Introduction

The issue with U.S. suppliers cannot be resolved by selling out

the interests of the people of India and the government must
stiffen its spine to make this absolutely clear.
-The Hindu

The 123 Agreement signed between India and U.S.A and the consequent enactment of The
Indian Nuclear Liability Act, 2010 has been the subject matter of debate in political circles,
corporate lobbyists and international regimes, since the time the Government of India took steps
towards enacting legislation owing to the inherent weakness in the liability law. The law while
recognizing the liability of the operator/ manufacturer/supplier ignores some integral aspects of
law relating to nuclear liability which have been duly recognized by the Courts in India. The
Government faces allegations for diluting the law by acting under the pressure of foreign nations
and the multi-billion dollar nuclear industry and bringing in a project which is inherently
unviable and dangerous. These allegations come in lieu of the apathy of the Government
reflected in the shabby manner in which it dealt with the Bhopal Gas Tragedy. Furthermore, the
Government seems to be oblivious of the Nuclear Tragedy which took place in Japan and its
deleterious effects on the population at large. This is further corroborated by a clean industrial
safety record of Japan which couldnt anticipate such hazards, even though effective regulatory
mechanism exists. Even countries like Germany, Switzerland and Italy have announced complete
withdrawal from nuclear industry in the aftermath of the Fukushima disaster. However, the
statement of the Secretary of the Department of Atomic Energy, Govt. of India, that Indian
nuclear plan is one hundred percent safe is indicative of a reckless statement made without
being substantiated by facts and proper analysis. This not only shows that that the Government
has turned a blind eye to the nuclear safety in the country but also ignorance of our poor safety
track record in the nuclear industry reflected in the Bhopal Gas Tragedy.
The stiff opposition and clamour to this badly drafted piece of legislation is because of the
deeply flawed perspective of the Act. Under the garb of bringing the victims to the center of
legislative activity, the cap on the liability of the operator seems to serve as subsidy which is

apparently counter-productive and chops away the reasonable nexus sought to be achieved by the
statute. It is in that sense, it is submitted that the project is not aimed against the use and
exploitation of nuclear energy per se but only highlights the risks accompanied and the cost
incurred while obtaining nuclear energy and the same should be considered so as to develop a
fool-proof mechanism through appropriate regulatory devices and certain optimum threshold of
safety standards.

Constitutional Validity of the Act on the touchstone of Article 14

It is submitted that the Government plans to order imports of nuclear power plants and material
thereof from pre-determined select foreign enterprises through private negotiations which is
worth a huge corpus of money. This transaction is made without any proper analysis of
technology and safety standards and without any procedural bidding or competitive auction and
is therefore, violative of Article 14 of the Constitution of India. The
The Honble Supreme Court has observed that In all actions, even in the field of contracts, an
instrumentality of the State must be governed by Article 14. It cannot afford to act with
arbitrariness or capriciousnessIn the field of contracts, the State and its instrumentalities ought
to design their activities as would ensure fair competition and non-discrimination1 It has been
consistently observed by the Court that Contracts by the State or its instrumentalities must be
made in a transparent fashion after public auction/tender.
Not only has the Government of India, without any prior public notification entered into
agreements and negotiations with foreign nuclear suppliers without any transparent, competitive
bidding process, but the Government has abysmally failed to evaluate the technical aspects and
nitty-gritties of the various nuclear reactors of different manufacturers/suppliers and has ignored
the safety aspects as is now clear about the lack of safety of French and Russian nuclear reactors
that are being imported.

1 Jamshed Hormusji v Board of Trustees AIR 2004 SC 1815: (2004) 3 SCC 214.

Ignorance of the Concepts of Absolute Liability, Precautionary Principle and

Polluter Pays-Violation of Article 21 of the Constitution of India

(i)

Violation of the Concept of Polluter Pays

The issue of liability has been dealt in section 6 of the Act. The Section specifies the amount
which the operator (which the Government is presently) will have to incur in case of a nuclear
accident. It further empowers the Central Government to revise the amount of compensation
from time to time. The liability of the operator is fixed at Rs. 1500 crores which seem to be quite
low taking into considerations the hazardous effects of a nuclear accident. Such a low capping on
the liability of the operator, as compared to $10.2 billion in US, $6.2 billion in Japan and
unlimited liability in Germany, might make it more feasible for him than to incur expenses on
safety measures that would involve a hike in the prices which in ordinary and modern
circumstances might lead up to a minimum 10% increase in the cost of construction. With the
prospect of foreign private players entry into this industry, this aspect of fixing the liability
seems to be a matter of serious concern. It is also submitted that amount exceeding the cap fixing
the liability of the operator will be bore by the Government which in turn shifts the burden on the
taxpayers of the Country, as the same will be paid out by the exchequer.
Hence, the section under question by limiting the liability of the operator at such a bare
minimum and ousting the liability of the supplier violates the Principle of Polluter Pays. The
Honble Court has observed, The Polluter Pays principle demands that the financial costs of
preventing or remedying damage caused by pollution should lie with the undertakings which
cause the pollution, or produce the goods which cause the pollution. Under the principle it is not
the role of Government to meet the costs involved in either prevention of such damage or in
carrying out remedial action, because the effect of this would be to shift the financial burden of
the pollution incident to the taxpayer.2 Hence, the Act is against the principle of Polluter Pays
which is held to be an integral part of Article 21 and therefore, ultra vires the Constitution.
2 Council for Environ-Legal Action v Union of India (1996) 3 SCC 212

The Act does not protect the Right of a person to a Clean, Healthy and Safe environment that is
also part of the Article 21 of the Constitution of India. If the financial liability in case of a
nuclear catastrophe is limited to such a small amount, the operator would prefer to bear the
burden of this liability in the event of an occurrence of an accident rather than taking recourse to
higher standards of safer technology and pressurizing its suppliers for better equipment which
certainly would entail higher expenses. This can be contrasted with the amount of 20 billion
dollars (roughly Rs. 1, 00, 000 crores) that was recovered from the company BP for causing an
oil spill which caused danger to the marine life. Hence, the amount sated in the Nuclear Liability
Act is grossly insufficient and arbitrary especially considering human lives, the loss of which
cannot be put in monetary terms, is involved and the inability of the Central Government to have
come up with an amount which correctly estimates the damage that may accrue in case of a
nuclear accident.
Thus, in effect the Act fails to address the object with which it is created and is not in the interest
of the public but in the interest of the corporates and nuclear industry. Furthermore, this suggests
inculcation of such a culture wherein the operator and supplier adopt a technology which is
cheaper and less safe, thereby, endangering the safety of the public. This clearly violates the
Right to Life, Health and Safe & Clean Environment that is encompassed in the broader Right to
Life enshrined in Article 21 of the Constitution.

(ii)

Violation of the principle of Absolute Liability

The Act provides for the Strict and no fault liability of the operator under section 5 of the statute.
The Act mentions that the operator shall not be liable for any damage caused by a nuclear
incident directly due to a grave natural disaster of an exceptional character and one such instance
of the above mentioned disaster can be an earthquake. In light of the disaster in Japan by the
destruction of the Fukushima Nuclear Power Plant which caused immense destruction and loss
of life, people need to be protected from the damage that may occur as a result of natural
calamities.

The provisions of Section 5 in the Act run counter to the principle of Absolute Liability as
laid down by the Honble Supreme Court in MC Mehta v. Union of India3.The Court while
appreciating the changing nature of the nuclear industry which has become more technologically
advanced and more hazardous, devised the principle of Absolute Liability for ensuring greater
accountability. The Court observed that if an enterprise engages in an inherently dangerous and
hazardous activity and if some harm is caused as a result of this activity then the liability is
absolute and not subjected to any exceptions as stated in Rylands v. Fletcher. The court observed
that facts need to be acknowledged that the industry is in the best position to absorb the cost of
the accident as it has the resources to discover, guard and warn against the hazards and dangers
and hence, industry should incur the cost of the damage caused by the accident notwithstanding
its cause.
Hence by, in effect, discouraging the use of safe practices, the Act exposes the citizens to the
deleterious effects of a nuclear accident and therefore it violates the rights guaranteed under
Article 21 of the Constitution. The Act also goes against the settled principles of polluter pays
and absolute liability that have become part of the Article 21 of the Constitution of India.
(iii)

Violation of the Precautionary Principle

The introduction and the proliferation of nuclear energy on such a massive scale by the
Government exhibits as the policy of the Government which is oblivious of public welfare and
disconnected from the issues associated with the promotion of such an inherently dangerous
activity. Furthermore, it is to be noted that the life span of a nuclear power plant is about 40
years, after which it has to be decommissioned, the cost of which entails thousands of crores of
rupees.
New nuclear plants are excessively capital intensive, take years to build, are prone to cost
overruns, and are economically competitive only when significantly subsidized. The history of
operating performance shows an unacceptable rate of serious incidents that will grow in
proportion with greater nuclear power generation. Secondary reserves of uranium will likely be
exhausted before the end of this decade and high quality reserves of primary uranium are hard to
find, contributing to rising and volatile fuel prices. The consequences of the nuclear fuel cycle to
3 (1987) 1 SCC 395

global water supply and land are disastrous, and within a few decades the carbon footprint of
nuclear plants will worsen to be equivalent to some fossil-fueled sources of electricity. Nuclear
facilities are attractive targets for terrorism, and they produce hazardous and radioactive material
that can be used to make weapons.4
Such concerns bring about a compelling ground for the invocation of the Precautionary
Principle. The principle mandates that when a new technology or process can cause serious and
irreversible harm to human health and the environment, precautionary measures should be taken
even if some cause and effect relationships are not fully established scientifically. In this context,
the proponent of the uncertain activity rather than the public has to bear the burden of proof.5
By giving environmental clearances to projects such as the Jaitpur Nuclear Power Plant, which is
one such instance of violation of the rule of Precautionary Principle it is essential that the
environmental clearance given to the same be revoked, when huge costs and damage is a
likelihood. Furthermore, it is also suggested an independent regulatory expert body or
commission be setup to make recommendations as to the cost-benefit analysis and safety
standards for the project. The absence of an independent nuclear safety authority or regulator
puts public safety to extreme risk public safety and is therefore impinges upon the rights
guaranteed under Article 21 of the Constitution which guarantees the rights to life, clean
environment, health and safety.
Thus, in effect, there is a clear violation of the rule laid down by the Honble Supreme Court
which has formed a part of the law of the land i.e. Article 21 of the Constitution of India.6
Violation of Article 19(1) (a) of the Constitution of India
The non-disclosure sub-clause mentioned under Section 18 of Atomic Energy Act should receive
a harmonious construction with Article 19(1) (a) of the Constitution and the provisions of Right
4 Prof. Sovacool, Questioning a Nuclear Renaissance GPPi Policy Paper No. <8> 2010
<http://www.gppi.net/fileadmin/gppi/GPPiPP8-Sovacool Questioning_a_Nuclear_Renaissance.pdf>
accessed 12 March 2014.
5 AP Pollution Control Board v M V Nayudu (1999) 2 SCC 718.
6 ibid; Vellore Citizens Welfare Forum v Union of India (1966) 5 SCC 647.

to Information Act, 2005 that empowers the citizens with the right to receive or obtain
information on the functioning of any public authority or its instrumentality.
The Honble Supreme Court has observed that If secrecy were to be observed in the functioning
of government and the processes of government were to be kept hidden from public scrutiny, it
would tend to promote and encourage oppression, corruption and misuse or abuse of authority,
for it would all be shrouded in the veil of secrecy without any public accountability. But if there
is an open government with means, of information available to the public there would be greater
exposure of the functioning of government and it would help to assure the people a better and
more efficient administration. There can be little doubt that' exposure to public gaze and scrutiny
is one of the surest means of achieving a clean and healthy administration. It has been truly said
that an open government is dean government and a powerful safeguard against political and
administrative aberration and inefficiency.7
Hence, it is essential that the functioning of the nuclear establishments and its subsidiaries in
India takes place in a transparent manner and puts out all the information related to such
establishments, necessary in the interest of citizens of this country in the public domain. Even
paragraph 2, 3 and 4 of Article 3 of the Aarhus Convention, ratified by 40 EU countries, which
deals a number of rights of the public (individuals and their associations) with regard to the
environment, provides their citizens with the right to seek access to information, in facilitating
participation in decision-making and in seeking access to justice in environmental matters. In
lieu of such Conventions which have been framed by taking into consideration various other
International Instruments dealing with similar aspects of right of access to information, there is
no reason why our citizens should be denied these rights which have been internationally
recognized. The functioning of the nuclear facilities in such a discreet, non-transparent and nonaccountable manner and complete secrecy over the safety audits and other information regarding
radioactivity, accidents and costs violates Article 19(1)(a) of the Constitution which guarantees
the right to information, and the same being arbitrary is violative of Article 14 of the
Constitution.
The Concept underlying Section 17(b) of the Act
7 SP Gupta v Union of India AIR 1982 SC 149.

Section 17 of the Act mentions about the Operators right of recourse to claim damage from the
supplier under certain circumstances enumerated under cause (a) to (c). However, there seems to
be a slight deviation under sub-clause(b) of this section from International Norms because of
which it has been the subject of criticism by countries including United States, Russia and
France. On the contrary, the Indian Parliament felt it fit to deviate from international standards
related to Nuclear Liability taking into consideration Indias history with nuclear accidents,
especially the Bhopal Gas Tragedy.
According to Mr. Soli Sorabjee8, the provisions of Section 17(b) of the Act are ultra vires Article
10 of the CSC. Section 17 (b) gives right of recourse to an operator by which the operator would
have the ability to reclaim any compensation it may pay, from a supplier, if the product supplied
has patent or latent defects or the service provided is substandard. However, Article 10 of the
CSC states that the operator can recover compensation from the supplier, subject to an express
contract between the two or when there is an intention on the part of the latter to do harm. But
Mr. Sorabjee further stated that international law cannot prevail over the municipal laws of India
and precedence shall be given to the latter.
However, the controversy with section 17 still doesnt seem to be resolved owing to the
ambiguities in the section. In a recent legal opinion given by the Attorney General to the Central
Government opining that Section 17(a) provides for a right of recourse to the operator subject to
the condition that such a sub-clause is expressly mentioned in contract and the operator is
therefore, at a liberty to waive this right and not incorporate such a provision in the contract with
the supplier. Essentially, in its strict legal sense of the term, the operator under Section 17 has a
right to either incorporate such a sub-clause of the right to recourse in the contract or can waive
such a statutory right.
The most important and pertinent question that needs to be addressed here is that whether right
available under sub-clause(a) of section 17 extends to sub-clause(b) or (c) i.e. is it legally
sustainable to provide such a blanket waiver. It may be argued that the provisions mentioned
under Section 17 of the Act when read in light of article 10 of the CSC, extends the statutory
right of waiver in Section 17 (a) to the circumstances mentioned or enumerated in sub-clause(b)
8 Senior Advocate, Supreme Court of India, Former Attorney general of India

and (c) of Section 17 of the Act. However, a plain reading of section is clearly indicative of the
presumption that sub-clauses (a), (b) and (c) are distinctive and separate. It can be argued that the
right of recourse given under sub-clause (b) or (c) will not be affected merely because the
operators right to recourse is given or not given in the contract with the supplier. This is further
corroborated, as it would be tantamount to defeating the provisions of the Act, if the operator is
to waive the right to recourse in situation mentioned under sub-clause(c) which deals with the
intent to cause nuclear damage. The fundamental question that is to be addressed here is that
whether an operator will be allowed to take a plea which says that it would waive its right to
recourse available against the supplier. The answer to this will be in the negative. Therefore, the
same rule of exclusion cannot be extended to sub-clause (b) and therefore, Section 17 (a) cannot
be invoked for availing such a waiver.
Furthermore, Nuclear Power Corporation of India Limited (NPCIL) and the Bhartiya Nabhikiya
Vidyut Nigam Limited (BHAVINI), are the nuclear operators in India which are wholly owned
by the government. Therefore, it is the entire responsibility of running the nuclear power
establishments lie with these arms of the government. Hypothetically speaking, in the event of
any nuclear accident, the cost of compensation has to be borne by these entities under the
relevant nuclear liability law. Since these entities are wholly owned by the Government and the
funding of these nuclear establishments is by the Government, the compensation payable is
ultimately out of the taxpayers money. It is submitted that this argument cannot be legally
sustainable, as the Indian operator cannot contractually agree with the supplier to waive its right
to recourse available under sub-clause (b) for compensation from the supplier who has supplied
the operator with products which have a patent or latent defect.
The reason for no legal sustainment of such a blanket waiver can be answered from the law
relating to waiver of a statutory right. The Supreme Court of India has held that a statutory
right in favour of a party can be waived by such party as long as no public interest or public
policy is adversely affected9. Therefore, if NPCIL is to waive its right of recourse against the
supplier to claim compensation for providing the operator with a product which has a patent or
latent defect, then the money for such compensation will be borne out of the taxpayers money

9 Krishna Bahadur v Purna Theatres (2004) 8 SCC 229.

despite the law which allows the operator to claim compensation from a grossly negligent
supplier. This would completely be against public interest and legally absurd.
If the legislature has enacted a law with the intention to expand the concept of suppliers liability,
then it can well be argued that it forms a part of public policy, an issue which is extraneous to the
legal opinion given by the learned Attorney General to the Central Government. Furthermore,
contract which would defeat the provisions of law or is contrary to public policy is unlawful
which further strengthens the case that it would defeat the provisions of the Act and is against
public policy. The Supreme Court in Rattan Chand Hira Chand v. Askar Nawaz Jung10 held that
a contract which has a tendency to injure public interests or public welfare is one against public
policy and what constitutes an injury to public interests or welfare would depend upon the times
in which the issue arises. It is therefore submitted that the interpretation of the provisions of the
Act should be done harmoniously with the aim to be achieved by the Act and not by
circumventing the provisions of the Act by providing a blanket waiver, as this would squarely be
against public interest.
The next aspect to be considered is the effectiveness of Section 17 which is eclipsed by the rules
framed by the Government in exercise of its powers under Section 48 of the Act. Although the
rules have been made as empowered under Section 48 but they do not seem to meet the
requirement as specified under Section 48(3) of the Act which requires the rules to be approved
by both the Houses of the Parliament. It is submitted that the Rules framed are not in consonance
with the spirit of the Act and whittles down the object of the Act. It is a settled rule of
interpretation that rules should facilitate the primary objective of the Act and pave way for its
legitimate functioning. If the rules are inconsistent with or repugnant to the provisions of the Act,
then rules battle down the purpose of the statute and are hence, ultra vires. Under Section 6 (1)
and 6 (2), the Act laid down provisions to remove strict caps on compensation and time limits for
these. Section 17 of the Act is made with the object to remove the strict caps on compensation
and time constraints to seek the same. However, Rule 24 made under the Act is repugnant to
Section 17 of the Act.

10 (1991) 3 SCC 67.

Rule 24 addresses the issue of right of recourse against the supplier mentioned under section 17
of the Act. . Section 17 (b) allows the operator to take recourse to claim compensation from the
supplier, if the nuclear accident occurs due to the negligence of the supplier. Rule 24 withdraws
from this position of the Act. Rule 24(1) specifies the amount of compensation that can be
recovered from the supplier which is to the extent of operators liability or the contract price,
whichever is lesser. Rule 24 (2) provides a period of limitation for which the liability can be
imposed on the supplier. The Rules, in effect, whittle down the effect of the statutory enactment
by offering a counter-productive subsidy at the cost of jeopardizing millions of lives of the
citizens of this Country and are hence, ultra vires the Act
Conclusion
The Civil Nuclear Liability Act, 2010 enacted by the Parliament though with the aim and
objective of providing the victims with a channelized legal mechanism of claiming compensation
has porous provisions like limiting the total liability, low cap on the liability of the operator, nontransparent functioning of nuclear establishments and right of recourse against the supplier. The
Act ignores the basic fundamental features of Article 21 which have become the law of the land
and has various ambiguities in relation to the scope of Section 17 which deals with suppliers
liability. It is to be remembered that the interpretation of this particular provisions would lie with
the Courts in India in the backdrop of a nuclear accident. Furthermore, Rule 24 to the Act is a
disappointing feature which is ultra vires the Act and hence, disables the smooth functioning and
effectiveness of the statutory enactment. In the opinion of the author, the Parliament must amend
these provisions to bring them in consonance with the Constitution and the must also remove the
ambiguities from the language of Section 17. Any watering down of the legislation by the
operator, waiving his statutory right, which under certain circumstances would be against public
policy would only increase these ambiguities, and is in no ones interests, including those of the
foreign suppliers. It is also suggested that an independent regulatory commission should be setup
alienated from the control of the Government to conduct a cost-benefit analysis of all existing
and proposed nuclear establishments in the country. To conclude, the Civil Nuclear Liability Act,
2010 in its totality, undermine the basic principles of liability and deprives the people of this
country their Right to life under Article 21. Towards the fag end, it must be remembered that
everything comes at a cost. The world has already experienced three major nuclear accidents and

another one cannot be afforded. Thus, if the Government wishes to pursue its dream of
harnessing nuclear energy, it must do so by enacting a legislation that correctly deals with the
wide and anachronistic International Nuclear Regime by balancing the interest of the people of
this country.