Bangalore Medical Trust v. B. S. Muddappa

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93. Sri Nariman contended that scientific and statistical evidence for estimates of damages in toxic tort actions is permissible only in fairness hearings and such evidence would not be so admissible in the proceedings of adjudication, where personal injury must be proved by each individual plaintiff. That would, indeed, be a struggle with infinity as it would involve individual adjudication of tens of thousands of claims for purposes of quantification of damages.

In an article on 'Scientific and Legal Standard of Statistical Evidence in Toxic Tort and Discrimination Suits’ by Carl Cranor and Kurt Nutting [See: Law and Philosophy Vol. 9 No. 2 May, 1990] there is an interesting discussion as to what would be the appropriate standard of evidence in presenting and evaluating scientific and statistical information for use in legal proceedings. The learned authors say:

"These are two of the main sides in the controversy concerning the kind and amount of scientific evidence necessary to support legally a verdict of the plaintiff. Black seems to urge that courts should only accept evidence that is scientifically valid, and adhere to the standards of evidence implicit in the discipline, while the Ferebee Court urges that plaintiffs in presenting scientific evidence and expert scientific testimony should be held to legal standards of evidence. Powerful forces are arrayed on both sides of this issue. On the side on requiring scientific testimony only to measure up to legal standards of evidence, the social forces include plaintiffs or potential plaintiffs, plaintiffs attorneys, public interest groups, consumer advocacy groups, all individuals who are concerned to make it somewhat easier to recover damages under personal injury law for alleged injuries suffered as a consequence of activities of others. On the other side of the same issue are defendants, potential defendants [typically corporations, manufacturing firms] and, interestingly, the scientific community".

(p. 118)

In Sterling v. Velsicol Chemical Corp. [855 F 2d 1188 (1988))] the US Court of Appeals tended to the view that generalised proof of damages is not sufficient to prove individual damages and that damages in mass tort personal injury cases must be proved individually by each individual plaintiff. The Court held:

"We cannot emphasise this point strongly enough because generalised proof will not suffice to prove individual damages. The main problem on review stems from a failure to differentiate between the general and the particular. This is an understandably easy trap to fall into in mass tort litigation. Although many common issues of fact and law will be capable of resolution on a group basis, individual particularised damages still must be proven on an individual basis".

94. While Shri Nariman contends that admissibility of scientific and statistical evidence is confined to Fairness Hearing alone and not in adjudication where personal injury by each individual plaintiff must be proved, the learned Attorney-General, however, urges that such evidence and estimates of damages are permissible in toxic-tort actions and says that the countless injured persons must not suffer because of the difficulty of proving damages with certainty or because of the delay involved in pursuing each individual claim. He referred to the following passage in Florance B. Bigelow v. RKO Radio Pictures Inc. (1945) 327 US 251, 264:

"The most elementary conceptions of justice and public policy require that the wrong doer shall bear the risk of the uncertainty which his own wrong has created".

Learned Attorney General also urged that in tort actions of this kind the true rules is the one stated in Story Parchment Company v. Paterson Parchment Paper Co. (1930) 282 US 555, 568):

"The rule which precludes the recovery of uncertain damages applies to such as are not the certain result of the wrong, not to those damages which are definitely attributable to the wrong and only uncertain in respect of their amount. Taylor v. Bradley, 4 Abb. App. Dec. 363, 366 367, 100 Am. Dec. 415:

It is sometimes said that speculative damages cannot be recovered, because the amount is uncertain; but such remarks will generally be found applicable to such damages as it is uncertain whether sustained at all from the breach. Sometimes the claim is rejected as being too remote. This is another mode of saying that it is uncertain whether such damages resulted necessarily and immediately from the breach complained of.

The general rule is that, all damages resulting necessarily and immediately and directly from the breach are recoverable, and not those that are contingent and uncertain. The later description embraces, as I think, such only are not the certain result of the breach, and does not embrace such as are the certain result, but uncertain in amount.

Where the tort itself is of such a nature as to preclude the ascertainment of the amount of damages with certainty, it would be a perversion of fundamental principles of justice to deny all relief to the injured person, and thereby relieve the wrongdoer from making any amend for this acts. In such case, while the damages may not be determined by mere speculation or guess, it will be enough if the evidence show the extent of the damages as a matter of just and reasonable inference, although the result be only approximate. The wrongdoer is not entitled to complain that they cannot be measured with the exactness and precision that would be possible if the case, which he alone is responsible for making, were otherwise".

And in Frederick Thomas Kingsley v. The Secretary of State for India, AIR 1923 Calcutta 49, it was observed:

"Shall the injured party be allowed to recover no damages (or merely nominal) because he cannot show the exact amount of the certainty, though he is ready to show, to the satisfaction of the Jury, that he has suffered large damages by the injury ? Certainty, it is true, would be thus attained, but it would be the certainty of injustice. Juries are allowed to act upon probable and inferential, as well as direct and positive proof. And when, from the nature of the case, the amount of damages cannot be estimated with certainty, or only a part of them can be so estimated, we can see no objection to placing before the Jury all the facts and circumstances of the case, having any tendency to show damages, or their probable amount, so as to enable them to make the most intelligible and probable estimate which the nature of the case will permit".

The risk of the uncertainty, says learned Attorney-General should, in such cases, be thrown upon the wrongdoer instead of upon the injured party. Learned Attorney General also urged that, on first principle, in cases where thousands have been injured, it is far simpler to prove that amount of damages to the members of the class by establishing their total damages than by collecting and aggregating individual claims as a sum to be assessed against the defendants. He said statistical methods are commonly accepted and used as admissible evidence in a variety of contexts including quantification of damages in such mass tort actions. He said that these principles are essential principles of justice and the Bhopal disaster is an ideal setting for an innovative application of these salutary principles.

95. The foregoing serves to highlight the complexities of the area. Indeed, in many tort actions the world-over speedy adjudications and expeditious relief’s are not easily accomplished as many of them have ended in settlements. In the context of the problems presented by the issues of liability in cases of certain corporate torts beyond the corporate veil there is an impressive body of academic opinion amongst the schoolmen that the very theories of limited corporate liability which initially served as incentives for commercial risk - taking needs rethinking in certain areas of tortuous liability of Corporations. Some scholars have advocated abolition of limited liability for" knowable tort risks". [See " "An Economic Analysis of Limited Liability in Corporation law" [30 U. Toronto LJ. 117, (1980)]; "The Place of Enterprise Liability in the Control of Corporate Conduct" [90 Yale Law Journal 1 (1980)]; "Should shareholders be personally liable for the torts of their Corporation?" [76 Yale Law Journal 1190 (1967)]. This, of course, has the limitation of one more shade of an academician’s point of view for radical changes in law.

96. With the passage of time there are more tangible details available by way of the proceedings of the Directorate of Claims which has medically evaluated and categorised nearly 3,60,000 affected person. We have looked into the formats and folders prepared by the Directorate of Claims for the medical evaluation of the conditions of the victims. Some sample medical dossiers pertaining to some individual claimants containing an evaluation of the data pertaining to the medical status of the persons have also been shown to us. It is on the basis of such medical dossiers that evaluation and categorisation are stated to have been done. The guidelines for carrying out these medical evaluations, it is stated, have been formulated and issued by the Government of India.

97. Petitioners seriously assail the correctness of the guidelines for medical evaluation as also the result of the actual operational processes of evaluation based thereon. Petitioners described the results indicated by the medical categorisation done by the Directorate of Claims which showed only 40 cases of total permanent disablement as shocking and wholly unrelated to the realities. Indeed some learned counsel for the petitioners, of course in a higher vein, remarked that if these were the final figures of injuries and incapacitations caused by the Bhopal Gas leak Disaster, then UCC should be entitled to a refund out of the sum settled and wondered why, in the circumstances, UCC was taking shelter under the settlement and fighting shy of a trial.

It appears to us that particular care has gone into the prescription of the medical documentation test and the formulation of the results for purposes of evaluation and categorisation.

98. After a careful thought, it appears to us that while it may be wise or proper to deprive the victims of the benefit of the settlement, it is however, necessary to ensure that in the - perhaps unlike - 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. But, such a contingency may not arise having regard to the size of the settlement-fund. If it should arise, the reasonable way to protect the interest of the victims is to hold that the Union of India, as a welfare State and in the circumstances in which the settlement was made, should not be found wanting in making good the deficiency, if any. We hold and declare accordingly.

99. It is relevant here that the Union of India while, quite fairly, acknowledging that there was in fact such a settlement, however, sought to assail its validity on certain legal issues but the factum of the settlement was not disputed. Indeed, Union of India did not initiate any substantive proceedings of its own to assail the agreement or the consensual element constituting the substratum of the order of the Court. The legal contentions as to the validity of the settlement were permitted to be raised in as much as that an order made on consent would be at no higher footing and could be assailed on the grounds on which an agreement could be. But, as stated earlier, the factum of the consensual nature of the transaction and its existence as a fact was not disputed. Those legal contentions as to the validity have now failed; the result is that the agreement subsists.

For all these reasons we leave the settlement and the orders dated 14/15th February, 1989 - except to the extent set aside or modified pursuant tot the other findings - undisturbed.

100. We may here refer to and set at rest one other contention which had loomed in the hearings. The petitioners had urged that the principles of the liability and the standards of assessment of damages in a toxic mass tort arising out of a hazardous enterprise should be not only on the basis of absolute liability - not merely on Rylands v. Fletcher (1968 L.R. 3 HL 330) principle of strict liability - not admitting of any exceptions but also that the size of the award be proportional to the economic superiority of the offender, containing a deterrent and punitive element. Sustenance was sought from M.C. Mehta v. Union of India, AIR 1987 SC 1086. This argument in relation to a proceeding assailing a settlement is to be understood as imputing an infirmity to the settlement process as not being informed by the correct principle of assessment of damages. Respondents, however, raised several contentions as to the soundness of the Mehta principle and its applicability. It was also urged that Mehta principle, even to the extent it goes, does not solve the issues of liability of the UCC as distinct from that of UCIL as Mehta case only spoke of the liability of the offending enterprise and did not deal with principles guiding the determination of a holding-company for the torts of its subsidiaries.

It is not necessary to go into this controversy. The settlement was arrived at and is left undisturbed on an over-all view. The settlement cannot be assailed as violative of Mehta principle which might have arisen for consideration in a strict adjudication. In the matter determination of compensation also under the Bhopal Gas Leak Disaster (PC) 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 for the alleged hazardous entrepreneurs viz., UCC and UCIL. We must also add that the Mehta principle can have no application against Union of India inasmuch as requiring it to make good the deficiency, if any, we do not impute to it the position of a joint tort-feasor but only of a welfare State. There is, therefore, no substance in the point that Mehta principle should guide the quantification of compensation to the victim claimants.

101. This necessarily takes us to the question of the medical surveillance costs; and the operational expenses of the Hospital. We are of the view that for at least a period of eight years from now the population of Bhopal exposed to the hazards of MIC toxicity should have provision for medical surveillance by periodic medical check-up for gas related afflictions. This shall have to be ensured by setting up long-term medical facilities in the form of a permanent specialised medical and research establishment with the best of expertise. An appropriate action-plan should be drawn up. It will be proper that expert medical facility in the form of the establishment of a full-fledged hospital of an expert medical facility in the form of the establishment of a full-fledged hospital of at least 500 bed strength with the best of equipment for treatment of MIC related affliction should be provided for medical surveillance and for expert medical treatment. The State of Madhya Pradesh shall provide suitable land free of cost. The allocation of the land shall be made within two months and the hospital shall be constructed, equipped and made functional within 18 months. It shall be equipped as a Specialist Hospital for treatment and research of MIC related afflictions and for medical surveillance of the exposed population.

102. We hold that the capital outlays on the hospital and its operation expenses for providing free treatment and services to the victims should, both on humanitarian considerations and in fulfilment of the offer made before the Bhopal Court, be borne by the UCC and UCIL. We are conscious that it is not part of the function of this Court to re-shape the settlement or restructure its terms. This aspect of the further liability is also not a matter on which the UCC and the UCIL had an opportunity to express their views. However, from the tenor of the written submissions made before the District Court at Bhopal in response to the proposal of the Court for "reconciliatory substantial interim relief" to the gas victims, both the UCC and UCIL had offered to fund and provide a hospital for the gas victims. The UCC had re-called that in January, 1986, it had offered "to fund the construction of hospital for the treatment of gas victims the amount being contributed by the UCC and UCIL in equal proportions". Shri Nariman had also referred to this offer during the submissions in the context of the bona fides of the UCC in that behalf. It is, no doubt, true that the offer was made in a different context and before an overall settlement. But that should not detract the UCC and UCIL from fulfilling these obligations, as, indeed, the moral sensibilities to the immense need for relief in all form and ways should make both the UCC and UCIL forthcoming in this behalf. Such a hospital should be fully equipped hospital with provision for maintenances for a period of eight years which in our estimate might together involve the financial outlay of around Rs. 50 crores. We hope and trust that UCC and UCIL will not be found waiting in this behalf.

103. Then comes the question which we posed at the end of paragraph 44. This concerns the exposed members of the populace of Bhopal who were put at risk and who though presently a symptomatic and filed no claim for compensation might become symptomatic in future. How should cases of yet unborn children of mothers exposed to MIC toxicity where the children are found to have or develop congenital defects?

The question is as to who would provide compensation for such cases?

We are of the view that such contingencies shall be taken care of by obtaining an appropriate medical group insurance cover from the General Insurance Corporation of India or the Life Insurance Corporation of India for compensation to this contingent class of possible prospective victims. There shall be no individual upper monetary limit for the insurance liability. The period of insurance cover should be a period of eight years in the future. The number of persons to be covered by this Group Insurance Scheme should be about and not less than one lakh of persons. Having regard to the population of the seriously affected wards of Bhopal city at the time of the disaster and having regard to the addition to the population by the subsequent births extrapolated on the basis of national average of birth rates over the past years and the future period of surveillance, this figure broadly accords with the percentage of population of the affected wards bears to the number of person found to be affected by medical categorisation. This insurance cover will virtually serve to render the settlement an open ended one so far as the contingent class of future victims both existing and after-born are concerned. The possible claimants all into categories: those who were in existence at the time of exposure; and those who were yet unborn and whose congenital defects are traceable to MIC toxicity inherited or derived congenitally.

In so far as the second class of cases is concerned, some aspects have been dealt with in the report of the Law Commission in United Kingdom on "Injuries to Unborn Children".

The Commission, referring to the then-existing Law, said:

"7. Claims for damages for pre-natal injuries have been made in many other jurisdictions but there is no English or Scottish authority as to whether a claim would lie and, if did, what rules and limitations should govern it. In our working paper we did not attempt to forecast how such a claim would be decided if it came before a court in this country, although we did add, as an appendix to the paper, a brief account of some of the decisions of courts in other jurisdictions ...."

"8. It is, however, important from our point of view to express our opinion (reinforced by our general consultation and supported by the report of the Scottish Law Commission) that it is highly probable that the common law would, in appropriate circumstances, provide a remedy for a plaintiff suffering from a prenatal injury caused by another's fault. It is important to make our opinion on this point clear because, on consultation, it has become apparent that many people think that we were, in our working paper, proposing the creation of new liabilities, whereas it is probable that liability under the common law already exists ....".

Thereafter in United Kingdom, the Congenital Disabilities (Civil Liability) Act, 1976, was brought forth S. 1 (1) of that Act says:

"1(1) If a child is born disabled as the result of such an occurrence before its birth as is mentioned in sub-sec. (2) below, and a person (other than the child's own mother) is under this section answerable to the child in respect of the occurrence, the child's disabilities are to be regarded as damage resulting from the wrongful act of that person and actionable accordingly at the suit of the child".

It is not necessary for the present purpose to go into other features of that legislation and the state of corresponding law in India. Our present question is as to how and who would provide compensation to the two classes of cases referred to us earlier. We hold that these two classes of cases are compensatable if the claimants are able to prove injury in the course of the next eight years from now.

The premia for the insurance shall be paid by the Union of India out of the settlement fund. The eligible claimants shall be entitled to be paid by the insurer compensation on such principles and upon establishment of the nature of the gas related toxic morbidity by such medical standards as are applicable to the other claimants under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, and the scheme framed thereunder. The individual claimants shall be entitled to have their claims adjudicated under the statutory scheme.

104. We must, however, observe that there is need for expeditions adjudication and disposal of the claims. Even the available funds would not admit of utilisation unless the claims are adjudicated upon and the quantum of compensation determined. We direct both the Union of India and the State Government to take expeditious steps and set-up adequate machinery for adjudication of claims and determination of the compensation. The appointment of the Claim Commissioners shall be completed expeditiously and the adjudicative process must commence within four months from today. In the first instance, there shall at least be 40 Claim Commissioners with necessary secretarial assistance to start the adjudication of the claims under the Scheme.

105. In the matter of disbursement of the amounts so adjudicated and determined it will be proper for the authorities administering the funds to ensure that the compensation-amounts, wherever the beneficiaries are illiterate and are susceptible to exploitation, are properly invested for the benefit of the beneficiaries so that while they receive the income therefrom they do not, owing to their illiteracy and ignorance, deprive themselves of what may turn out to be the sole source of their living and sustenance for the future. We may usefully refer to the guidelines laid down in the case of Muljibhai Ajarambhai Harijan v. United India Insurance Co. Ltd., 1982 (1) 23 Guj LR 256.

We approve and endorse the guidelines, with appropriate modifications, could usefully be adopted. We may briefly recapitulate those guidelines:

(i) The Claims Commissioner should, in the case of minors, invariably order the amount of compensation awarded to the minor to be invested in long term fixed deposits at least till the date of minor attaining majority. The expenses incurred by the guardian or next friend may, however, be allowed to be withdrawn;

(ii) In the case of illiterate claimants also the Claims Commissioner should follow the procedure set out in (i) above, but if lump sum payment is required for effecting purchases of any moveable or immovable property such as, agricultural implements, assets utilisable to earn a living, the Commissioner may consider such a request after making sure that the amount is actually spent for the purpose and the demand is not a rush to withdraw money;

(iii) In the case of semi literate persons the Commissioner should ordinarily report to the procedure set out in (ii) above unless he is satisfied that the whole or part of the amount is required for expanding any existing business or for purchasing some property for earning a livelihood;

(iv) In the case of widows the Claims Commissioner should invariably follow the procedure set out in (i) above;

(v) In personal injury cases if further treatment is necessary withdrawal of such amount as may be necessary for incurring the expenses for such treatment may be permitted;

(vi) In all cases in which investment in long term fixed deposits is made it should be on condition that the Bank will not permit any loan or advance on the fixed deposit and interest on the amount invested is paid monthly directly to the claimant or his guardian, as the case may be.

It should be stipulated that the FDR shall carry a note on the face of the document that no loan or advance will be allowed on the security of the said document without express permission.

(vii) In all cases liberty to apply for withdrawal in case of an emergency should be available to the claimants.

Government might also consider such investments being handled by promulgating an appropriate scheme under the Unit Trust of India Act so as to afford to the beneficiaries not only adequate returns but also appropriate capital appreciation to neutralise the effect of denudation by inflation.

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