The case of Rylands v Fletcher laid down the rule of strict liability for the non-natural use of land. Similarly, the Rule of Absolute Liability was devised for hazardous and inherently dangerous industries to make them accountable for their devastating effect on the people and environment.
The Supreme Court heard M.C. Mehta v. Union of India on claims stemming from the Oleum gas leakage at one of Shriram Foods and Fertilizers Industries’ operations in Delhi, which belonged to Delhi Cloth Mills Ltd, on the 4th and 6th of December, 1985. The case was launched as public interest litigation (PIL) through a writ petition filed under Article 32 of the Constitution. The Court kept in mind that this was the second large-scale release of lethal gas in India in a year since more than 3,000 people had perished and thousands more had been exposed to debilitating ailments of various types owing to the leakage of MIC gas from the Union Carbide factory in Bhopal a year before.
If the rule of Strict Liability established in Rylands v. Fletcher were applied to such situations, people who established “hazardous and inherently dangerous” industries in and around densely populated areas would be able to avoid liability for the havoc caused by pleading some exception to the rule in Rylands v. Fletcher.
The Supreme Court made a daring ruling, saying that it was not bound by the 19th-century rule of English Law and that it may develop a rule that was more appropriate to the current social and economic realities in India. In place of the Strict Liability rule, it developed the concept of “Absolute Liability” as part of Indian law. The Court said unequivocally that the new rule would not be susceptible to any of the exceptions found in Rylands v. Fletcher.
When it came to deciding the case, Justice Bhagwati stated that they believe that an enterprise engaged in a hazardous or inherently dangerous industry that poses a potential threat to the health and safety of those working in the factory and those living in the surrounding areas owes an absolute and non-delegable duty to the community to ensure that no one is harmed as a result of the hazardous or inherently dangerous activity it has undertaken.
The Court further stated that the enterprise must be held to an obligation to ensure that the hazardous or inherently dangerous activity in which it is engaged is conducted with the highest standards of safety, and if any harm occurs as a result of such activity, the enterprise must be held absolutely liable to compensate for such harm, and it should be no defence to the enterprise to claim that it took all reasonable precautions and that the harm occurred without its negligence.
Furthermore, it was held that where an enterprise is engaged in a hazardous or inherently dangerous activity and harm is caused to anyone as a result of an accident in the operation of such hazardous or inherently dangerous activity, such as the escape of toxic gas, the enterprise is strictly and absolutely liable to compensate all those who are affected by the accident, and such liability is not subject to any of the exceptions that apply to the statutory liability.
The Court cited two reasons for developing the new rule of absolute liability:
i.) An enterprise engaging in such hazardous and inherently dangerous activity for private profit has a social obligation to compensate those who suffer as a result of such activity, and that such loss should be absorbed as an item of overheads; and
ii.) The enterprise alone has the resources to discover and guard against such hazards and dangers.
In other words, it can be said that if an enterprise is allowed to engage in any hazardous or inherently dangerous activity for profit, the law must assume that such permission is contingent on the enterprise bearing the cost of an accident resulting from such hazardous or inherently dangerous activity as an appropriate item of its overheads. Such hazardous or inherently dangerous activity for private profit can only be permitted if the enterprise involved in such hazardous or inherently dangerous activity indemnifies all persons who suffer as a result of the activity, regardless of whether it is carried out skillfully or not. The Court further stated that the amount of compensation payable should be proportional to the size and capabilities of the business in order to have a deterrence impact.
Bhopal Gas Tragedy
The leaking of Methyl Isocyanate (MIC) and other hazardous gases from a Union Carbide India Ltd. (UCIL) factory set up for the manufacturing of pesticides and other chemicals in Bhopal on the night of December 2/3, 1984, created a mass calamity, the worst in recent times. At least 3,000 people died in the tragedy, with a considerable number of others (estimated to be over 6 lacs) suffering serious injuries that left them with lasting vision and respiratory problems, as well as a slew of other issues, including harm to the foetuses of pregnant women.
Because of the enormous number of casualties, the majority of whom were from lower socioeconomic groups, a unique difficulty with compensation claims arose. A considerable number of cases were brought on behalf of the victims in Bhopal and in the United States of America against the UCC. The Government of India and the UCC attempted but failed, to reach an out-of-court settlement.
In M.C. Mehta v. Union of India, the Supreme Court had adopted the rule of “Absolute Liability” above the rule of “Strict Liability” established in Rylands v. Fletcher. As a result, the UCC could not avoid accountability by claiming sabotage as a defence, as allowed by the Rylands v. Fletcher rule. After a four-year-long legal battle, the Union of India and Union Carbide Corporation reached an agreement, with the Supreme Court ordering the payment of 470 million US dollars or almost Rs. 750 crores.
Landmark Judicial Precedents
Indian Council for Enviro-Legal Action v Union of India AIR 1996 S.C. 1446
The manufacturing of ‘H’ acid and discharges from the defendants’ sulphuric acid factory polluted the environment in Bichhri village and other nearby villages in the aforementioned case.
A writ petition was filed with the Supreme Court under Article 32 of the Constitution in the form of social action lawsuit on behalf of the villagers who have been impacted by pollution, which has resulted in an invasion of their right to life, as guaranteed by Article 21 of the Constitution. The Supreme Court ruled that the writ petition may be maintained and that the court had the authority and responsibility to act and preserve people’ right to life.
The Supreme Court ruled that the Central Government may order private enterprises to pay for the corrective measures. The sum needed to carry out the remedial measures, which included the removal of sludge in and around the respondent enterprises’ complex, was to be determined by the Central Government. The ruling also directed the respondent industries to pay the petitioner a sum of Rs. 50,000/- in expenses to the petitioner, who had to pursue the action on its own for six years. The above-mentioned “rogue industries'” responsibility was found to be based on the concept of “Polluter Pays,” as well as the principle of absolute liability recognized in M.C. Mehta v. U.O.I.
Klaus Mittelbachert v East India Hotels Ltd. A I R. 1997 Delhi 201
A German co-pilot, who was staying at the five-star Hotel Oberoi Inter-continental in New Delhi, was gravely hurt when he plunged into the hotel swimming pool, which had a faulty design and inadequate water. After 13 years, he died as a result of his injuries, which left him paralysed. It was decided that a five-star hotel charging a premium or fancy rate owes its visitors a high level of attention. Absolute responsibility is triggered by a hidden flaw in its structure or service. The hefty price tag attached to its service bundle attracts and creates a duty to pay exemplary damages if the need arises. For this accident, the plaintiff was awarded rupees 50 lacs.
Which case first laid down the concept of Absolute Liability?
The concept of Absolute Liability is different from ‘Strict Liability’ as prevalent in English law and was devised in the case of M.C. Mehta v. Union of India (Oleum gas tragedy) to suit the Indian scenario.
Can exceptions be used under Absolute Liability?
The exceptions as laid down under the Rule of Strict Liability is not applicable to the Rule of Absolute Liability. The Rule of Absolute Liability was devised to make hazardous industries solely liable for their actions without giving them any shield.
What were the two reasons given by the Supreme Court to lay down the Rule of Absolute Liability?
The Apex Court said that firstly the industries had the social obligation to compensate sufferers and secondly these big industries have the resources to prevent such hazards and dangers.