Bangalore Medical Trust v. B. S. Muddappa



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(Para 37)

(C) Constitution of India, Art. 142 - Power of Supreme Court under – Scope - Prohibitions or Limitations in statutory provisions do not limited this power - Ss. 320, 321, 482 of Criminal P.C. - Do not limit power of Supreme Court to quash criminal proceedings.

Criminal P.C. (1974), Ss. 320, 321, 482.

Observations in AIR 1963 SC 996 and AIR 1988 SC 1531, held to be obiter dicta.

The proposition that a provision in any ordinary law irrespective of the importance of the public policy on which it is founded, operates to limit the powers of the apex Court under Art. 142 (1) is unsound and erroneous. The power of the court under Art. 142 in so far as quashing of criminal proceedings are concerned is not exhausted by Ss. 320 or 321 or 482, Cr. P.C. or all of them put together. The power under Art. 142 is at an entirely different level and of a different quality. Prohibitions or limitations or provisions contained in ordinary laws cannot, ipso facto, act as prohibitions or limitations on the constitutional powers under Art. 142. Such prohibitions or limitations in the statutes might embody and reflect the scheme of a particular law, taking into account the nature and status of the authority or the court on which conferment of powers - limited in some appropriate way - is contemplated. The limitations may not necessarily reflect or be based on any fundamental considerations of public policy. The prohibition should be shown to be based on some underlying fundamental and general issues of public policy and not merely incidental to a particular statutory scheme or pattern. It will again be wholly incorrect to say that powers under. Art. 142 are subject to such express statutory prohibitions. That would convey the idea that statutory provisions override a constitutional provision. Perhaps, the proper way of expressing the idea is that in exercising powers under Art. 142 and in assessing the needs of "complete justice" of a cause or matter, the apex court will take note of the express prohibitions in any substantive statutory provision based on some fundamental principles of public policy and regulate the exercise of its power and discretion accordingly. The proposition does not relate to the powers of the court under Art. 142, but only to what is or is not 'complete justice' of a case or matter and in the ultimate analysis of the propriety of the exercise of the power. No question of lack of jurisdiction or of nullity can arise.


(Para 43)

The decision in Gargs as well as Antualy's case turned on the breach of constitutional rights. The observations in the two cases as to the effect of inconsistency with statutory provisions were therefore unnecessary.

Observations in AIR 1963 SC 996, AIR 1988 SC 1531 held to be obiter dicta.

(Para 43)

When in the Bhopal Gas Disaster case the Supreme Court was invited by the Union of India to permit the termination of the prosecution and the court consented to it and quashed the criminal cases, it could not be said that there was some prohibition in some law for such powers being exercised under Art. 142. The mere fact that the word 'quashing' was used did not matter. Essentially, it was a matter of mere form and procedure and not of substance. The power under Art. 142 was exercised with the aid of the principles of S. 321, Cr. P.C. which enables withdrawal of prosecutions. The order quashing and terminating the criminal proceedings was therefore not without jurisdiction. However as no specific ground or grounds for withdrawal of the prosecution was/were made out, the order quashing the criminal proceedings was liable to be as aside.



(Paras 44, 46)

As a logical corollary to the setting aside of withdrawal of prosecution all portions in the order of the Supreme Court D/- 14/15-2-1989 which related to the incompetence of any future prosecution were ordered to be deleted.



(Paras 49, 50)

(D) Evidence Act (1872), S. 115 - Estoppel – Exception – Agreement - Plea that it is nullity being opposed to public policy - Can be raised even by a person who had earlier consented to the agreement.


Contract Act (1872), Ss. 23, 24.

(Para 52)

(E) Civil P.C. (1908), O. 23, R. 3 - Consent order – Validity - Depends wholly on legal validity of agreement on which it rests - Can be set aside any ground which justifies setting aside of agreement

(Para 53)

(F) Contract Act (1872), S. 62 - Accord and satisfaction - Illegal contract - Cannot constitute or effect an accord and satisfaction.

(Para 54)

(G) Contract Act (1872), Ss. 23, 24 - Void contracts - Unlawfulness of consideration - Doctrine of stifling of prosecution – applicability - Motive and consideration for reaching agreement to be distinguished - Settlement reached in Bhopal Gas Disaster case - No part of consideration was unlawful.

Stifling of prosecution – Doctrine - Applicability.

Contract - Consideration - Stifling of prosecution.

The allegations of unlawfulness of consideration against the settlement reached in Bhopal Gas Disaster case on ground that dropping of criminal charges and undertaking to abstain from bringing criminal charges in future were part of the consideration for the offer of 470 million US dollars by the UCC and as the offences involved in the charges were of public nature and non-compoundable, the consideration for the agreement was stifling of prosecution and, therefore, unlawful, are not tenable. The settlement is not hit by S. 23 or 24 of the Contract Act and no part of the consideration for payment of 470 million US dollars was unlawful.


(Paras 57, 63)

The essence of the doctrine of stifling of prosecution is that no private person should be allowed to take the administration of criminal justice out of the hands of the Judges and place it in his own hands. In this sense, private party is not taking administration of law in its own hands in the instant case (Bhopal Gas Disaster case). It is the Union of India, as the Dominus Litis, that consented to the quashing of the proceedings. What was purported to be done was not a compounding of the offences. The arrangement which purported to terminate the criminal cases was one of a purported withdrawal not forbidden by any law but one which was clearly enabled. More importantly, the distinction between the "motive" for entering into agreement and the "consideration" for the agreement must be kept clearly distinguished. Where dropping of the criminal proceedings is a motive for entering into the agreement - and not its consideration - the doctrine of stifling of prosecution is not attracted. Where there is also a pre-existing civil liability, the dropping of criminal proceedings need not necessarily be a consideration for the agreement to satisfy that liability.



(Paras 59, 60, 61)

(H) Bhopal Gas Disaster (Processing of Claims) Act (21 of 1985), S. 4 – Settlement - Rights of victims to express their views on - Does not envisage or compel fairness hearing before entering into settlement - Settlement not vitiated for want of fairness hearing.

Constitution of India, Art. 226.

Representative Actions – Compromise - Fairness hearing - Whether condition precedent.

The right of the victims read into S. 4 of the Act to express their views on a proposed settlement does not contribute to a position analogous to that in United States in which fairness hearings are imperative. Section 4 to which the right is traceable merely enjoins Government of India to have 'due-regard' to the views expressed by victims. The power of the Union of India under the Act to enter into a compromise is not necessarily confined to a situation where suit has come to be instituted by it on behalf of the victims. Statute enables the Union of India to enter into a compromise even without such a suit. Right of being heard read into S. 4—and subject to which its constitutionality has been upheld in Sahu's case AIR 1990 SC 1480— subjects the Union of India to a corresponding obligation. But that obligation does not envisage or compel a procedure like a "Fairness-Hearing" as a condition precedent to a compromise that Union of India may reach, as the situations in which it may do so are not necessarily confined to a suit. The settlement reached in the Bhopal Gas Disaster case is not vitiated by reason alone of want of a "Fairness-Hearing" procedure preceding it.



(Para 71)

(I) Bhopal Gas Disaster (Processing of Claims) Act (21 of 1985), S. 4 – Settlement - Absence of reopener clause - Does not vitiate settlement.

Torts - Toxic tort action - Settlement of claims - absence of reopener clause - Settlement not vitiated.

(Para 71)

(J) Civil P. C. (1098), S. 144 – Restitution - An equitable principle - Court must see that litigant does not go back with feeling that he was prejudiced by act done on faith of court's order - Settlement in Bhopal Gas Disaster Case - If set aside - U.C.C. will be entitled to restitution of entire amount deposited with interest.

Section 144, Code of Civil Procedure, embodying the doctrine of restitution does not confer any new substantive right to the party not already obtained under the general law. The section merely regulates the power of the court in that behalf. There is always an inherent jurisdiction to order restitution a fortiori where a party has acted on the faith of an order of the court. A litigant should not go back with the impression that the judicial process so operated as to weaken his position and whatever the litigant did on the faith of the court's order operated to its disadvantage. It is the duty of the court to ensure that no litigant goes back with a feeling that he was prejudiced by an act which he did on the faith of the court's order.


(Paras 75, 76)

The Union Carbide Corporation (UCC) transported the funds to India and deposited the foreign currency in the Reserve Bank of India on the faith of the Court order. If the settlement is set aside they shall be entitled to have their funds remitted to them back in the United States together with such interest as has accrued thereon. Such restitution would however be subject to the compliance with and proof of satisfaction of the terms of the order D/- 30-11-1986 made by District Court Bhopal.



(Paras 76, 77)

(J1) Constitution of India, Arts. 14, 226 - Natural justice - Audi Alteram Partem rule - Non-compliance - There should be circumstantial flexibility in consequences.

Omission to comply with the requirements of the rule of Audi Alteram Partem, as a general rule, vitiates a decision. Where there is violation of natural justice no resultant or independent prejudice need be shown, as the denial of natural justice is, in itself, sufficient prejudice and it is no answer to say that even with observance of natural justice the same conclusion would have been reached. The citizen is entitled to be under the Rule of Law and not the Rule of Discretion and to remit the maintenance of constitutional right to judicial discretion is to shift the foundations of freedom from the rock to the sand. But the effects and consequences of non-compliance may alter with situational variations and particularities, illustrating a flexible use of discretionary remedies to meet novel legal situations. Natural justice should not degenerate into a set of hard and fast rules. There should be a circumstantial flexibility.


(Para 79)

(K) Constitution of India, Art. 141 - Bhopal Gas Disaster (Processing of Claims) Act (1985), S. 4 - Binding Precedent - What is - Court considering constitutionality of Act of 1985 and scope of obligation under S. 4 to afford hearing - Suggesting curatives in case of non-compliance of obligation to afford hearing - Curatives suggested cannot be treated as obiter dicta.

Precedent - What is - Observations in judgment - When can be called obiter dicta.

Obiter dicta - What constitutes.

The Supreme Court in Sahu's case AIR 1910 SC 1480 was not only sitting in judicial review of legislation namely the Bhopal Gas Disaster (Processing of Claims) Act 1985; but was a court of construction also, for, it is upon proper construction of the provisions, questions of constitutionality come to be decided. The Supreme Court was considering the scope and content of the obligations to afford a hearing implicit in S. 4 of the Act of 1985. It cannot be said to have gone beyond the pale of the enquiry when it considered the further question as to the different ways in which that obligation to afford a hearing could be complied with or satisfied. It cannot be said that these observations were made by the way and had no binding force.

AIR 1990 SC 1480, Explained.

(Para 79)

(L) Constitution of India, Art. 137 – Review – Scope - Mass disaster cases - Review proceedings should not be strict, orthodox and conventional - Its scope should be such as would accommodate great needs of justice.

(Para 84)


(M) Constitution of India, Arts. 137, 142, 226 - Bhopal Gas Disaster - Settlement reached in - Not vitiated by absence of hearing to victims and victim-groups - Settlement fund – Adequacy - Supreme Court having regards to complexity of issues involved thought it proper to leave the settlement undisturbed - Supreme Court however declared that in event settlement fund is exhausted the Union of India should made good the deficiency.

Torts - Mass tort action – Settlement - Hearing to victims.

Natural justice - Mass tort action - Hearing to victims.

Majority view - The court assisted settlement reached in Bhopal Gas Disaster case is not vitiated for not affording the victims and victim-groups and opportunity of being heard. As regards the adequacy of the settlement fund the Supreme Court after rejecting the charge that medical documentation done of the victims of Bhopal Gas disaster was faulty and was calculated to play down the ill-effects of the exposure of MIC (poisonous gas) and after taking into consideration the complexity of issues involved in the case such as, the basis of UCC's liability, assessment of the quantum of compensation in a mass tort action, admissibility of scientific and statistical data in the quantification of damages without resort to the evidence as to injuries in individual cases, left the settlement reached in the Bhopal Gas Disaster case undisturbed. The Supreme Court to ensure that in the - perhaps unlikely - event of the settlement-fund being found inadequate, to meet the compensation determined in respect of all the present claimants, those persons who may have their claims determined after the fund is exhausted are not left to fend themselves, declared that the Union of India would make good the deficiency.


(Paras 91, 92, 98, 99, 107)

(Minority view -) Per A. M. Ahmadi, J.):- The Union of India cannot be directed to suffer the burden of the shortfall, if any, without finding the Union of India liable in damages on any count. The Court has to reach a definite conclusion on the question whether the compensation fixed under the agreement is adequate or otherwise and based thereon decide whether or not to convert it into a decree. But on a mere possibility of there being a shortfall, a possibility not supported by any realistic appraisal of the material on record but on a mere apprehension, quia timet, it would not be proper to saddle the Union of India with the liability to make good the shortfall by imposing an additional term in the settlement without its consent, in exercise of power under Art. 142 of the Constitution or any statute or on the premises of its duty as a welfare State. It is impermissible in law to impose the burden of making good the shortfall on the Union of India and thereby saddle the Indian tax-payer with the tort-feasor's liability, if at all.



(Paras 110, 113)

(N) Torts - Toxic tort action - Quantification of damages - Scientific and statistical evidence - Admissibility of, discussed.

(Paras 93, 94)

(O) Torts - Toxic tort action - Award of damages - Principle that size of award should be proportional to economic superiority of offender - Cannot be applied to settlement reached in Bhopal Gas Disaster case.

The principle in M. C. Mehta v. Union of India, AIR 1987 SC 1086 that in Toxic tort actions the award for damages should be proportional to the economic superiority of the offender - a principle that has arisen in a strict adjudication - Cannot be pressed to assail the settlement reached in the Bhopal Gas Disaster Case.


(Para 100)

In the matter of determination of Compensation also under the Bhopal Gas Leak Disaster (P.C.) Act, 1985, and the Scheme framed thereunder, there is no scope for applying the Mehta principle inasmuch as the tort-feasor, in terms of the settlement -for all practical purposes - stands notionally substituted by the settlement-fund which now represents and exhausts the liability of the alleged hazardous entrepreneurs viz., UCC and UCIL. The Mehta principle can have no application against Union of India inasmuch as in requiring it to make good the deficiency, if any, the Supreme Court did not impute to it the position of a tort-feasor but only of a welfare State.



(Para 100)

(P) Torts - Toxic tort action - Medical surveillance - Bhopal Gas disaster - Medical surveillance of exposed population - Facilities for, to be granted for 8 years - Supreme Court ordered establishment of full-fledged hospital equipped as specialist hospital for treatment and research of MIC (poisonous gas) related afflictions - Court directed that land should be given by State Govt. and capital outlays and operational expenses should be borne by UCC and UCIL.

(Para 101, 102)

(Q) Torts - Toxic tort action – Compensation - Persons and children born to exposed mothers who may become symptomatic in future - Court directed Union of India to obtain appropriate medical group insurance cover to take care of compensation for such prospective victims - Premium ordered to be paid from settlement fund.

(Para 103)

(R) Constitution of India, Art. 145 - Bhopal Gas disaster - Claims for compensation - Expeditious adjudication necessary - Supreme Court directed Union and State Govt. to expeditiously set-up adjudicatory machinery - Court also directed the authorities to prevent exploitation of illiterate beneficiaries by properly investing the adjudicated amount for benefit of beneficiaries - Court also suggested adoption of guidelines in 1982 (1) 23 Guj LR 756 with appropriate modifications, in this regard.


1982 (1) 23 Guj LR 756, Approved.

(Paras 104, 105)

(S) Constitution of India, Arts. 226, 32, 137 - Civil P.C. (1908), O. 6, R.1 - Shifting of stand - Union of India entering into court assisted settlement with Union Carbide corporation etc. - Review petition filed against settlement - Union of India supporting review petitioners without seeking Court's leave to withdraw from the settlement on permissible grounds or itself filing a review petition - Conduct of Union of India held was surprising. (Per A.M. Ahmadi, J.)

(Para 114)

Cases Referred: Chronological Paras

AIR 1990 SC 1480 (Explained) 31, 33, 35, 36, 44, 70, 71, 79, 80, 81, 85, 111, 112

AIR 1989 SC 568: (1989) 1 SCC 764: 1989 Lab IC 1031 79

AIR 1989 SC 1038: (1989) 1 SCC 628: 1989 Tax LR 389 79

AIR 1988 SC 686: (1987) 4 SCC 431: 1988 Lab IC 1497 79

AIR 1988 SC 1531: (1988) 2 SCC 602: 1988 Cri LJ 1961 41, 42, 43

(1988) 855 F 2d 1188, Sterling v. Velsicol Chemical Corp. 93

AIR 1987 SC 71: (1986) 4 SCC 537 79

AIR 1987 SC 188: (1986) 4 SCC 335: 1987 Cri LJ 151 44

AIR 1987 SC 877: (1987) 1 SCC 288: 1987 Cri LJ 793 44

AIR 1987 SC 1086: (1987) 1 SCC 395 13, 14, 15, 16, 28, 100

1987 AC 625: (1987) 2 WLR 821: (1987) 1 All ER 1118, Llovd v. McMahon 79

(1987) 515 A 2d 287 (NJ), Ayers v. Jackson T.P. 67

AIR 1984 SC 718: (1984) 4 SCC 500: 1984 Cri LJ 647 44

(1984) 3 All ER 140: (1984) 3 WLR 705, Isaacs v. RobertsoN 37

(1984) 1 AC 529: (1984) 2 WLR 668 (PC), Jamil Bin Harun v. Young Kamsiah 29

(1984) 597 Federal Supplement 740, Agent Orange Litigation 70

AIR 1983 SC 75: (1983) 1 SCC 228: 1983 Tax LR 2407 76

(1983) 706 F 2d 426 (2d Cir), Malchman v. Davis 70

AIR 1982 SC 849: (1982) 3 SCR 235: 1982 Cri LJ 795 34

1982 (1) 23 Guj LR 756: 1983 Acc CJ 57 (Approved) 105, 107

(1982) 457 US 731: 73 Law Ed 2d 349, Richard Nixon v. A. Ernest Fitzgerald 47

(1981) 454 US 235: 70 Law Ed 2d 419, Piper Aircraft Co. v. Reyno 28

AIR 1980 SC 1622: (1981) 1 SCR 97: 1980 Cri LJ 1075 17

1980 AC 574: (1979) 2 WLR 755: (1979) 2 All ER 440, Calvin v. Carr 79

(1980) 30 U. Toronto LJ 117 95

(1980) 90 Yale Law Journal 1 95

(1979) 1 All ER 332: (1978) 3 WLR 895, Lim Poh

Choo v. Camden Islington Area Health Authority 29

(1977) 2 All ER 842: (1977) 1 WLR 638, Moore v. assignment Courier Ltd. 29, 68

(1976) 424 US 968: 47 Law Ed 2d 734 Vincent La Rocca v. Morgan Lane 70

(1975) 67 FRD 30 (SDNY), Quoting Teachers Ins.

& annuity Ass'n of America v. Beame 70

(1975) 528 F 2d 1169 (4th Cir), Flin v. FMC Corp. 70

AIR 1974 SC 994: (1974) 2 SCC 70 53

AIR 1974 SC 2734: (1974) 1 SCR 671 52

AIR 1972 SC 496: (1972) 2 SCR 599: 1972 Cri LJ 301 44

1971 AC 297: (1969) 3 WLR 706: (1969) 3 All ER 275,

Wiseman v. Borneman 79

(1971) Ch 34: (1970) 3 WLR 434: (1970) 2 All ER 713, Leary

v. National Union of Vehicle Builders 79

AIR 1967 SC 895: (1967) 1 SCR 447: 1967 Cri LJ 828 43

(1967) 76 Yale Law Journal 1190 95

AIR 1966 SC 948: (1966) 3 SCR 24 76

AIR 1965 SC 166: (1964) 7 SCR 745 59, 61

AIR 1963 SC 107: (1963) 3 SCR 687 58, 59, 60

AIR 1963 SC 996: 1963 Suppl (1) SCR 885 40, 41, 43, 42

AIR 1963 Sc 1909 84

(1961) 2 All ER 446: (1961) 2 WLR 897, Shaw v. Director

of Public Prosecutions 21

(1960) 284 F 2d 567 (5th Cir), Florida Trailer and Equipment Co. v. Deal 70

AIR 1954 SC 520: 1955 SCR 267 34

AIR 1948 Allahabad 252 (FB) 76

(1946) 330 US 501: (1 Law Ed 1055, Gulf Oil Corp. v. Gilbert 28

(1946) 330 US 518: 91 Law Ed 1067, Koster v. Lumbermens

Mutual Casualty Co. 28

(1945) 327 US 251: 90 Law Ed 652, Florance B. Bigelow v. RKO Radio 94

AIR 1941 Oudh 593 61

AIR 1937 PC 114 52

AIR 1935 PC 12 76

AIR 1931 Calcutta 421 61

(1930) 282 US 555: 75 Law Ed 544, Story Parchment Co. v. Paterson

parchment Paper Co. 94

AIR1926 Calcutta 455 59

(1924) 2 Ch D 76: 131 LT 307: 93 LJ Ch 497, Re A. Bankruptcy Notice 52

AIR 1923 Calcutta 49 94

AIR 1922 PC 269 76

AIR 1922 Patna 502 61

AIR 1916 Madras 483: 16 Cri LJ 750 43

(1913) ILR 40 Cal 113 43, 59

1899 AC 114: 79 LT 35: 68 LJPC 25, Great North West

Central Railway Co. v. Charlebois 53

(1895) 2 Ch 273: 72 LT 703: 64 LJ Ch 523, Huddersfield

Banking Company Ltd. v. Henry Lister & Son Ltd. 53

(1890) 45 Ch D 351: 59 LJ Ch 608: 63 LJ 366, Windhill

Local Board of Health v. Vint 57

(1871) 3 PC 465: 40 LJPC 1: LT 111, Rodger v. Compoir

D'Dscopte de Paris 76

(1968) LR 3 HL 330: 19 LT 220: 37 LJ Ex 161, Rylands v.

Fletcher 13, 15, 28, 100

(1846) 6 QB 371: 15 LJQB 360: 115 ER 1315 Keir v. Leeman 57

(1844) 6 QB 308: 115 ER 118: 13 LJQB 359, Keir v. Leeman 57

(1762) 2 Wils 347: 95 ER 850, Collins v. Blantern 57

4 Abb App Dec 363: 100 Am Dec 415, Toylor v. Bradley 94

13 ALR 1427, Apodaca v. Viramontes 47

257 NY 244, Doyle v. Hafstader 47

712 F 2d Supp 1019 (Amercian Case) Acushnet River v. New

Bedford Harbour 68



Ranganath Misra, C.J.:- I entirely agree with my noble and learned Brother Venkatachaliah and hope and trust that the judgement he has produced is the epitaph on the litigation. I usually avoid multiple judgments but this seems to be a matter where something more than what is said in the main judgment perhaps should be said.



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