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LAW OF TORTS

M. C. Mehta
Vs.
Union of India
[ 1987 SCR (1) 819 ]

Submitted to:
Tulishree Ma’am

Submitted By:
Pallavi Agrawalla
B.B.A L.L.B ‘B’ (1st year)
Roll Number - 1882127
CASE SUMMARY

Facts -
A writ petition was filed by M.C Mehta, a social activist lawyer, he sought closure for
Shriram Industries as it was engaged in manufacturing of hazardous substances and located in
a densely populated area of Kirti Nagar. While the petition was pending, on 4 and 6
December 1985, there was leakage of oleum gas from one of its units which caused the death
of an advocate and affected the health of several others. The incident took place on December
4, 1985. Just after one year from the Bhopal gas disaster a large number of persons – both
amongst the workmen and public were affected. This incident also reminded of the Bhopal
gas holocaust. M.C Mehta filed a PIL under Articles 21 and 32 of the Constitution and sought
closure and relocation of the Shriram Caustic Chlorine and Sulphuric Acid Plant which was
located in a thickly populated area of Delhi. Factories were closed down immediately as
Inspector of Factories and Commissioner (Factories) issued separate orders dated December
8 and 24, 1985. This incident took place only a few months before Environment (Protection)
Act came into force, thus became a guiding force for having an effective law like this. There
are six reported orders in the Shriram Food and Fertilizer Industry case of the Supreme Court
of India, out of these six, four orders were pronounced before Environment (Protection) Act,
1986 was passed and the date from which it came into force. Thus the reported orders are
relevant and important as they shed new light on how highly toxic and hazardous substances
industry should be dealt with and contained and controlled to minimize hazards to the
workers and general public.

Issues -
 Whether such hazardous industries to be allowed to operate in such areas
 If they are allowed to work in such areas, whether any regulating mechanism be evolved.
 Liability and amount of compensation how to be determined.

Decision -
Chief Justice Bhagwati showed his deep concern for the safety of the people of the Delhi
from the leakage of hazardous substances like the one here – oleum gas. He was of the
opinion that we cannot adopt the policy to do away with chemical or hazardous industries as
they also help to improve the quality of life, a sin this case this factory, was supplying
chlorine to Delhi Water Supply Undertaking which is used to maintain the wholesomeness of
drinking water. Thus industries even if hazardous have to be set up since they are essential
for economic development and advancement of well-being of the people.

“We can only hope to reduce the element of hazard or risk to the community by taking all
necessary steps for locating such industries in a matter which would pose least risk of danger
to the community and maximizing safety requirements in such industries.”
Thus the Supreme Court was of the opinion that total ban on the above industry of public
utility will impede the developmental activities.

It was also observed that permanent closure of the factory would result in the unemployment
of 4000 workers, caustic soda factory and add to social problem of poverty. Therefore, the
court made an order to open the factory temporarily subject to eleven conditions and
appointed an expert committee to monitor the working of the industry.
The court also suggested that a national policy will have to be evolved by the Government for
the location of toxic or hazardous industries and a decision will have to be taken in regard of
relocation of such industries with a view to eliminate risk to the community.

Some of the conditions formulated by the government were -:


The Central Pollution Control Board to appoint an inspector to inspect and see that pollution
standards set under the Water Act and Air Act to be followed.
 To constitute Worker’s Safety Committee
 Industry to publicise the effects of chlorine and its appropriate treatment
 Instruct and train its workers in plant safety through audio visual programme, install
loudspeaker to alert neighbours in the event of leakage of gas
 Workers to use safety devices like masks and belts
 And that the workers of Shriram to furnish undertaking from Chairman of DCM Limited,
that in case of escape of gas resulting in death or injury to workmen or people living in
vicinity they will be “personally responsible” for payment of compensation of such death
or injury.

The Court also directed that Shriram industries would deposit Rs 20 lakhs and to furnish a
bank guarantee for Rs. 15 lakhs for payment of compensation claims of the victims of oleum
gas if there was any escape of chlorine gas within three years from the date of order resulting
in death or injury to any workmen or living public in the vicinity. The quantum of
compensation was determinable by the District Judge, Delhi. It also shows that the court
made the industry “absolutely liable” and compensation to be paid as when the injury was
proved without requiring the industry to be present in the case.

The above mentioned conditions were formulated to ensure continuous compliance with the
safety standards and procedures laid by the committees (Manmohan Singh Committee and
Nilay Choudhary Committee) so that the possibility of hazard or risk to workmen could be
reduced to nil.

This all indicates that Supreme Court in its judgement emphasized that certain standard
qualities to be laid down by the government and further it should also make law on the
management and handling of hazardous substances including the procedure to set up and to
run industry with minimal risk to humans, animals etc.

Further the industries cannot absolve itself of the responsibility by showing either that that
they were not negligent in dealing with the hazardous substance or they took all the necessary
and reasonable precautions while dealing with it. Thus the court applied the principle of no –
fault liability in this case.
IMPORTANT ASPECTS OF THE CASE
 Change of Bench:
The case was first referred to a three-judge bench which allowed the power plant and the
other concerned plants to begin its operations subject to certain regulations laid down by the
court. Considering the issues to be of utmost importance to the legal and environmental
scenario of the country, the bench further referred the applications for compensation to a
larger bench of five judges. Thus the matter was eventually looked upon by the larger bench
of five judges.

 Scope and ambit of Supreme Court:


One of the major issues regarding the case was the extent of the Supreme Court to decide
upon cases under article 32 since the application for compensation was sought to be
maintained under the said article. The court iterated that the court’s job was to not only issue
writs for the enforcement of the fundamental rights but also protect the fundamental rights of
the people. Ordinarily, a petition under Article 32 is not accepted as a right to claim
compensation through the ordinary process of Civil Courts. In exceptional cases though,
compensation can be claimed. Thus in the mentioned case, considering the factors, the claim
for compensation was maintainable.

 Would Shriram fall under the ambit of Article 12 so as to be subjected to the


discipline of Article 21?
This was the central issue to the case over which the court debated extensively. According to
the constitution, article 12 states that the State includes the Government and Parliament of
India and the Government and the Legislature of each of the States and all local or other
authorities within the territory of India or under the control of the Government of India.
Whether Shriram would be included within its scope would further decide its subjection to
article 21.
As per the petitioners, article 21 was available, as Shriram was carrying on an industry which,
according to the Government’s self-announced policies, was eventually intended to be carried
out by itself, but instead of the Government immediately embarking on that industry, Shriram
was permitted to carry it on under the active control and regulation of the Government. As
the mode of carrying on the industry could vitally affect the public at large, the control of the
Government was linked to that aspect of the industry which could affect public interest at
large.

Nevertheless, the regulation of a private corporation’s activities by the State under statutory
laws such as the Industries Development and Regulation Act, 1951 is only in the exercise of
police power. Thus, such regulation could not convert the activity of a private corporation
into that of the State and that it would be unfair to extend the ambit of Article 12. After an
extensive debate, the court stated that Shriram was indeed working under the shadow of the
government. It also contended that there would always be an element of risk when a new
industry is introduced for development. Since the development was integral to the country,
the private entities could not be kept under the looming threat of being labelled as a public
entity which could discourage them from opening new private corporations. Since this issue
required a lot of time and deliberation, the court eventually did not take a decision.
 Application of Ryland v Fletcher:
The rule in Ryland v. Fletcher was evolved in the year 1866; it proposed that a man who for
his own purposes keeps on his land any object likely to escape and cause damage to others,
should do so at his own risk. The liability under this rule is strict and it is no defence that the
thing escaped without that person’s wilful act, default or neglect or even that he had no
knowledge of its existence. While the concept of strict liability was an essential rule laid
down by the court, the Indian courts chose to look at it rather differently. The court ruled that
there existed no need for the court to blindly follow the rules set down by a foreign court.
Since Indian laws are of expansive nature, the court felt new regulations could be set as per
the requirements of the case.

 Absolute Liability:
While the foreign rule of Strict Liability was not completely accepted, the court brought in its
own interpretation of the liability that an enterprise owner had. The court was of the view that
an enterprise which is engaged with an innately unsafe industry which represents a potential
risk to the health and security of the people working in the processing plant and dwelling in
the neighbouring regions, owes an outright and non-delegable obligation to the group to
guarantee that no loss/ harm is caused to the group on account of the activities committed by
the industry. The activities should be undertaken with due care to not cause harm to anyone
involved or residing in the neighbouring region. Additionally, an enterprise that seeks to
work with the aim of earning profits is permitted only when they guarantee to compensate the
victims in case of any harm/ loss suffered by them. Thus the rule of absolute liability was
arisen by the court in this case where the enterprise is completely liable for the damage
caused and no exceptions or defence may absolve them of this liability. As opposed to strict
liability, no exception to be held liable for the damages can be used as a defence. The
enterprise/person shall be held totally liable for the acts.

 Public benefit at large most integral:


An important issue which was debated over was why compensation should be provided by
Shriram when no such claim was made in the writ petition. The petition only asked for the
company to stay shut and not otherwise. It was conceded by the opposition party that the gas
leaked occurred subsequent to the filing of the petition; hence any claim for compensation
could not be made earlier. The objection raised was why the writ petition was not amended to
claim damage after the leak materialized. The court after much thought decided in favour of
the public at large. It iterated that the court could not be completely technical in its approach
and that a certain level of flexibility is required. The purpose to obtain justice cannot be done
away with due to technical issues on part of the petitioner in cases of such mass tragedies.
Additionally, these applications for compensation are for the enforcement of the fundamental
right to life enshrined in article 21 and thus cannot be compromised on.

The court adjudicating on the issue of Shriram’s closure produced several new stances that
are hailed even today. It remains to be one of the landmark judgments by the court in the
environmental Indian context. While stringent laws and legislation were introduced, there
seems to be a blatant violation of environmental laws in our country today. The degrading
situation of natural resources is an example of how the resources are being misused by
corporations and people alike. It is integral that we cautiously use the resources to be able to
sustain our environment for the future.