand con-
eluded in terms of the settlement, and all criminal proe<!edlngs
related to and arising out of the disaster shall stand quashed
G wherever pending; [732F-G I
'--f
(3) That upon fuU payment of the sum referred to above:

(a) The Union oflndia and the State of Madhya Pradesh shall
take all steps which may in future become necessary in order
H to implement and give effect to this order, including but not
730
UNION CARBIDE CORPN. v. U.0.1. 731

limited to ensuring,
.
that any suits, claims or civil or criminal
/
A
complaints which may be tiled in future against any Corpora-
tion, Company or person referred to in the Settlement are
defended by them and disposed ofin terms of this order; [734
A-BJ
(b) Any such suits, claims or civil or criminal proceedings
B
tiled or to be filed before any court or authority are hereby
enjoined and shall not be proceeded with before such court or
authority except for dismissal or quashing in terms of this
order; and [734C]
(4) That upon full payment in accordance with the directions
issued by the Court,
c
(a) The undertaking given by Union Carbide Corporation
pursuant to the order dated 30.11.1986. in the District Court,
Bhopal shall stand discharged, and all orders passed in Suit
No. 1113 of 1986 and/or in revision therefrom shall also stand·
discharged; [7340] D

(b) Any action for contempt initiated against counsel or
parties relating to this case and arising out of proceedings in
-+ the courts below shall be treated as dropped. [734E]

.. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3187-
88of 1988 .
E

From the Judgment and Order dated 4.4.1983 of the Madhya
. Pradesh High Court in C.R. No. 26 of 1988 .

. .__.,- -f - AND VICE VERSA F

(WITH S.L.P. (CIVIL) No. 13080of 1988).

K. Parasaran, Attorney General, F.S. Nariman, Anil B. Divan,
B.R. Zaiwala, Gopal Subramaniam, V.P. Sarthi, J.B. Dadachanji,
Vi jay Gupta, Ms. Anjali K. Verma, Sumeet Kachwaha, Ashok Sagar, G
D.N. Misra, S.C. Sharma, 0.C. Mathur, A. Subhashini, S.K.
Gambhir, D.S. Shastri and Arun Madan for the appearing parties.

Vibhuri Jha, Anil K. Nauriya, Ms. _Aruna Mathur, A. Mariar-
putham and C.L. Sahu for the Interveners.
H
732 SUPREME COURT REPORTS [1989] 1 S.C.R.

A The following Order of the Court was delivered: ·

ORDER

Having given our careful consideration for these several days to
the facts and circumstances of the case placed before us by the parties
B in these proceedings, including the pleadings of the parties, the mass
of data placed before us, the material relating to the proceedings in the
Courts in the United States of America, the offers and count1er-offers
made between the parties at different stages during the various pro-
ceedings, as well as the complex issues of law and fact raised before us
and the submissions made thereon, and in particular the enormity of
C human suffering occasioned by the Bhopal Gas disaster and the pres-
sing urgency to provide immediate and substantial relief to victims of
the disaster, we are of opinion that the case is pre-eminently fit for an
overall settlement between the parties covering all litigations, claims,
rights and liabilities related to and arising out of the disaster and we
hold it just, equitable and reasonable to pass the following order:
D
We order:

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

(2) The aforesaid sum shall be paid by the Union Carbide Cor-
poration to the Union of India on or before 31 March, 1989.

F (3) To enable the effectuation of the settlement, all civil pro-
ceedings related to and arising out of the Bhopal Gas disas-
ter shall hereby stand transferred to this Court and shall
stand concluded in terms of the settlemen.t, and all criminal
proceedings related to and arising out of the disaster shall
stand quashed wherever these may be pending.
G
A memorandum of settlement shall be filed before us tomorrow set-
ting forth all the details of the settlement to enable cons'<G.uential
directions, if any, to issue.

We may record that we are deeply Indebted to learned counsel
H for the parties for the dedicated assistance and the sincere cooperation
UNION CARBIDE CORPN. v. U.0.1. 733
.-\
they have offered the Court during the hearing of the case and for the
----+- manifest reasonableness they have shown in accepting the terms of
settlement suggested by this Court.

Having heard learned counsel for the parties, and having taken
into account the written memorandum filed by them, we make the B
following order further to our order dated 14 February, 1989 which
~ ~-
shall be read with and subject to this order:

.. "
t
'f- .
1. Union Carbide India Ltd., which is already a party in numer-
ous suits filed in the District Court at Bhopal, and which have
been stayed by an order dated 31 December, 1985 of the.
District Court, Bhopal, is joined as a necessary party in order c
to effectuate the terms and conditions of our order dated 14
February, 1989 ~s supplemented by this order.
->-
I
2. Pursuant to the order passed on 14 February 1989 the pay-
ment of the sum of U.S. $ 470 Millions (four Hundred and D
Seventy millions) directed by the Court to be paid on or be-
fore 31March,1989will be made in the manner following:

(a) A sum of U.S.$ 425 Millions (four Hundred and Twenty
five Millions) shall be paid on or before 23 March, 1989
, -t- by Union Carbide Corporation to the Union of India, less E
U.S. $ 5 Millions already paid by the Union Carbide
Corporation pursuant to the order dated 7 June, 1985 of
Judge Keenan in the court proceedings taken in ·the
United States of America.

(b) Union Carbide India Ltd. will pay on or before 2.3 March, F

---+· ' 1989 to the Union of India the rupee equivalent of U.S.$
45 Millions (forty five Millions) at the exchange rate pre-
vailing at the date of payment.

( c) The aforesaid payments shall be made to the Union of
India as claimant and for the benefit of all victims of the G
Bhopal Gas Disaster under the Bhopal Gas Leak Disaster
(Registration and Processing of Claims), Scheme, 1985,
~nd not as fines, penalties, or-punitive damages.
Jr"
3. Upon full payment of the sum referred to in paragraph 2
above: H
734 SUPREME COURT REPORTS [1989) J S.C.R.

(a) The Union of India and the State of Madhya Pradesh )r---
A
shall take all steps which may in future become_ necessary
in order to implement and give effect to this order includ-
ing but not limited to ensuring that any suits, claims or
civil or criminal complaints which may be filed in future
against any Corporation, Company or person referred to
B in this settlement are defended by them and disposal of in )( -~
terms of this order.

(b) Any such suits, claims or civil or criminal proceedings
filed or to be filed before any court or authority are
hereby enjoined and shall not be proceeded with before .
x,..
)

such court or authority except for dismissal or quashing in
c terms of this order.

4. Upon full payment in accordance with the Court's dire,ctions:

(a) The undertaking given by Union Carbide Corporation
D pursuant to the order dated 30 November, 1986 in the
District Court, Bhopal shall stand discharged, and all
order passed in Suit No. 1113 of 1986 and/or in·revision
therefrom shall also stand discharged.

(b) Any action for contempt initiated against counsel or
E parties relating to this case and arising out of proceedings
in the courts below shall be treated as dropped.

5. The amounts payable to the Union of India under these
orders of the Court shall be deposited to the credit of the
Registrar of this Court in a Bank under directions to be taken {
F from this Court. ., · ·--,._.,..

This order will be sufficient authority for the Registrar of the
Supreme Court to have the amount transferred to his credit
which is lying unutilized with the Indian Red Cross Society
pursuant to the direction from the International Red Cross
G Society.

6. The terms of settlement filed by learned counsel for the ~
parties today are taken on record and shall form part of our
order and the record.

H The case will be posted for reporting compliance on the first
Tuesday of April, 1989.
\

UNION CARBIDE CORPN. v. U.0.1. 735.

TERMS OF SETTLEMENT CONSEQUENTIAL TO THE DIREC- A
TIONS AND ORDERS PASSED BY THIS HON'BLE COURT

1. The parties acknowledge that the order dated February 14,
1989 as supplemented by the order dated February 15, 1989 disposes of
in its entirety all proceedings in Suit No. 1113 of 1986. This settlement
B
shall finally dispose. of all past, present and future claims, causes of
· ;,( action and civil and criminal proceedings (of any nature whatsoever
wherever pending) by all Indian citizens and all public and private
entities with respect to all past, present and future deaths, personal
injuries, health effects, compensation, losses, damages and civil and
criminal complaints of any nature whatsoever against UCC, Union
Carbide India Limited, Union Carbide Eastern, and ali of their sub- c
sidiaries and affiliates as well as each of their present and former
directors, officers, employees, agents representatives, attorneys advo-
cates and solicitors arising out of, relating to or connected with the
·Bhopal gas leak disaster, including past, present a1,1d future claims,
causes of action and proceedings against each other. All such claims
D
and causes of action whether within or outside India of Indian citizens,
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 with prejudice, and all such criminal proceed-
ings including contempt proceedings stand quashed and accused E
deemed to be acquitted.

2. Upon full payment in accordance with the Court's directions
the undertaking given by UCC pursuant to the order dated November
)~O, 1986 in the District Court, Bhopal stands discharged, and all orders
F
- X .-'tl'assed in Suit No. 1113 of 1986 and or in any Revision therefrom, also
stand discharged.

Sd/-J.B. Dadachanji Sd/-A. Subhashini 15.2.1989
for UCC and UCIL Ltd. Advocate on Record for
15.2.1989 Union of India.