Bangalore Medical Trust v. B. S. Muddappa


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18. When dealing with this case this Court has always taken a pragmatic approach. The oft-quoted saying of the great American Judge that 'life is not logic but experience' has been remembered. Judges of this Court are men and their hearts also bleed when calamities like the Bhopal gas leak incident occur. Under the constitutional discipline determination of disputes has been left to the hierarchical system of court and this Court at its apex has the highest concern to ensure that Rule of Law work effectively and the cause of justice in no way suffers. To have a decree after struggling for a quarter of a century with the apprehension that the decree may be ultimately found not to be executable would certainly not have been a situation which this Court could countenance.

19. In the order of May 4, 1989, this Court had clearly indicated that it is our obligation to uphold the rights of the citizens and to bring to them a judicial fitment as available in accordance with the laws. There have been several instances where this Court has gone out of its way to evolve principles and make directions which would meet the demands of justice in a given situation. This, however, is not an occasion when such an experiment could have been undertaken to formulate the Mehta principle of strict liability at the eventual risk of ultimately loosing the legal battle.

20. Those who have clamoured for a judgement on merit were perhaps not alive to this aspect of the matter. If they were and yet so clamoured, they are not true representatives of the cause of the victims, and if they are not, they were certainly misleading the poor victims. It may be right that some people challenging the settlement who have come before the Court are the real victims. I assume that they are innocent and unaware of the rig marble of the legal process. They have been led into a situation without appreciating their own interest. This would not be the first instance where people with nothing at stake have traded in the misery of others.

21. This Court is entitled under the constitutional scheme to certain freedom of operation. It would be wrong to assume that there is an element of judicial arrogance in the act of the Court when it proceeds to act in a pragmatic way to protect the victims. It must be conceded that the citizens are equally entitled to speak in support of their rights. I am prepared to assume, any, concede, that public activists should also be permitted to espouse the cause of the poor citizens but there must be a limit set to such activity and nothing perhaps should be done which would affect the dignity of the Court and bring down the service ability of the institution to the people at large. Those who are acquainted with jurisprudence and enjoy social privilege as men educated in law owe an obligation to the community of educating it properly and allowing the judicial process to continue unsoiled. Lord Simonds in Snaw v. Director of Public Prosecutions (1961) 2 Al ER 446 (447) said:

"I entertain no doubt that there remains in the courts of law a residual power to enforce the Supreme and fundamental purpose of the law, to conserve not only the safety and order but also the moral welfare of the State".

22. Let us remember what had once seen said in a different context:

"It depends upon the present age whether this great national institution shall descend to our children in its masculine majesty to protect the people and fulfil their great expectations".

23. Let us also remember what Prof. Harry Jones in the Efficacy of Law has said:

"There are many mansions in the house of jurisprudence, and I would not belittle any one's perspective on law in society, provided only that he does not insist that his is the only perspective that gives a true and meaningful view of ultimate legal reality".

24. In the facts and circumstances indicated and for the reasons adopted by my noble brother in the judgement I am of the view that the decree obtained on consent terms for compensation does not call for review.

25. I agree with the majority view.

Venkatachaliah J.:- 26. These Review petitions under Art. 137 and writ petitions under Art. 32 of the Constitution of India raise certain fundamental issues as to the constitutionality, legal validity, propriety and fairness and conceivability of the settlement of the claims of the victims in a mass-tort-action relating to what is known as the "Bhopal Gas Leak Disaster" .....considered world's worst industrial disaster, unprecedented as to its nature and magnitude. The tragedy, in human terms, was a terrible one. It has taken a toll of 4000 innocent human lives and has left tens of thousands of citizens of Bhopal physically affected in various degrees. The action was brought up by the Union of India as parens-patriae before the District Court Bhopal in Original Suit No. 1113 of 1986 pursuant to the statutory enablement in that behalf under the Bhopal Gas Leak Disaster (Processing of Claims) Act 1985 ('Act for short') claiming 3.3 Billion Dollars as compensation. When an interlocutory matter pertaining to the interim-compensation came up for hearing there was a court assisted settlement of the main suit claim itself at 470 million U.S. Dollars recorded by the orders of this Court dated 14th and 15th of February 1989. The petitions also raise questions as to the jurisdiction and powers of the Court to sanction and record such settlement when appeals brought up against an interlocutory order were alone before this Court.

The Union Carbide (India) Limited (for short the UCIL) owned and operated, in the northern sector of Bhopal, a chemical plant manufacturing pesticides commercially marketed under the trade-names "Sevin" and "Temik". Methyl Isocyanate (MIC) is an ingredient in the composition of these pesticides. The leak and escape of the poisonous fumes from the tanks in which they were stored occurred late in the night on the 2nd of December 1984 as a result of what has been stated to be a 'run-away' reaction owing to water entering into the storage tanks. Owing to the then prevailing wind conditions the fumes blew into the hutments abutting the premises of the plant and the residents of that area had to bear the burnt of the fury of the vitriolic fumes. Besides large areas of the city were also exposed to the gas.

27. Referring to this industrial accident this Court in the course of its order dated 4th May, 1989 had occasion to say:

"The Bhopal Gas Leak tragedy that occurred at midnight on 2nd December, 1984, by the escape of deadly chemical fumes from the appellant's pesticide-factory was a horrendous industrial mass disaster, unparalleled in its magnitude and devastation and remaining a ghastly monument to the de-humanising influence of inherently dangerous technologies. The tragedy took an immediate toll of 2,660 innocent human lines and left tens of thousands of innocent citizens of Bhopal physically impaired or affected in various degrees. What added grim poignance to the tragedy was that the industrial-enterprise was using Methyl Isocyanate, a lethal toxic poison, whose potentiality for destruction of life and biotic-communities was, apparently, matched only by the lack of a pre-package of relief procedures for management of any accident based on adequate scientific knowledge as to the ameliorative medical procedures for immediate neutralisation of its effects."

The toll of life has since gone up to around four thousand and the health of tens of thousands of citizens of Bhopal City has come to be affected and impaired in various degrees of seriousness. The effect of the exposure of the victims to Methyl Isocyanate (MIC) which was escaped on the night of the 2nd of December 1984 both in terms of acute and chronic episodes has been much discussed. There has been growing body of medical literature evaluating the magnitude and intensity of the health hazards which the exposed population of Bhopal suffered as immediate effects and to which it was potentially put at risk.

It is stated that the MIC is the most toxic chemical in industrial use. The petitioners relied upon certain studies on the subject carried out by the Toxicology Laboratory, Department of Industrial Environmental Health Sciences, Graduate School of Public Health, University of Pittsburg, (reported in Environmental Health Perspective Volume 72, pages 159 to 167). Though it was initially assumed that MIC caused merely simple and short-term injuries by scalding the surface tissues owing to its highly exothermic reaction with water it has now been found by medical research that injury caused by MIC is not to the mere surface tissues of the eyes and the lungs but is to the entire system including nephrological lymph, immune, circulatory system, etc. It is even urged that exposure to MIC has mutagenic effects and that the injury caused by exposure to MIC is progressive. The hazards of exposure to this lethal poison are yet an unknown quanta.

Certain studies undertaken by the Central Water and Air Pollution Control Board, speak of the high toxicity of the chemical.

The estimates of the concentration of MIC at Bhopal that fateful night by the Board indicate a concentration of 26.70 parts per million as against the 'OSHA' standard for work environment of 0.02 P.P.M. which is said to represent the threshold of tolerance. This has led to what can only be described as a grim and grisly tragedy. Indeed the effects of exposure of the human system to this toxic chemical have not been fully grasped. Research studies seem to suggest that exposure to this chemical fumes renders the human physiology susceptible to long term pathology and the toxic is suspected to lodge itself in the tissues and cause long term damage to the vital systems, apart from damaging the exposed parts such as the eyes, lung membranes etc. It is also alleged that the 'latency period' for the symptomatic manifestation of the effects of the exposure is such that a vast section of the exposed population is put at risk and the potential risk of long term effects is presently unpredictable. It is said that even in cases of victims presently manifesting symptoms, the prospects of aggravation of the condition and manifestation of other effects of exposure are statable possibilities.

Immediately symptomatic cases showed ocular inflammation affecting visual acuity and respiratory distress owing to pulmonary edema and a marked tending toward general morbidity. It is argued that analysis of the case histories of persons manifesting general morbidity trends at various intervals from 3rd December, 1989 up to April, 1990 indicate that in all the severely affected, moderately affected and mildly affected areas the morbidity trend initially showed a decline compared with the acute phase. But the analysis for the later periods, it is alleged, showed a significant trend towards increase of respiratory, ophthalmic and genera morbidity in all the three areas. It is also sought to be pointed out that the fatal miscarriages in the exposed group was disturbingly higher than in the control group as indicated by the studies carried out by medical researchers. One of the points urged is that the likely long term effects of exposure have not been taken into account in approving the settlement and that the only way the victims interest could have been protected against future aggravation of their gas related health hazards was by the incorporation of an appropriate "re-opener" clause.

28. On 29th of March, 1985 the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (Act) was passed authorising the Government of India, as parens patriae exclusively to represent the victims so that interests of the victims of the disaster are fully protected, and that claims for compensation were pursued speedily, effectively, equitably and to the best advantage of the claimants. On 8th of April, 1985 Union of India, in exercise of the powers conferred on it under the Act, instituted before the U.S. District. Court, Southern District of New York, an action on behalf of the victims against the Union Carbide Corporation (UCC) for award of compensation for the damage caused by the disaster.

A large number of fatal-accidents and personal-injury actions had earlier also come to be filed in Courts in the United States of America by and on behalf of about 1,86,000 victims. All these earlier claims instituted in the various Courts in United States of America had come to be consolidated by the "Judicial Panel on Multi District Litigation" by its direction dated 6th February 1985 and assigned to United States District Court, Southern District of the New York, presided over by a Judge Keenan. The claim brought by the Union of India was also consolidated with them.

The UCC held 50.9% of the shares in the UCIL. The latter was its subsidiary. UCC's liability was asserted on the averments that UCC, apart from being the holding company, had retained and exercised powers of effective control over its Indian subsidiary in terms of its Corporate Policy and the establishment of the Bhopal Chemical Plant - with defective and inadequate safety standards which, compared with designs of UCC's American plants, manifested an indifference and disregard for human-safety - was the result of a conscious and deliberate action of the UCC. It was averred that UCC had, on considerations of economic advantages, consciously settled and opted for standards of safety for its plant in a developing country much lower than what it did for its own American counter-parts. The claim was partly based on 'design liability' on the part of UCC. The liability was also said to arise out of the use of ultra-hazardous chemical poisons said to engender not merely strict liability on Rylands v. Fletcher (1968 LR 3 HL 330) principle but an absolute liability on the principles of M.C. Mehta's case (AIR 1987 SC 1086).

The defences of the UCC, inter alia, were that UCC was a legal entity distinct in law from the UCIL; that factually it never exercised any direct and effective control over UCIL and that its corporate policy itself recognised, and was subject to, the country and therefore subject to the statutes in India which prohibit any such control by a foreign company over its Indian subsidiary, except the exercise of rights as share-holder permitted by law.

The UCC also resisted the choice of the American Forum on the pea of Forum-Non-Conveniens. Union of India sought to demonstrate that the suggested alternative forum before the judiciary in India was not an 'adequate' forum pointing out the essential distinction between the American and Indian systems of Tort Law both substantive and procedural and a comparison of the rights, remedies and procedure available under the competing alternative forums. The nature and scope of a defendant's plea of Forum Non-Conveniens and the scope of an enquiry on such plea have received judicial considerations before the Supreme Court of United States of America in Gulf Oil Corp. v. Gilbert, (1946) 330 US 501, Koster v. Lumbermens Mutual Casualty Co. (1946) 330 US 518 and Piper Aircraft Co. v. Reyno, (1981) 454 US 235.

The comparison of rights, remedies and procedures available in the two proposed forums though not a "major-factor", nevertheless, were relevant tests to examine the adequacy of the suggested alternative forum. System of American Tort Law has many features which make it a distinctive system. Judge Keenan adopting the suggested approach in Piper's decision that doctrine of forum non conveniens was designed in part to help courts in avoiding complex exercises in comparative laws and that the decision should not hinge on an unfavourable change in law which was not a major factor in the analysis was persuaded to the view that differences in the system did not establish inadequacy of the alternative forum in India. Accordingly on 12th of May, 1986, Judge Keenan allowed UCC's plea and held that the Indian judiciary must have the "opportunity to stand tall before the world and to pass judgment on behalf of its own people".

29. Thereafter the Union of India was constrained to alter its choice of the forum and to pursue the remedy against the UCC in the District Court at Bhopal. That is how original Suit No. 1113 of 1986 seeking a compensation of 3.3 Billion Dollars against the UCC and UCIL came to be filed at Bhopal.

Efforts were made by the District Court at Bhopal to explore the possibilities of a settlement. But they were not fruitful. Zahreeli Gas Kand Sangharsh Morcha one of the victim-organisations appears to have moved the Court for award of interim-compensation. On 13th December 1987, the District Court made an order directing payment of Rupees 350 crores as interim compensation. UCC challenged this award before the High Court of Madhya Pradesh. The High Court by its order dated 4th of April, 1988 reduced the quantum of interim compensation to Rs. 250 crores. Both Union of India and UCC brought up appeals by Special Leave before this Court against the order of the High Court - Government of India assailing the reduction made by the High Court in the quantum of interim compensation from Rs. 350 crores to Rs. 250 crores and the UCC assailing the very jurisdiction and permissibility to grant interim compensation in a tort action where the very basis of liability itself had been disputed. The contention of the UCC was that in a suit for damages where the basis of the liability was disputed the Court had no power to make an award of interim compensation. It was urged that in common law - and that the law in India too - in a suit for damages no court could award interim compensation.

Prior to 1980 when the Rules of Supreme Court in England were amended (Amendment No. 2/1980) Courts in United Kingdom refused interim-payments in actions for damages. In Moore v. Assignment Courier, (1977) 2 All ER 842 (CA), it was recognised that there was no such power in common law. It was thereafter that the rules of the Supreme Court were amended by inserting Rules 10 and 11 of Order 29 Rules of Supreme Court specifically empowering the High Court to grant interim relief in tort injury actions. The amended provision stipulated certain pre conditions for the invokability of its enabling provision. But in England Lord Denning in the Court of Appeal thought that even under the common law the court could make an interim award for damages (See Lim Poh Choo v. Camden Islington Area Health Authority, (1979) 1 All ER 332. But his view was disapproved by the House of Lords (See 1979 (2) All ER 910 at pages 913, 914). Lord Scarman said:

"Lord Denning MR in the Court of Appeals declared that a radical reappraisal of the law is needed. I agree. But I part company with him on ways and means. Lord Denning MR believes it can be done by the Judges, whereas I would suggest to your Lordships that such a reappraisal calls for social, financial, economic and administrative decisions which only the legislature can take. The perplexities of the present case, following on the publication of the report of Royal Commission of Civil Liability and Compensation of Personal Injury (the Pearson report), emphasise the need for reform of the law.

Lord Denning MR appeared, however, to think, or at least to hope, that there exists machinery in the rules of the Supreme Court which may be adopted to enable an award of damages in a case such as this to be 'regarded as an interim award'.

It is an attractive, ingenious suggestion, but, in my judgment, unsound. For so radical a reform can be made neither by judges nor by modification of rules of court. It raises issues of social, economic and financial policy not amenable to judicial reform, which will almost certainly prove to be controversial and can be resolved by the legislature only after full consideration of factors which cannot be brought into clear focus, or be weighed and assessed, in the course of the forensic process. The Judge, however wise, creative, and imaginative he may be, is cabined, cribbed, confined, bound in not as was Macbeth, to his 'saucy doubts and fears' but the evidence and arguments of the litigants. It is this limitation, inherent in the forensic process, which sets bounds to the scope of judicial law reform".

But in cases governed by common law and not affected by the statutory changes in the Rules of Supreme Court in U. K., the Privy Council said:

"Their Lordships cannot leave this case without commenting on two unsatisfactory features. First, there is the inordinate length of time which has elapsed between service of the writ in February 1977 and final disposal of the case in the early months of 1984. The second is that, as their Lordships understand the position, no power exists in a case where liability is admitted for an interim payment to be ordered pending a final decision on quantum of damages. These are matters to which consideration should be given. They are, of course, linked; though the remedy for delay may be a matter of judicial administration, it would be seen legislation may be needed to enable an interim award to be made".

See: Jamil Bin Harun v. Yong Kamsiah: 1984 (1) AC 529, 538.

The District Court sought to sustain the interim-award on the inherent powers of the court preserved in S. 151, CPC. But the High Court of Madhya Pradesh thought that appeal to and reliance on S. 151 was not appropriate. It invoked S. 9 CPC read with the principle underlying the English Amendment, without its strict pre-conditions. The correctness of this view was assailed by the UCC before this Court in the appeal.

On 14th February, 1989 this Court recorded an over-all settlement of the claims in the suit for 470 million U.S. Dollars and the consequential termination of all civil and criminal proceedings. The relevant portions of the order of this Court dated 14th Feb. 1989 provide:

(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 liabilities related to and arising out of the Bhopal Gas disaster.

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

(3) To enable the effectuation of the settlement, all civil proceedings related to and arising out of the Bhopal Gas disaster shall hereby stand transferred to this Court and shall stand concluded in terms of the settlement, and all criminal proceedings related to and arising out of the disaster shall stand quashed wherever these may be pending.

A memorandum of settlement shall be filed before us tomorrow setting forth all the details of the settlement to enable consequential directions, if any, to issue."

On 15th February, 1989 the terms of settlement signed by learned Attorney General for the Union of India and the Counsel for the UCC was filed. That memorandum provides:

“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 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 all of their subsidiaries and affiliates as well as each of their present and former directors, officers, employees, agents, representatives, attorneys, advocates and solicitors arising out of, relating to or concerned with the Bhopal gas leak disaster, including past, present and future claims, causes of action and proceedings against each other. All such claims 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 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 proceedings including contempt proceedings stand quashed and accused 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 Nov. 30, 1986 in the District Court, Bhopal stands discharged, and all orders passed in Suit No. 113 of 1986 and or in any Revision therefrom, also stand discharged".

A further order was made by this Court on 15th February, 1989 which, apart from issuing directions in paras 1 and 2 thereof as to the mode of payment of the said sum of 470 million U.S. Dollars pursuant to and in terms of the settlement, also provided the following:

"3. Upon full payment of the sum referred to in para 2 above:

(a) The Union of India and the State of Madhya Pradesh shall take all steps which may in future become necessary in order to implement and give effect to this order including 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 in this settlement are defended by them and disposed 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 such court or authority except for dismissal or quashing in terms of this order.

4. Upon full payment in accordance with the Court's directions:

(a) The undertaking given by Union Carbide Corporation pursuant to the order dated 30 November, 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.

(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."

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