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Union Carbide Corporation v. Union of India

Supreme Court of India · 3 October 1991 · 5 judges · 1992 AIR 248; 1991 SCR Supl. (1) 251; 1991 SCC (4) 584

On review, the Court upheld the US $470 million Bhopal settlement and its Article 142 power to record it, but revived the quashed criminal proceedings and declared the Union of India liable to meet any shortfall in the fund.

Facts

Methyl isocyanate escaped from the pesticide plant of Union Carbide (India) Limited at Bhopal on the night of 2 December 1984, killing about 4000 people and affecting tens of thousands. Under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, the Union of India sued as parens patriae in the District Court, Bhopal, claiming US $3.3 billion. When appeals on an interlocutory order for interim compensation reached the Supreme Court, a Court-assisted settlement of the whole claim for US $470 million was recorded by orders of 14 and 15 February 1989, which also quashed the criminal proceedings. Review petitions under Article 137 and writ petitions under Article 32 challenged the settlement and the Court's jurisdiction to make those orders.

Questions before the Court

  1. Did the Court have jurisdiction, in appeals against an interlocutory order, to withdraw the suits and criminal proceedings and dispose of them in terms of a settlement under Article 142(1)?
  2. Was the settlement void for non-compliance with Order XXIII Rule 3B CPC, as opposed to public policy, or for lack of a fairness hearing and a re-opener clause?
  3. Was the quashing of the criminal proceedings justified?
  4. What follows if the settlement fund proves inadequate, and what further directions are needed for the victims?

What the Court held

  • Under Article 142(1) the Court had jurisdiction to withdraw the suits and criminal proceedings and dispose of them. Provisions of ordinary law do not, as such, limit that power; prohibitions based on fundamental public policy go only to what is 'complete justice' in the case, not to jurisdiction.
  • The settlement was not void for non-compliance with Order XXIII Rule 3B CPC, nor as opposed to public policy or as stifling prosecution. A fairness hearing was not strictly required under the 1985 Act, and absence of a re-opener clause did not by itself vitiate it.
  • The Court had power to quash the criminal proceedings, but on the facts the quashing was not justified; the criminal proceedings were directed to proceed, and the bar on future prosecutions was set aside.
  • The settlement was not vitiated for want of hearing to victims. If the fund proved insufficient, the Union of India, as a welfare State, must make good the deficiency (Ahmadi, J. dissenting on this point).
  • If the settlement were set aside, UCC would be entitled to restitution of the amount brought in, subject to the Bhopal District Court's order of 30 November 1986. Directions were given for claim adjudication, medical surveillance, a 500-bed hospital and group insurance for about one lakh people.

Why it matters

The judgment explains the reach of the Supreme Court's power to do complete justice under Article 142(1), holding that limitations in ordinary statutes do not by themselves curtail it and confining the observations in Prem Chand Garg on this point. It upheld the civil settlement of the Bhopal mass tort claims while reviving the criminal prosecutions, and placed on the Union of India, as a welfare State, the burden of any shortfall in the fund.

In the Court's words

Copied from the official judgment; each passage links to its page.

“The proposition that a provision in any ordinary law irrespective of the importance of the public policy on which it is founded, operates to limit the powers of the Apex Court under Article 142(1) is unsound and erroneous.”
Venkatachaliah, J.Page 47 of the judgment
“We agree with Shri Nariman that the power of the Court under Article 142 in so far as quashing of criminal proceedings are concerned is not exhausted by Sections 320 or 321 or 482 Cr.P.C. or all of them put together. The power under Article 142 is at an entirely different level and of a different quality. Prohibitions or limitations or provisions contained in ordinary laws cannot, ipso-facto, act as prohibitions or limitations on the constitutional powers under Article 142.”
Venkatachaliah, J.Page 47 of the judgment
“If it should arise, the reasonable way to protect the interests 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.”
Venkatachaliah, J.Page 88 of the judgment
“Having regard to the scheme of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, the incidents and imperatives of the American Procedure of 'Fairness Hearing' is not strictly attracted to the Court's sanctioning of a settlement. Likewise, the absence of a "Re-opener" clause does not, ipso facto, vitiate the settlement.”
Venkatachaliah, J.Page 93 of the judgment

Provisions interpreted

Related judgments

Case and bench

Parties
Union Carbide Corporation Etc. Etc. v. Union of India Etc. Etc.
Case
Review Petition Nos. 229 and 623-24 of 1989 and Civil Miscellaneous Petitions in Civil Appeal Nos. 3187-88 of 1988, with connected Writ Petitions
Decided
3 October 1991
Bench
Venkatachalliah, M.N. (J), Misra, Rangnath (CJ), Singh, K.N. (J), Ahmadi, A.M. (J), Ojha, N.D. (J)
Opinions
Main judgment by Venkatachaliah, J., which Ahmadi, J. calls the majority; K.N. Singh and N.D. Ojha, JJ. wrote no separate opinions. Ranganath Misra, C.J. entirely agreed in a separate concurring opinion. Ahmadi, J. agreed with most conclusions but dissented on directing the Union of India to make good any shortfall in the settlement fund.

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