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SC dismisses plea for higher payout by Union Carbide

Hindustan Times logo Hindustan Times 14-03-2023 Utkarsh Anand, New Delhi

A Constitution bench in the Supreme Court on Tuesday dismissed a petition filed by the Union government in 2010, demanding an additional compensation of more than 7,400 crore from the American company Union Carbide Corporation (UCC) for the victims of 1984 Bhopal gas tragedy, and reproached the Centre for “gross negligence” in providing insurance cover to those affected by one of the world’s worst industrial disasters which claimed more than 5,000 lives.

Noting that the curative petition filed by the Centre for a top-up of the $470 million settlement amount had no basis either in law or on the facts of the case, a five-judge bench led by justice Sanjay Kishan Kaul lamented that the Centre is yet to frame an insurance policy for the victims of the tragedy despite an undertaking given to the apex court in 1991.

“The responsibility was placed on the Union of India, being a welfare state, to make good the deficiency (in the compensation) and to take out the relevant insurance policy. Surprisingly, we are informed that no such insurance policy was taken out. This is gross negligence on the part of Union and is in breach of the judgment of this court. The Union cannot be negligent on this aspect and then seek a prayer from this Court to fix such responsibility on the UCC,” said the court.

The bench, which also included justices Sanjiv Khanna, AS Oka, Vikram Nath and JK Maheshwari, referred to the court order in 1991, requiring the Centre to take out a medical insurance policy to cover 1,00,000 people who might later develop symptoms from being exposed during the gas release. The government had undertaken to do so but the bench on Tuesday noted that the direction was not implemented.

It also held that the Centre’s plea for an additional compensation has “no foundation in any known legal principle”, particularly in the wake of the government’s admission before the court in past proceedings that the settlement amount was not just sufficient, but in surplus of the compensation required to be paid to the claimants. The terms of settlement were signed before the court in February 1989 by the then attorney general and the counsel representing Union Carbide.

“We are equally dissatisfied with the Union of India for not furnishing any rationale for raking up this issue more than two decades after the incident... Even if assuming that figures of affected persons turned out to be larger than contemplated earlier, an excess amount of funds remains available to satisfy such claims,” noted the bench, directing that the Centre must utilise 50 crore that is still lying with the Reserve Bank of India to compensate the victims.

The bench further cited the welfare commissioner’s affidavit before the top court in 2009, stating that the victims were paid six times more than the average damages to be paid to the victims of motor accident cases.

Through a curative plea moved in 2010, the government had sought a reconsideration of the May 1989 judgment and a 1991 order of the Supreme Court. It argued that the 1989 settlement to the tune of $470 million was grossly inadequate and that Union Carbide, which is now a wholly owned subsidiary of The Dow Chemical Company, must be asked to pay more.

It sought additional funds of over 7,400 crore from the chemical company, which was held accountable for the loss of more than 5,000 lives on the intervening night of December 2-3, 1984 when the toxic Methyl Isocynate (MIC) gas escaped from company’s plant in Bhopal, leading to what is recognised as one of the worst public health disasters in the world.

The toll was pegged at 5,295 and the number of people suffering serious ill-effects was put at 40,399, according to the official health estimate submitted by the government in the court in January.

Five organisations working for victims of the tragedy on Tuesday criticised the Supreme Court’s decision.

Rashida Bee, president of the Bhopal Gas Peedit Mahila Stationery, said, “Bhopal gas victims have once again been deprived of justice. The counsel for the Union Carbide Company, whose officials are absconding till date and is facing charges of culpable homicide. Adequate time was given to speak, while the counsel for the victims’ organisations was heard only for 45 minutes.”

Rachna Dhingra, of the Bhopal Group for Information and Action said the Supreme Court ignored the “facts and arguments presented by the victims’ organisations”.

“We presented official figures of deaths and diseases caused by the gas tragedy which were analysed by international experts of epidemiology to show that the 1989 accord was a gross injustice but the Supreme Court bench ignored all these facts. The bench said that the 1989 agreement can be reconsidered only on the basis that fraud was resorted to in it. Our counsel presented full details of the frauds perpetrated by Union Carbide for settlement but the bench did not consider it necessary,” Dhingra said.

Nawab Khan, president of the Bhopal Gas Peedit Mahila Purush Sangharsh Morcha, said, “Against the black accord of 1989, we fought and won and now we will resume our fight. We will fight in court and we will fight in the streets until justice is done in the world’s worst corporate disaster.”

In its judgment on Tuesday, the constitution bench emphasised that “providing closure to the lis is also very important, particularly in the context of the scenario faced by Indian judiciary where delay is “almost inevitable”. It also flagged that reopening of settlement would result in trials and furnishing of evidence and thus, a Pandora’s box which could eventually be to the detriment of the beneficiaries.

The bench further underlined that the government chose not to file a review petition against the main judgement in 1989 and waited for almost 20 years to challenge the dismissal of the review petition in 1991.

Attorney general R Venkataramani led the matter on behalf of the Union government while senior advocates Harish Salve, Ravindra Shrivastav and Sidharth Luthra represented the Dow Chemical and UCC.

“This has been a long, eventful battle of over 20 years, and I and my team members are elated that we have been able to get a favourable judgement from the Supreme Court in this matter,” advocate Shiraz Patodia, senior solicitor of Dua Associates, which has been handing the matter on behalf of the American company for 20 years, said.

The bench had on January 12 reserved its verdict in the matter while stressing that the Union government and the chemical company mutually agreed to the $470 million settlement towards “all past, present and future claims” and that the court did not thrust the settlement upon parties.

Soon after the tragic incident, the central government enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, to assume the exclusive right to fight for compensation for the victims on their behalf.

In April 1985, immediately after the Bhopal Act was passed, the government sued Union Carbide in the United States. However, in 1986 a US district court declined to entertain the claims there on the ground that Union Carbide consented to submit to the jurisdiction of the courts in India.

Subsequently, the Union government filed a suit before a civil court in Bhopal, which awarded an interim payment of 350 crore.

However, after the company challenged this interim order, the Madhya Pradesh high court reduced the interim award by 30%. The Centre then challenged the high court order in the Supreme Court where a five-judge bench heard the case and the settlement amount of $470 million was arrived at in 1989.

In 2010, separate curative petitions were filed by the Centre and the Central Bureau of Investigation questioning the compensation and the dilution of the criminal charge against the accused. The government sought enhancement of damages, claiming the compensation decided in 1989 was on the basis of a preliminary assessment that there were 3,000 deaths, 20,000 people suffering from serious injuries, and 50,000 from minor ones. It said the death figure had risen to 5,295, with 35,000 people suffering from serious injuries and 5.27 lakh from minor ones.

CBI, in its petition, questioned the “colossal failure of justice” in 1996 when the top court chose to dismiss the gas tragedy as a result of an act of negligence, and not culpable homicide, by former Union Carbide chairman Warren Anderson and his Indian employees. Anderson died in 2014.

While the curative petition by the Centre remained pending, a five-judge bench junked CBI’s plea in May 2011 noting no fetters were placed by the Supreme Court on a trial judge to approve prosecution of accused under any charge if the prosecution could adduce appropriate materials and that its 1996 judgment was based on the evidence till that stage. The court also held that “no satisfactory explanation has been given to file such curative petitions after about 14 years from the 1996 judgment”.

Arguing for the plea to reopen the settlement, the Centre stressed that it was an “extraordinary case” where the unparalleled disaster claimed several lives. According to the AG, the 1989 settlement before the top court relied on “incorrect and wrong assumption of facts and data” regarding deaths and other cases of injuries, and therefore the government was pressing for additional compensation. His submissions were supported by a group of victims and NGOs.

The bench, however, in its judgment on Tuesday refused to invoke its special powers under Article 142 to reopen the settlement, and held that “it will not be an appropriate course of action” to impose a greater liability on the UCC than it initially agreed to bear.

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