Supreme Court: The 5-judge Constitution Bench of Sanjay Kishan Kaul*, Sanjiv Khanna, Abhay S. Oka, Vikram Nath and J.K. Maheshwari J.J. dismissed the curative petition seeking reconsideration of the settlement that was effected in the aftermath of the Bhopal gas tragedy.
“Providing closure to a lis is also a very important aspect. This is more so in the context of the scenario faced by the Indian judiciary, where delay is almost inevitable.”
The horrendous tragedy
On the night of 02-12-1984 and 03-12-1984, deadly chemical fumes escaped from the factory owned and operated by Union Carbide India Limited (‘UCIL’) in Bhopal. Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (‘1985 Act’) was enacted by the Union of India (‘UoI’) for providing remuneration to victims which granted the Central Government an exclusive right to represent and act in a place of every person who was entitled to make a claim for compensation. It also empowered the Central Government to institute suits or other proceedings and to enter into a compromise.
Union Carbide Corporation (‘UCC’) was a New York based corporation which owned 50.9% stock in UCIL at the time of the tragedy.
In the year 1987, the District Judge, Bhopal had passed an interim order, directing UCC to deposit a sum of Rs. 350 crores by way of interim compensation. However, in the year 1988, by way of a revision petition filed by UCC, this amount was reduced to Rs. 250 crores by the Madhya Pradesh High Court.
In a Special Leave Petition, the Supreme Court vide order dated 14-02-1989 and 15-02-1989 directed UCC to pay a sum of $470 million to UoI in settlement of all claims, rights, and liabilities relating to and arising out of the Bhopal Gas disaster and closing all further civil and criminal proceedings in the process.
The private parties by way of filing a review challenged the powers of Supreme Court to record a settlement which was upheld by one caveat that the extinguishment of criminal liabilities by the settlement was held to be inappropriate. The Court had stated that those persons who may have their claims determined after the fund was exhausted should not be left to fend for themselves since a reasonable way to protect the interest of the victims was to hold the UoI as a welfare State. Further the members of the population of Bhopal who were put at risk; and who though asymptomatic at the time and not having filed for compensation, might become symptomatic in future were also to be kept into for consideration. In addition, care had to be taken of unborn children of mothers exposed to toxicity, where such children later develop congenital defects. For such an eventuality, a medical group insurance cover was envisaged.
The UoI filed under the Court’s curative jurisdiction seeking enhancement of the settlement decided in the year 2010 instead of filing under the review petitions.
Central Government’s aim
In essence, it was to ‘top up’ the settlement i.e., maintain the factum of the settlement but to increase the amount which were based on the following categories:
Error in computation of Death Cases
Error in computation of Temporary Injury Cases
Error in computation of Minor Injury Cases
In certain categories, the actual number assumed by the Court had been found to be on the higher side resulting in the extra provision of compensation.
UoI had contended that since the revised amount was being claimed after 2 decades of the settlement, several aspects such as the devaluation of the rupee, interest rate, purchasing power parity and the inflation index ought to be taken into account.
Curative petition relates to a re-examination of a final judgment of this Court, particularly one that has already undergone such re-examination through the Court’s review jurisdiction. The Court therefore stated that it cannot devise a curative jurisdiction that is expansive in character when the Court’s review jurisdiction itself was so restrictive.
The Court noted that when review petitions were filed against the orders recording the settlement, the UoI opposed all other applications filed for reopening the settlement since its strategy was not to set aside the settlement but merely ‘top up’ the settlement. Therefore, the Court showcased its hesitation in allowing such sui generis relief since the inherent power ought not to be exercised to circumspect in reconsidering an order of this Court that had become final on dismissal of the review petition.
The Supreme Court noted that the basic consideration motivating the settlement was the compelling need for urgent relief as it was a question of survival for the thousands of persons rendered destitute by the ghastly disaster.
The Bench noted that a caveat in paragraph 14 was added wherein it was observed that if any material was placed for drawing a reasonable inference that UCC had earlier offered to pay any sum higher than the out-right down payment; it would result in the Court initiating a suo motu action.
Further, the Court agreeing with the submissions of the UCC stated that if the settlement was set aside, the only consequence would be to revive the suit. As a corollary, UoI would be required to lead evidence to establish UCC’s liability, and UCC would be entitled to have the US$ 470 million remitted back to it by the UoI with interest. The Court stated that if evidence were to be led for each claimant, this would open a pandora’s box in UCC’s favour which would only be to the detriment of the beneficiaries.
The Court stated that it was not a ‘midnight settlement’ whereby a fraud was played upon this Court and the UoI. The settlement amount was actually in excess and in case of minor injuries ranging between Rs. 50,000 to Rs. 4 Lakh and an additional Rs. 50,000 were paid in cases of mere presence in the gas affected areas of Bhopal on the fateful night.
“While we sympathize with the victims of the awful tragedy, we are unable to disregard settled principles of law, particularly at the curative stage. Mere sympathy for the sufferers does not enable us to devise a panacea; more so while looking into the nature of dispute, and the multifarious occasions on which this Court has applied its mind to the settlement.”
The Court was conscious of the fact that the exchange rate worked in the UoI’s favour as the exchange rate of the Dollar rate escalated. Some interest on the settlement amount also came in which allowed UoI to work out more wholesome allotment for the claimants. The Court noted that only compensatory mechanism known to common law was that of a lump-sum settlement.
“This was deemed far more preferable to the alternative option, whereby the suit would be allowed to be tried without a reasonable expectation of knowing when the trial would come to an end.”
The Court stated that it was the UoI’s own stand that the Commissioner had adjudicated all the claims through procedure established by law where the possibility of appeal was provided with.
The Bench stated that the scenario arising ‘in case of a shortage’ was clearly outlined in the review judgment, i.e., the responsibility was placed on UoI, being a welfare State to make good the deficiency and to take out the relevant insurance policies. However, to the “Court’s surprise no such insurance policy was taken out which was held to be a gross negligence on part of the Union of India and in breach of the directions made in the review judgment. The Union cannot be negligent on this aspect and then seek a prayer from this Court to fix such liability on UCC.”
The Bench was of the view that the UoI’s s claim for a ‘top up’ had no foundation in any known legal principle. Either a settlement was valid or it was to be set aside in cases where it was vitiated by fraud. However, no such fraud had been pleaded by UoI, and their only contention was related to the number of victims, injuries, and costs that were not contemplated at the time the settlement was effected. Therefore, disagreed with the fact that the method for ‘topping up’ the settlement would amount to be devised under Article 142 of the Constitution.
The Bench expressed its dissatisfaction with UoI being unable to furnish any rationale for raking up the issue after these many years. The Court stated that even assuming that the figures of affected persons turned out to be larger than contemplated earlier, an excess amount of funds remained available to satisfy such claims and directed that the sum of Rs 50 crore lying with the RBI be utilised by UoI to satisfy pending claims, if any, in accordance with the 1985 Act and the Scheme framed thereunder.
With the above observation, the Court dismissed the present curative petition leaving parties to bear their own costs.
[Union of India v Union Carbide Corporation, Curative Petition (c) 345-347 of 2010 in Revision Petition 229 of 1989 and 623-624 of 1989 in Civil Appeal 3187-3188 of 1988 and Special Leave Petition 13080 of 1988, decided on 14-03-2023]
Judgement authored by Justice Sanjay Kishan Kaul.
Advocates who appeared in this case :
For the petitioner- Advocate on Record Shreekant Neelappa Terdal, Advocate on Record Gurmeet Singh Makker, Advocate Karuna Nundy, Advocate on Record Aparna Bhat, Advocate Nischal Anand, Advocate Rahul Narayan, Advocate Muskan Tibrewala, Advocate Amanpreet Singh, Advocate Ragini Nagpal, Advocate Ishaan Karki, Advocate Sanchith Shiva Kumar and Advocate Karishma Maria;
For the respondent- Senior Advocate H. N. Salve, Senior Advocate Ravindra Shrivastava, Senior Advocate Sidharth Luthra, Advocate on Record Shiraz Contractor Patodia, Advocate Ashish Singh, Advocate Divya Sharma, Advocate Juhi Chawla, Advocate Mayank Singhal, Advocate Sanya Shukla, Advocate Varun Varma, Advocate Gayatri Goswami, Advocate Devangna Singh, Advocate Pankaj Singhal, Advocate Ayush Anand, Advocate Ieshan Sharma, Advocate on Record Bina Gupta, Senior Advocate Sanjay Parikh, Advocate on Record Anuj Kapoor, Advocate on Record Mrinal Gopal Elker, Additional Attorney General Saurabh Mishra, Advocate on Record Sunny Choudhary.