Oleum gas Case: Extreme ownership. That is what the self-help diary of military blokes prescribes. Somehow, society does not always follow. The legal system makes space for common human traits like committing mistakes. It may be true for the average member, but not for hazardous industries. Their owners have to be absolutely liable for any kind of accident.
Strict liability
After the Bhopal Gas tragedy, citizens all across the country became aware of industrial hazards. On greater inquiry, they found that company owners and workers went scot-free in those cases. The reason was a century-old rule that dominated court proceedings. It is a strict liability rule evolved in the Rylands v. Fletcher case. As the name implies, strict liability means that if any hazardous substance escapes from any premises and causes damage, the person who kept the substance in that premises is held liable. It applies to the owner of land as well.
The problem is that this rule is not strict in an absolute sense. It concedes space for some exceptions. These include damage caused by an act of God, act of any third party, or the person who sustained the damage himself. Moreover, if a person has consented to the possibility of some damage, the owner won’t be liable.
The rule was good for the year 1868, when technology-led exponential growth was not present. However, it was not pragmatic in the 20th century. The Bhopal gas tragedy demanded stricter rules.
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Oleum gas leak case
At that time, there was a similar case of leakage in the Kirti Nagar area of Delhi. Lawyer M.C. Mehta filed a writ petition to close down “Shriram Industries,” which was operating in a dense area. Mr. Mehta wanted its closure and relocation due to the inherent risk. While the hearing was going on, one day some leakage occurred, leading to the death of a Tis Hazari Court lawyer. Mehta filed another PIL under Articles 21 and 32 of the Constitution of India. The Oleum gas Case was ultimately referred to a larger bench.
Shriram Industries insisted that Mehta was not even party to damage. The Apex Court held that given the paucity of resources to approach the Court in the country, even a letter written to the Justices could be used as a writ petition. The Apex Court justified it on the basis of observations held in S.P. Gupta’s case, the People’s Union for Democratic Rights case, and Babdhua Mukti Morcha’s case.
The Court also relied on its powers under Article 32(1) and 32(2) to “devise any procedure appropriate for the particular purpose of the proceeding, namely, enforcement of a fundamental right” and “issue whatever direction, order, or writ.”
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Industries have to borne the cost
In order to arm itself with the authority to award compensation for fundamental rights, the Court cited the Rudal Shah and Bhim Singh cases. In the same vein, the Court cautioned that compensation for violations of fundamental rights should be given only when “infringement was patent and incontrovertible, the violation was gross, and its magnitude was such as to shock the conscience of the court.”
Now, the question was whether Shriram Industries bore any responsibility for the damage or not. On their part, owners put up a spirited defence under strict liability rules. Chief Justice Bhagwati was on a different track. He accepted that strict liability has been the norm but also held it redundant for Oleum gas Case. He said that Indian law no longer needs the crutches of foreign legal orders. CJI went on to propose a new principle of liability called the “absolute liability rule.”
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Under this rule, any industry that works with hazardous substances poses 100 per cent responsibility to the society. CJI Bhagwati probably understood that companies carry out cost-benefit analysis. Therefore, it is impossible that they do not foresee the possible damage a leak from them could cause. Any defences applicable under strict liability were gone.
Companies are now asked to pay compensation in direct proportion to their bank accounts. It was the first such rule in the world. The absolute liability principle was later incorporated in the Environment (Protection) Act, 1986. The case bolstered India’s status as a welfare state.
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