Some reflections

FALI S. NARIMAN

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TWENTY years after the Bhopal gas tragedy the arduous task of sifting the genuine from non-genuine claims is still not over. Some victims (and or their heirs) have been paid. But more than Rs 1500 crore are accumulated in the bank awaiting disbursal.

It was an imaginative and enlightened decision of a bench of the Supreme Court of India,1 prompted by a group of public-spirited advocates, that has helped to unlock the money-chest. In its order the court said that it was satisfied that a direction was needed to be given to the Welfare Commissioner to disburse the amounts to persons whose claims have been settled, on a pro rata basis.

In this day and age of increasing public awareness of rights, and reluctance of statutory bodies and authorities to take prompt measures to enforce statutory provisions, it is up to the judiciary to devise adequate remedies to prevent injustice. And it is in the field of remedies that equity must display the greatest inventiveness, providing relief in new situations as they arise.

One such experiment in inventiveness was undertaken more than 16 years ago in the Bhopal Gas Disaster case by a judge of the High Court of Madhya Pradesh, Justice Sheth. He delivered, what I now regard as an invaluable, inventive judgment in the suit filed by the Government of India on behalf of all claimants (there were many thousands) who had suffered or had been injured as a result of the world’s worst gas disaster. The GOI was entitled to do so by virtue of the provisions of the Bhopal Gas Leak Disaster (Processing of Claims) Act 1985.

The suit was filed by the GOI in the District Court of Bhopal. Very soon after the pleadings were completed, the district judge passed an order for interim relief against the Union Carbide India Ltd, (a subsidiary of the multinational Union Carbide Corporation) assessed in the sum of Rs 350 crore. This was an ad hoc sum by way of interim relief granted before any discovery and inspection, and well before the trial of the suit. The district judge said that he was empowered to do so under Section 94(e) of the Code of Civil Procedure2 and under Section 151 (the court’s inherent power).

The High Court on appeal said he was not so empowered. However wide the inherent powers of the court, they were related to the procedure to be followed by the court in deciding the cause before it: they were not powers that could override substantive rights.

 

 

In the Bhopal case, the action was one in tort where English principles applied, and even in England prior to express statutory provision enabling English courts to award an interim sum as and by way of damages in an action for damages, there was no power to make any interim award of damages until the liability was ultimately established at the trial and the damages proved.

Whilst the High Court of Madhya Pradesh, (Justice Sheth) set aside the reasoning of the district judge who had relied on the doctrine of inherent powers, it held that the court was not powerless because of want of a statutory provision to award interim damages in a suit for tort. The judge traced this power not to the inherent powers of the court but to the common law, and he rationalised and upheld the ultimate order of the district judge whilst disagreeing with his reasoning. He said that the law of tort was and is part of the common law of India adopted and adapted from the common law of England.

 

 

When adapting the common law, Indian courts were enjoined to decide cases (including suits on torts) ‘according to justice, equity and good-conscience’: which had always been interpreted to mean ‘the rules of English law as found applicable to Indian society and circumstances.’ Relying on Section 9 of the Code of Civil Procedure 19083 and supported by a 1975 judgment of the High Court of Madhya Pradesh4, Justice Sheth adapted (and applied) the statutory rules of English law brought into force in the United Kingdom which enabled courts in England to grant interim compensation in a suit for damages for tort.

Holding the UCC prima facie liable, albeit vicariously, for the Bhopal gas leak disaster – the judge directed its subsidiary, an Indian company, UCIL, being in charge of the plant, ‘to make interim payment of damages’ –assessed at Rs 250 crore.

This judgment was brought up in further appeal before the Supreme Court of India. It was heard for several weeks by a Constitution Bench of the court, where ultimately it helped to trigger off an overall final civil settlement in the sum of US $ 470 million, (about Rs 3000 crore). And after another tortuous round of litigation, this settlement of the civil case was ultimately approved.

The judgment of Justice Sheth constitutes the only precedent in India for grant of interim relief in a suit for damages for tort. It also underscores the need for judges to avoid literal and parochial approaches to interpret the law, when justice would be better served by bringing to bear larger humane sensitivities to their tasks. As the American philosopher Martha C. Nussbaum has said: ‘Judges must educate not only their technical capacities but also their capacity for humanity.’

 

 

The judgment of Justice Sheth is significant also because: First, it did not go against settled law about inherent powers viz., the inherent powers in the code (powers which inhere in courts because they are courts) are governed in matters of procedure and do not enable its provisions to be invoked in the realm of substantive law; and Second, it followed the principle of equity that a right should not be without a remedy – the ‘right’ in this case was the right to claim interim compensation in a civil suit for damages – and it was rationalised on principles of common law, as adapted by courts in India.

I was the lead counsel for UCC in the Supreme Court, and Justice Venkatachaliah who delivered the judgment of the Constitution Bench of five judges (whilst approving the civil settlement5) correctly recorded (without approving) UCC’s contention viz. ‘that in a suit for damages where the basis for liability was disputed the court had no power to make an award of interim compensation.’

It is now more than 15 years since that case was argued by me in the Supreme Court of India. I must confess that when I first read Justice Sheth’s judgment, I was not at all impressed by the reasoning and attacked it with considerable force before the Constitution Bench of the Supreme Court. I had submitted that it was illogical. But as they say, wisdom comes (sometimes!) with age. Looking back, I find that the judgment does afford as good a rationale as any I can see, absent enacted law, for relieving hardship caused to litigants in a mass tort action – they have to wait for years in a three-tier system before they can establish and obtain a final executable decree for damages.

 

 

In Megarry’s Second Miscellany at Law the author mentions that Lord Eldon spent 25 years as Lord Chancellor of England. When he was a lawyer, as plain Mr. Scott, he argued a case in the Chancery Courts and lost, and 33 years later the same case was cited to him, when now as Lord Eldon, he presided over the same Court of Chancery. He said that he remembered the case very well: ‘and very angry I was with the decision; but have lived long enough to find out that one may be very angry and very wrong!’

On the vexed question whether fault is an essential element in tortious liability, the law has moved in cycles. Medieval law, preoccupied with preserving peace, looked to causation, not fault. Gradually, however, the law in western countries (partially under the influence of the church) began to pay heed to exculpatory considerations. During the industrial revolution (in the late 18th and 19th centuries), there was a distinct tilt towards moral culpability as the proper basis for tort: to reap the benefits of the new machine age it was considered more politic to subordinate the security of individuals and not to burden the enterprise with the cost of inevitable accidents: a policy decision of courts. More recently, however, viewpoints appear to be changing drastically – more especially in the ‘core area’ of torts viz. industrial accidents – doubtless due to the realisation that modern technology, however safe, is not infallible, and the fact that victims of mishaps, more often that not, are unable to pin down the accident-producing activity to an ascertained fault.

 

 

The search is on for new rules of law which would require those engaged in particular activities, especially hazardous ones, to bear collectively the operative cost including the distribution of losses consequent as a result of carrying on such activities. Public policy, it is believed would then be better served than under a legal system which leaves compensation for casualties to what has been described as ‘a forensic lottery’ based on notions of fault. Chernobyl and Bhopal are not just significant events: they are dreaded words in the vocabulary of all industrial nations, words that mean that, technologically, the unthinkable can happen.

In the realm of liability for industrial torts – fault or no-fault? – we are harking back to medieval law: but only in theory. Assimilating the aspirations of what the law ideally should be, it is not beyond the realm of possibility to contemplate (and therefore to initiate) legislation for setting up a National Disaster Fund – such governments as are able and willing to raise resources could constitute such a fund even by executive order. The fund would, when established – either through governmental resources, voluntary contributions, and/or compulsory exactions by way of a levy on extra hazardous industries – help finance immediate and speedy relief to victims of human (manmade) disasters. The fund would make no distinction between injuries caused negligently or accidentally and would compensate victims according to a graded tariff, with a certain flexibility for individual needs and degree of loss and damage in particular cases; it would enable immediate partial payments to be made, to be followed later by an award of additional compensation in lumpsum or in the form of an annuity when the needs of the victim are better ascertained; the fund could have its own independent assessors and medical experts.

The advantage of establishing such a fund, in anticipation and in the preparation for a toxic disaster, would be that by providing for immediate need of the victims, it would hedge against the time loss in seeking compensation through litigation under the existing tort system from parties ultimately liable for the accident. It would thus make adequate provision for a preponderant majority of victims of a mass disaster, enabling them to get quick relief cheaply; and yet would not foreclose the rights of those claiming larger damages through the tardy processes of litigation. The fact that there is such a fund would accelerate prospects of a quick settlement and offset the adverse effects of the threat of playing the trump card (of delay) held by every defendant whose liability is yet to be established in litigation. It would also help contain another unintended but inevitable consequence of a mass toxic tort.

 

 

In toxic torts, the toxin or poison in the product which has killed or injured many, creates a violent emotional reaction in those affected – a condition biologically described as the ‘toxicity of anger’.6 The result of this is: (i) A built-in inhibition to an early settlement of claims at a reasonable figure; (ii) Consequentially, a bitter, long-drawn litigious contest; (iii) If, and when, the claims are ultimately settled, a residual gnawing resentment of a group of victims (often vocal and supported by ‘do-gooders’) that blood was not drawn: that liability was not fixed, that the wrongdoer was not identified and ‘nailed’; (iv) Ultimately, when the case does reach the stage of adjudication – after several years – the result quite often is a determination of liability not according to well-known principles of law but in accordance with individual notions of justice; for, as Cardozo said, the great tides and currents of tragic events which engulf the rest of men do not turn aside in their course and pass judges by; and, (v) where, even at this stage no settlement is reached, the tortuous process of assessing damages under the traditional well-defined individualistic heads of damage: viz. pain and suffering, loss of earnings etc.

Sentiment is a poor guide to decision-making, but toxic torts do generate a great deal of it.

 

 

In toxic torts, anger against the industrial enterprise believed to be responsible is infectious, evoking strange responses. Affluent sections of society unaffected by the tragedy – who share the rage of the victims – themselves do nothing to alleviate the loss; they have heard people and the press repeatedly say that retribution must come from the wrongdoer: the industrial or chemical company must be compelled to pay. This results in a climate of opinion which favours the view that only victims of natural disasters require public help and support: as to others, the polluter (the perpetrator) should pay.

 

 

It was this aspect that was particularly adverted to by the Supreme Court of India in the cases arising out of the Bhopal gas tragedy of December 1984. Whilst giving reasons, on 4 May 1989, as to what prompted the court to accept the overall civil settlement reached in February 1989 between (on the one hand) the Union of India – (by statute, representing all claimants and appearing through its Attorney General) – and (on the other hand) the Union Carbide Corporation with its subsidiary Indian company – Chief Justice Pathak said:

‘It is indeed a matter for national introspection that public response to this great tragedy which affected a large number of poor and helpless persons limited itself to the expression of understandable anger against the industrial enterprise but did not channel itself in any effort to put together a public-supported relief fund so that the victims were not left in distress, till the final decision in the litigation. It is well-known that during the recent drought in Gujarat, the devoted efforts of public spirited persons mitigated, in great measure, the loss of cattle-wealth in the near famine conditions that prevailed.’7

Absent statutory reform, the essential thing in this ‘poisonous’ branch of the law is to take particular care that the toxin does not get into the legal system; when it does, it impedes negotiation, reduces the chances of a compromise, prolongs the agony of the victims; in turn, this agony gets reflected in the adjudicatory process, and, at times even in the ultimate adjudication. In this branch of the law, more than in any other, the judge, the mediating intervenor, lawyers on both sides – all the actors – are called upon to display rare skills of a high order: not all of them forensic. The lack of a coherent set of principles of applicable law, the want of essential tools to tackle the magnitude of the problems associated with toxic torts, are not in themselves sufficient reason for not pursuing legitimate claims nor sufficient reason why legitimate defences to such claims be not raised.

But these gaps in toxic tort law do indicate the necessity for making Herculean efforts in at least three directions: First, to ascertain promptly and accurately the victims – the number of dead, those injured, and the nature of their injuries; Second, to a make a complete disclosure of this to the party sought to be made liable; and Third, to try and negotiate, without acrimony, an overall settlement – without reference to liability.

There is no other way – at least not until the slow, cumbersome, tortuous and highly expensive common-law tort system is reformed: by legislation. And it was legislation that was proposed by the Supreme Court of India in its later decision of 22 December 1989.

 

 

For the Bhopal gas tragedy not to be repeated, a series of recommendations were made by the Supreme Court of India when upholding the constitutional validity of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985. In Charanlal Sahu vs. Union of India8 the Constitution Bench of the Supreme Court in the background of the bitter experience arising from the Bhopal disaster, set out in great detail what was required to be done by legislation and executive action. First, the court said, the central government should lay down norms and standards that must be observed before permission or licences are granted for running of industries which have dangerous potentiality. The government should insist on the creation of a fund as a condition precedent for the grant of such licences or permissions, which would provide for payment of damages when an accident or a disaster occurred and ensure that the party agree to abide to pay such damages under a procedure which is not inordinately delayed. The court then went on to suggest five separate measures that should be enacted by law. They are set out in the judgment, and are summarised below:

1. The basis for damages in case of leakages and accident should be statutorily fixed taking into consideration the nature of damages inflicted, the consequences thereof and the ability and capacity of the parties to pay. Such law should also provide for deterrent or punitive damages, the basis for which should be formulated by an expert committee or by the government: ‘This’ (the court said) ‘is vital for the future.’

2. A law should be enacted to ensure immediate relief to victims – viz. by providing for the constitution of tribunals regulated by special procedure for determining compensation to victims of industrial disasters or accident, appeals against which may lie to the Supreme Court on limited questions of law, and only after depositing the amount determined by the tribunal.

3. The law should also provide for interim relief to victims during the pendency of proceedings: these steps would minimise the misery and agony of victims of hazardous enterprises.

4. The law should provide for the establishment of a statutory ‘Industrial Disaster Fund’, contributions to which may be made by the government and industries, whether they are of transnational corporations or domestic undertakings, public or private. The fund should be permanent in nature, so that the money is readily available for providing immediate effective relief to the victims. This would avoid delay in providing effective relief to the victims.

5. ‘The antiquated law’, (sic) contained in the Fatal Accidents Act 1855, should be drastically amended, or fresh legislation should be enacted which should, inter alia, contain appropriate provisions in regard to the following matters:

(i) The payment of a fixed minimum compensation on a ‘no-fault liability’ basis (as under the Motor Vehicles Act), pending final adjucation of the claim by a prescribed forum;

(ii) The creation of a special forum with specific power to grant interim relief in appropriate cases.

(iii) The evolution of a procedure to be followed by such forum which will be conducive to the expeditious determination of claims and avoid the high degree of formalism that attaches to proceeding in regular courts; and

(iv) A provision requiring industries and concerns engaged in hazardous activities to take out compulsory insurance against third party risks.

 

 

It is sad to record that save and except for a separate statutory provision requiring industries engaged in hazardous activities to take out compulsory insurance against third party risks (Public Liability Insurance Act, 1991) not one – not a single one – of any of these recommendations of the Supreme Court of India (made as far back in 1989) have been implemented so far; no steps whatever have been taken to implement any of these recommendations of the court – and no one – not even spirited NGOs seem to be interested in lobbying for enactment of new laws as suggested by the court.

 

Footnotes:

1. Order dated 19 July 2004 of a Bench of the Supreme Court of India (Shivraj Patil J. and B.N. Srikrishna J.).

2. ‘94. Supplemental proceedings. – In order to prevent the ends of justice from being defeated the court may, if it is so prescribed... (e) Make such other interlocutory orders as may appear to the court to be just and convenient.’

3. ‘9. Courts to try all civil suits unless barred – The courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature expecting suits of which their cognizance is either expressly or impliedly barred.’

4. Smt. Vidya Devi vs. Madhya Pradesh State Road Transport Corporation AIR 1975 M.P. 89 at para 7 (Justice G.P. Singh and Justice K.K. Dube).

‘Before applying any rule of English Law on the ground of justice, equity and good conscience the courts in India must consider whether it is suited to Indian society and circumstances. Where a rule of English common law has been modified or abrogated by the English legislature, it is open to the Indian courts to reject the outmoded common law and apply the new rules of the legislation.’

5. 1991 (4) SCC 584 at p. 615.

6. The Trusting Heart: Great News about Type A Behaviour by Dr. Redford Williams (Duke University, 1989).

7. C.A. Nos. 3187, 3188 of 1988 – 4th May, 1989: Union Carbide Corporation v. Union of India and Vice-Versa. 1989 (3) SCC 38.

8. 1990 (1) SCC 613.

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