Case Analysis: M. C. Mehta v. Union of India 1987 SCC (1) 395

Author: Yukta Chordia

CITATION

1987 SCC (1) 395

NAMES OF PARTIES

Petitioner: M. C. Mehta

Respondent: Union of India

JUDGES

Justice P. N. Bhagwati, Chief Justice, (assenting);

Justice Ranganath Misra, (assenting);

Justice G. L. Oza, (assenting);

Justice M. M. Dutt, (assenting);

Justice K. N. Singh, (assenting).

INTRODUCTION

With a population of almost 1.4 billion people, India is the largest democracy in the world. In a nation, so diverse, there are bound to be conflicts for a variety of reasons; political, economic, social, cultural and religious. But, at the same time, it also has a unique Judicial system to resolve these conflicts. According to the former Chief Justice of India, N V Ramana “The Indian Judicial System is unique not only because of a written Constitution, but also because of the immense faith reposed by the people in the system. People are confident that they will get relief and justice from the judiciary. It gives them the strength to pursue a dispute. They know that when things go wrong, the judiciary will stand by them. The Indian Supreme Court is the guardian of the largest democracy.”((“People Know If Things Go Wrong, Judiciary Will Be With Them: CJI N V Ramana.” The Indian Express 18 July 2021. Web. 27 July 2022. https://indianexpress.com/article/india/people-know-if-things-go-wrong-judiciary-will-be-with-them-cji-nv-ramana-7409939/)) The Constitution has given various powers and wide-ranging jurisdiction to do complete justice and to bring to life Supreme Court of India’s motto, “Yato Dharma Sthato Jaya”, which means “Where there is righteousness, there is victory.”

M.C. Mehta v. Union of India, widely known as the ‘Oleum Gas Leak Case’ is one such case, where the Hon’ble Supreme Court gave a decision which led to victory, victory for the people harmed because of the Oleum gas leak inside Shriram Foods and Fertilizers’ unit, victory in the form of introduction of Absolute Liability which gave a new dimension and a wider scope to the remedy of compensation for the injured and affected parties. This was possible because of the writ petition filed by a social activist and environmental lawyer, M.C. Mehta who sought closure of Shriram Foods and Fertilizers industry as it posed a hazardous risk to people’s lives.

In this case, the Hon’ble Supreme Court, not only took a stand for the affected parties, but it also observed that industries like Shriram Foods and Fertilizers contribute to people’s and nation’s economic development and advancement. These industries support employment of people. Thus, the decision of the court was to relocate such factories to less populated areas so that they don’t pose a threat to human life. The court also suggested the government to frame a policy for the location of such toxic plants and check whether such toxic plants are causing any risk to the community. Therefore, in this case, the Supreme Court, through creative interpretation and bold innovation, took into consideration the economic interests while furthering human rights and environmental jurisprudence.

FACTS

• The petitioner, in this writ petition under Article 32, sought a direction for closure of various units of Shriram Foods and Fertilizers Industries on the ground that they were hazardous to the community.
• The Industry was permitted to restart its power plant along with manufacturing plants of caustic chlorine including its by-products and recovery plants like soap, glycerine and technical hard oil set out in the judgement by a three-judge bench.
• That, normally would have put an end to the conundrum raised in this petition, and then only one point of contention would have remained, that being whether the units of Shriram should be directed to be removed from their current situate leading to their relocation in another place where there wouldn’t be as much human habitation so that there would not be any real danger to the health and safety of the people. 
• The court stated that the government should develop a national strategy for the location of poisonous or dangerous companies and make a judgement on their relocation with the goal of eliminating risk to the community.
• The Court ordered Shriram Industries to deposit Rs 20 lakhs and include a bank guarantee for Rs.15 lakhs to pay insurance claims from victims of oleum gas if any escape from chlorine gas occurred within three years of the date of the order, resulting in the death or injury of any worker or living public in the vicinity. 
• But during the pendency of the petition, oleum gas escaped from one of Shriram’s units. The Delhi Legal Aid and Advice Board and the Delhi Bar Association filed petitions for compensation for those who were harmed as a result of oleum gas release.
• The Bench of three Hon’ble Judges referred the compensation applications to this larger Bench of five Judges because issues of high constitutional importance were implicated.

ISSUES

1. What is the scope and ambit of Supreme Court’s jurisdiction under Article 32 as the applications for compensation are sought to be maintained under that article?
2. Whether Article 21 is available against Shriram Foods and Fertilizers, owned by Delhi Cloth Mills Limited, which is a public company limited by shares and is engaged in an industry which is vital to public interest having potential to affect the life and health of the people?
3. What is the measure of liability of an enterprise, when people die or get injured by reason of an accident occurring in an industry by virtue of being engaged in a hazardous or inherently dangerous activity? Will the rule laid down in Rylands v. Fletcher apply or will there be any other principle according to which the liability can be determined?

JUDGMENT

The primary contention raised by the respondent was that the Court should not proceed to decide these constitutional issues because there was no claim for compensation made in the writ petition originally because the oleum gas leak happened subsequent to the filing of writ petition and the petitioner did not make an application for amendment of the writ petition for the same and therefore these issues couldn’t have risen on the writ petition. The court dismissed this objection observing that even though the petitioner did not apply for an amendment for payment of compensation, it does not mean that the applications made by the Delhi Legal Aid and Advice Board and the Delhi Bar Association can be thrown out. This was because these applications for compensation are for enforcement of fundamental right to Life enshrined under Article 21 of the Constitution and while dealing with such applications, the court cannot adopt a hyper technical approach which would ultimately defeat the ends of justice.

Moving on to the issues of law, the court observed on the first issue that apart from issuing directions, it also has the power to forge new remedies and fashion new strategies in order to enforce the fundamental rights under Article 32. Its power under Article 32 is not confined to preventive measures when fundamental rights are threatened to be violated, rather it also extends to remedial measures when the fundamental rights have already been violated. However, this power of court is limited to cases where the violation of fundamental rights affects people on a large scale or where the affected people are poor and disadvantaged. It also observed that compensation under Article 32 may be awarded in exceptional circumstances only. The court refrained from deciding on the second issue of whether Article 21 is available against Shriram because it was of the opinion that it needs detailed discussion and can be done at a later stage if it becomes necessary to do so.

While discussing the third issue, the Court assessed the rule laid down in Rylands v. Fletcher((Rylands v. Fletcher 1866 Law Report 1 Exchequer 265.)), the rule laid down was that if a person brings on his land and collects and keeps there anything which is likely to cause harm and such thing escapes and does damage to another, he is liable to compensate for the damage caused because the liability is strict. However, there are a few exceptions to this rule including natural us of land, escape due to an act of God, an act of stranger or the default of the person injured or where the thing which escapes is present by the consent of the person injured or in certain cases where there is statutory authority.

The court held that this rule with all of its exceptions is not applicable to all the industries engaged in hazardous activities considering the fact that this rule was laid down in the 19^th century, and now, due to scientific and technological advancement, it is the demand of the century to propound a new rule; thus the court introduced the new rule of Absolute Liability which states that: “an industry engaged in hazardous activities which poses a potential danger to health and safety of the persons working and residing near owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone. Such an industry must conduct its activities with the highest standards of safety and if any harm results, the industry must be absolutely liable to compensate for such harm irrespective of the fact that the enterprise had taken all reasonable care and that the harm occurred without any negligence on its part.” The rule for determination of compensation was noted by the court as “the larger and more prosperous the industry, the greater will be the amount of compensation payable by it.” Therefore, the Hon’ble Supreme Court directed the Delhi Administration to provide necessary funds to the Delhi Legal Aid and Advice Board which was to take up the cases who claimed to have suffered due to the oleum gas leak and to file actions on their behalf in the appropriate court for compensation claims.

ANALYSIS

While deciding the first issue, the Court observed that Article 32 does not merely confer power on the court to issue direction, order or writ for enforcement of the fundamental rights, but it also lays down a constitutional obligation on the court to protect the fundamental rights of the people, for which the court has a power to forge new remedies and fashion new strategies to enforce the fundamental rights. Which means the power of the court is not only injunctive in nature, but it can also grant remedial relief including the power to award compensation in appropriate cases. The Bench, therefore, ruled for an award of compensation under Article 32, even though, ordinarily, a petition under Article 32 should not be used as a substitute to enforce the right to claim compensation for infringement of a fundamental right. But the court still granted the remedy of compensation because the fact of infringement was patent and incontrovertible, the violation was gross and its magnitude was such that it shook the conscience of the court. This shows the continuing concern of the court for socially and economically disadvantaged persons.   

Further the Court laid down in the matter of Public Interest Litigations or Social Action Litigations, that it is not necessary that if a fundamental right is infringed, the aggrieved can only seek redress by filing a writ, even a letter addressed to a Justice can be entertained, because as held in S. P. Gupta v. Union of India((S. P. Gupta v. Union of India (1981) Supp. SCC 87.)) and also in People’s Union for Democratic Rights and Ors. v. Union of India((People’s Union for Democratic Rights and Ors. v. Union of India (1983) 1 SCR 456.)), “procedure being merely a hand-maden of justice it should not stand in the way of access to justice to the weaker sections of Indian humanity and therefore where the poor and the disadvantaged are concerned who are barely eking out a miserable existence with their sweat and toil and who are victims of an exploited society without any access to justice, this Court will not insist on a regular writ petition and even a letter addressed by a public spirited individual or a social action group acting probono publico would suffice to ignite the jurisdiction of this Court.”((M. C. Mehta v. UOI 1987 AIR 1086)) The Court had wholly endorsed this statement of law in regard to the broadening of locus standi and what has come to be known as epistolary jurisdiction.

The Court mentioned that all such letters will be processed through Public Interest Litigation Cell in the Supreme Court and after scrutiny would be placed before the Chief Justice. The future of PIL/SAL then considerably depended upon the functioning of this cell. Therefore, attention should have been paid to the administrative structure and working of a model PIL Cell with proper setting and inputs so that similar PIL Cells could be opened in each High Court and there would be uniform working amongst them. In this process, Legal Aid Cells could have been encouraged to function as catalysts or agents for the PIL Cells. The aftermath of this judgement and various other judgements led to the Supreme Court issuing a notification on 1 December 1988 regarding matters that could be entertained as PIL.

“Under this notification, letter petitions falling under certain categories alone would be ordinarily entertained. These included matters concerning bonded labour, neglected children, petitions from prisoners, petitions against the police, petitions against atrocities on women, children, and scheduled castes and scheduled tribes. Petitions pertaining to environmental matters, adulteration of drugs and food, maintenance of heritage and culture, and other matters of public importance could also be entertained. The notification set out matters that ordinarily were not to be entertained as PIL, such as landlord-tenant disputes, service matters, and admission to medical and other educational institutions. The notification also laid down the procedure: the petition would be first screened in the PIL Cell and thereafter it would be placed before a judge to be nominated by the Hon’ble Chief Justice of India for directions.”((Sangeeta Ahuja, “PEOPLE, LAW AND JUSTICE: CASES AND MATERIALS ON PIL,” Orient Longman, Delhi, 1996, Vol. II, p. 860.)) The reason behind analysing and predicting what should have happened and specifying what actually happened is to recognize this case’s importance in furthering the human rights jurisprudence by way of PIL Cells and appreciating the stand taken by the court that “Where constitutional fundamentals vital to the maintenance of human rights are at stake, functional realism and not facial cosmetics must be the diagnostic tool, for constitutional law must seek the substance and not the form.”((Ajay Hasia Etc v. Khalid Mujib Sehravardi & Ors. Etc (1981) 2 SCR 79.))

While dealing with the next issue, the court has considered, without finally deciding the question, whether a private corporation is covered under Article 12 to be subject to Article 21. Though the court did not have sufficient time to consider and reflect on the question, the stand taken by the court to advance human rights jurisprudence is commendable. They said, “Whenever a new advance is made in the field of human rights, apprehension is always expressed by the status quoists that it will create enormous difficulties in the way of smooth functioning of the system and affect its stability…. It is through creative interpretation and bold innovation that the human rights jurisprudence has been developed in our country to a remarkable extent and this forward march of the human rights movement cannot be allowed to be halted by unfounded apprehensions expressed by status quoists.”

“If the stand point is that as far as the hapless helpless poor and disadvantaged are concerned it matters little if the defendant corporation is private or public, what justification remains is for retaining the rule of sovereign immunity where the defendant is the State. The effect of the injury is the same regardless of the status of the person or authority by whose negligence (or their servant’s) it was caused. In any case the doctrine of sovereign immunity born of an imperialistic era is little suited for democratic socialist India.” ((N. T. Dowling and G. Gunther, CASES AND MATERIALS ON CONSTITUTIONAL LAW, Foundation Press, 7^th ed., p. 44.))

However, it is very interesting to note that, when the case was first heard by three judges and the judgement was given on the question of restarting the caustic chlorine plant((M.C. Mehta v. Union of India (1986) 2 SCC 176.)), there was no discussion about finding out regarding the jurisdictional basis for the court under Article 32. Violation of Article 21 was apparently assumed or it can be said that its violation was not contested and directions which affected the substantive rights of Shriram Industry were passed. There was a subsequent petition in which Shriram Foods and Fertilizer Industries made an application for clarification in respect of certain conditions set out in the order passed by the judges. However, this petition was not a review petition, but a mere clarification. Therefore, it can be observed that Article 32 was in fact exercised against a private corporation. Now the question which has left us perplexed is ‘whether by ruling that this question is being left open, the present five judge bench has overruled the exercise of Article 32 against a private corporation by the three-judge bench in (1986) 2 SCC 176?’

The Court has stated that, “the purport to include private corporations in Article 12 and have the matter decided within the original jurisdiction of Article 32 is to subject the activity of such private corporations ‘to the limitations of fundamental rights’ and ‘to inject respect for human rights and social conscience in our corporate structure’ thereby to ‘advance human rights jurisprudence’.”((Supra Note 8.)) Can we understand from this and the rest of the judgement that in “appropriate cases” the entire case involving issues of fact, liability, damages and compensation would be decided by the Supreme Court in its original jurisdiction as a trial court? While damage to life and liberty would be covered under Article 21, what about the cases connected to it, involving damage to property alone, for which the right to property is no longer fundamental?  Because the number of victims would be huge, the issue of awarding compensation to everyone in response to the peculiarity of injury suffered would have to be determined. The Supreme Court may establish a specific mechanism for such claims, but it will eventually have to monitor and evaluate the claims. While there is a wealth of case law on liability/ damages/ compensation for tribunals, there are few examples for the Supreme Court of India to follow, therefore comprehensive principles would have to be invented and used in the first significant case itself. Despite the Supreme Court’s well-known backlog of litigation, all such matters must be given priority and determined as soon as possible.

However, the Court must take logistics into careful consideration. The location of the mishap may not be close to the Supreme Court or any of the High Courts. How will victims from remote places effectively contact upper courts and communicate with counsel at such courts? “Already the move is to decentralise justice and take it to the door steps of the victims through Lok Adalats etc. And if as against constitutional remedies, the normal statutory remedies and common law remedies available at district Court level are really found inadequate to deal with such cases, as a long-term policy should not the further development of such remedies be informed and inspired by the provisions of the Constitution so that human rights jurisprudence may operate and flourish at grass root level?”((Supra Note 8.)) For this, in the preceding judgement in this case((Judgment M. C. Mehta v. Union of India, (1986) 2 SCC 176.)), Bhagwati, C.J. himself had appointed Chief Metropolitan Magistrate before whom claims for compensation could be filed.((Judgement, p. 118.)) He also appointed District Judge, Delhi to determine the compensation in future cases.((Judgment,  p. 200.)) He even suggested the setting up of Environment Courts on regional basis with professional judge and experts and the matter to come to Supreme Court “only by way of appeal.” ((Judgment,  p. 202.))

The Court has taken a bold step in laying down the principle of liability for industries engaged in hazardous or inherently dangerous activities. Chief Justice Bhagwati took a stand for India’s judicial thinking by saying that “We cannot allow our judicial thinking to be constricted by reference to the law as it prevails in England or for the matter of that in any other foreign country. We no longer need the crutches of a foreign legal order. We are certainly prepared to receive light from whatever source it comes but we have to build up our own jurisprudence and we cannot countenance an argument that merely because the new law does not recognize the rule of strict and absolute liability in cases of hazardous or dangerous liability or the rule as laid down in Rylands v. Fletcher as is developed in England recognizes certain limitations and responsibilities. We in India cannot hold our hands back and I venture to evolve a new principle of liability which English courts have not done.”

Thus, the court introduced the new rule of Absolute Liability which states that: “an industry engaged in hazardous activities which poses a potential danger to health and safety of the persons working and residing near owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone. Such an industry must conduct its activities with the highest standards of safety and if any harm results, the industry must be absolutely liable to compensate for such harm irrespective of the fact that the enterprise had taken all reasonable care and that the harm occurred without any negligence on its part.” They also pointed out that the measure of compensation must be co-related to the magnitude and capacity of enterprise because such compensation must have a deterrent effect. “The larger and more prosperous the enterprise, the greater must be the amount of compensation payable by it for the harm caused on account of an accident in the carrying on of the hazardous or inherently dangerous activity by the enterprise.”

Two aspects which logically follow from this “onerous responsibility” are: the freedom to choose the workers in order to run such an industry and the expectation for an equally responsible functioning of regulatory government agencies. The operation of even the most complex and well-planned industrial facility is ultimately dependent on the attentiveness and care of the individuals who operate it. As a result, the management of such sectors will need to have a free hand in terms of selection and the exercise of discretion to terminate the services of individuals it does not find responsible enough or loses trust in. “What this means is a special labour law jurisprudence in respect of hazardous and inherently dangerous industries.”((Supra Note 8.)) Furthermore, all government agencies and inspectorates who conduct routine inspections and verify the quality and fitness of an industrial facility may be held criminally accountable for their actions of commission and omission if an accident happens. The public money spent on their expert inspections is useless, and their findings are deadly for the public if they are not dependable enough and fool any management into thinking everything is well. The exception would be if management keeps the inherent and potential hazards of the process hidden or are not fully disclosed to licencing or regulatory bodies. “What has been enunciated in this case is truly a rule of accountability and so must extend to its logical conclusion to include others on whom any management would necessarily rely upon to run the industry.”((Supra Note 8.)) 

The last question which occurs to the mind in this case is ‘can the opinion of the court in the above context of liability be regarded as obiter and therefore not binding?’ This question comes to mind if we re-read the case of Marbury v. Madison((Marbury v. Madison 5 U.S. 137.)). Here, it is interesting to read that celebrated case on judicial review in the context as to ‘what was the question for decision and what the judgement laid down and is considered an authority for?’ Commenting on it, “many years afterwards, in speaking of the opinion in that case, Jefferson said: …this case is continually cited by bench and bar as if it were settled law, without animadversion on its being merely an obiter dissertation of the Chief Justice.”((Wilson, Henry H. “IS MARBURY VS. MADISON OBITER DICTUM?” American Bar Association Journal, vol. 13, no. 6, 1927, pp. 335–37. JSTOR, http://www.jstor.org/stable/25707168. (Visited on 7 Aug. 2022).)) 

However, in India, “the Supreme Court has consistently held that a decision which is neither founded on reasons nor proceeds on consideration of issues, cannot be deemed to be a law declared to have a binding effect as is contemplated by Article 141 of the Constitution.¹ On the other hand, a case decided after properly appreciating the facts, circumstances, and questions of law involved, is without an iota of doubt, a binding precedent by virtue of Article 141.”((Gautam, Hardik. “Observations Made by the Supreme Court in a Judgment.” Bar and Bench – Indian Legal News, https://www.barandbench.com/columns/observations-made-by-the-supreme-court-in-a-judgment-binding-or-not. (Visited on 7 Aug. 2022).)) In the present case, the question of liability was “seriously debated” and hence, the rule laid down must be considered as binding law according to Article 141 which states that: “Law declared by the Supreme Court shall be binding on all courts within the territory of India.”

CONCLUSION

In this case, the Supreme Court of India was called upon to evolve norms and principles for determining the liability of large enterprises engaged in manufacture and sale of hazardous product and the basis on which damages in case of such liability should be quantified. The Rule of strict liability upheld in Rylands v. Fletcher case has been holding the field for over a century until this path breaking judgement of M. C. Mehta v. Union of India. The court introduced Absolute Liability as the new rule for such circumstances and adopted an approach which is termed as the ‘deep pocket theory.’ This case brought to fore the question of extent of compensation to be given to the victims of an industrial disaster. Though the absolute liability principle attracted currents and cross currents, the Supreme Court has repeatedly ruled it as “a settled law of the land.”((Indian Council for Enviro-Legal Action v. Union of India, 1996 AIR 1446 )) The court in this case, while taking into consideration the role of large enterprises like Shriram Foods and Fertilizers in creating employment and contributing to the nation’s economic progress in this age of global free market economy has very innovatively given a new dimension to India’s Tort Laws by injecting respect for human rights and social conscience in corporate structure with a view of not destroying the raison d’etre of creating corporations, but to advance the environmental and human rights jurisprudence.  

1. State of UP v. Synthetics & Chemicals Ltd. [↩]