- CJI P.N. BhagwatiFavored (Authored)
- Justice Ranganath MisraFavored
- Justice G.L. OzaFavored
- Justice M.M. DuttFavored
- Justice K.N. SinghFavored
- Constitution of India (Articles 21, 32)
- Factories Act, 1948
- Water (Prevention and Control of Pollution) Act, 1974
- Air (Prevention and Control of Pollution) Act, 1981
- Rylands v. Fletcher (1868) (UK Strict Liability Rule - Distinguished)
- Indian Council for Enviro-Legal Action v. Union of India (1996) (Applied Absolute Liability)
This landmark Public Interest Litigation (PIL) arose following a leak of hazardous Oleum gas from a unit of Shriram Foods and Fertiliser Industries in Delhi in December 1985, which caused widespread panic and injury, including the death of an advocate practicing in the Tis Hazari courts. Environmental activist M.C. Mehta filed a writ petition seeking closure of the plant and compensation for the victims.
The case raised critical questions about the liability of enterprises engaged in hazardous or inherently dangerous activities. The Court had to decide whether the traditional rule of Strict Liability (from the English case Rylands v. Fletcher), which allowed for exceptions, was adequate for protecting citizens' rights in an industrialized society, particularly the Right to Life under Article 21.
ARGUMENTS
Petitioner's Case (M.C. Mehta)
- Shriram Industries, engaged in a hazardous activity (manufacturing chlorine and oleum gas), should be held liable for the harm caused by the gas leak.
- The location of such a hazardous plant in a densely populated area posed a significant risk to public health and violated the Right to Life (Article 21) of the residents.
- The traditional rule of Strict Liability (Rylands v. Fletcher) with its exceptions (e.g., act of God, plaintiff's fault, act of third party) is unsuitable for modern industrial hazards.
- A stricter, absolute standard of liability is needed to ensure safety and compensate victims adequately, especially considering the potential for catastrophic harm.
- The amount of compensation should be correlated to the magnitude and capacity of the enterprise, acting as a deterrent.
Respondents' Case (Shriram & UOI - partly)
- The company took all reasonable safety precautions.
- The principle of Strict Liability (Rylands v. Fletcher) should apply, potentially allowing for exceptions that could limit or negate liability.
- Relocating the plant immediately would cause significant economic disruption and job losses.
- Compensation should be based on proven damages according to established legal principles, not solely on the company's size.
- Regulatory authorities (like Delhi Administration) had inspected and approved the plant's operations.
Case Progression Timeline
Oleum Gas Leak
A major leakage of Oleum gas occurs from the Shriram Foods and Fertiliser Industries plant in Kirti Nagar, Delhi, affecting many people.
December 4 & 6, 1985PIL Filed by M.C. Mehta
Advocate M.C. Mehta files a PIL under Article 32 seeking closure of the plant and compensation for victims.
December 1985Interim Orders / Plant Closure
Supreme Court issues interim orders, including temporary closure of the caustic chlorine plant unit.
Late 1985 - Early 1986Hearing on Liability Principle
The Court specifically considers the scope and nature of liability for enterprises engaged in hazardous activities.
1986Judgment on Absolute Liability Delivered
The 5-judge bench lays down the principle of Absolute Liability, departing from the rule in Rylands v. Fletcher.
December 20, 1986Subsequent Orders on Compensation
Further orders were passed regarding the assessment and payment of compensation to the victims based on the absolute liability principle.
1987 onwardsThe Supreme Court, in a path-breaking judgment delivered by CJI Bhagwati, established the principle of Absolute Liability for industries engaged in hazardous or inherently dangerous activities. The Court consciously departed from the 19th-century English rule of Strict Liability laid down in Rylands v. Fletcher, deeming it inadequate for modern industrial risks.
The Court held that an enterprise carrying out hazardous activities, especially if for profit, owes an absolute and non-delegable duty to the community to ensure no harm results. If harm does occur, the enterprise is absolutely liable to compensate all affected parties, and this liability is not subject to any of the exceptions allowed under the rule of strict liability. The Court linked this principle to the Right to Life under Article 21, emphasizing the need for a safe and healthy environment.
COURT'S ANALYSIS
CJI Bhagwati's analysis highlighted the need for Indian environmental jurisprudence to evolve independently, tailored to the country's specific conditions. He argued that the old rule of Strict Liability, developed in a pre-industrial era, was insufficient. The Court reasoned that enterprises undertaking hazardous activities have a social obligation; if they profit from such activities, they must bear the cost of any resulting harm, regardless of fault or the presence of traditional exceptions. The principle of Absolute Liability was thus crafted as a stronger, indigenous legal standard. The Court also innovatively linked the measure of compensation not just to the harm suffered but also to the magnitude and capacity of the enterprise, ensuring that the compensation acts as a deterrent. This judgment significantly strengthened environmental law and corporate accountability in India.
FINAL VERDICT
- The principle of Absolute Liability was established for enterprises engaged in hazardous or inherently dangerous activities.
- Such enterprises owe an absolute and non-delegable duty to the community; if harm results from their activity, they are liable without exceptions (unlike Strict Liability).
- The rule in Rylands v. Fletcher (Strict Liability) was deemed unsuitable for conditions in India.
- The measure of compensation must be correlated to the magnitude and capacity of the enterprise to act as a deterrent.
- This liability arises under both the law of torts and as a violation of the Right to Life (Article 21).
- (Subsequent orders dealt with the specific directions for plant operation, safety measures, and compensation assessment).
RATIO DECIDENDI
Where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results to anyone on account of an accident in the operation of such hazardous activity (e.g., escape of toxic gas), the enterprise is strictly and absolutely liable to compensate all those who are affected by the accident. Such liability is not subject to any of the exceptions which operate vis-à-vis the tortious principle of strict liability under the rule in Rylands v. Fletcher. The measure of compensation must be correlated to the magnitude and capacity of the enterprise because such compensation must have a deterrent effect.