…..........................................................

INSTITUTE OF
MANAGEMENT STUDIES

A PROJECT ON

BLOOD OF WORKMEN TO BE BORNE BY INDUSTRY

By
….........................
1st Semester, MFM
ACKNOWLEDGEMENT
 PROLOGUE

(Synopsys of thesis in 20 lines max)

In this age of globalization where the companies has to work hard

and do whatever needed to do to survive the tough competition
given by global companies, the workmen are exploited badly. The
corporates or the management do not pay proper attention to their
working conditions or their safety.
One can see the tragic accidents

In earlier days people used to travel months and years to trade

with others. But now the whole world has become a small village
and no economy can survive without trade and commerce. Because
of this, trade among different economies are increasing
exponentially and so is the competition. To survive in this
competitive world or to make more and more profit business
persons often break laws or goes for unfair means. Unfair means
not only affects the economy or the consumer but also the business
entity itself in the long run.

Fair practices: promotes research. Gives entrepreneurial

opportunities to others. Gives equal opportunities. Fair deals to
farmers and producers of goods/services.
 CASE LAW INDEX

• Petitioner – Respondent
• Bench
• Citation
• ACT
• Head note
• Judgment Ref
• Court ORDER
SUPREME COURT CASE JUDGMENT

PETITIONER:
UNION CARBIDE CORPORATION

Vs.

RESPONDENT:
UNION OF INDIA ETC.

• DATE OF JUDGMENT04/05/1989

BENCH:

PATHAK, R.S. (CJ)

BENCH:

PATHAK, R.S. (CJ)

VENKATARAMIAH, E.S. (J)
MISRA RANGNATH
VENKATACHALLIAH, M.N. (J)
OJHA, N.D. (J)

CITATION:
1990 AIR 273 1989 SCC (2) 540
1989 SCALE (1)932
ACT:
Bhopal Gas Leak Disaster (Registration and Processing of
claims) Act, 1985: Court giving reasons for the overall
settlement order dated February 14, 1989—Compelling duty
both judicial and humane to secure immediate relief to the
victims.
HEADNOTE:
The Bhopal Gas Leak Tragedy that occurred at midnight of
2nd December, 1984, by the escape of deadly chemical fumes
from the appellant's factory was a great industrial disaster
and it took an immediate toll of 2600 human lives and left
tens of thousands of innocent citizens of Bhopal physically
affected in various ways. As per the figures furnished by
the Union of India in its amended plaint a total number of
2,660 persons suffered agonising and excruciating deaths
between 30,000 to 40,000 persons sustained serious injuries
as a result of the said disaster.
Legal proceedings for the recovery of compensation for
the victims were initiated against the multi-national compa-
ny first in the U.S. Courts and later in Distt. Court at
Bhopal in Suit No. 113 of 1986. The present appeals concern
with the order dated 4th April, 1988 passed by the Madhya
Pradesh High Court whereby it modified the interlocutory
order dated 17.12.1987 made by the Distt. Judge and granted
interim compensation of Rs.250 crores. Both the Union of
India and the Union Carbide Corporation have appealed to
this Court against that order.
The Courtby its order dated the 14th February, 1989
made in these appeals directed that there shall be an over-
all settlement of the claims in the suit for 470 million
U.S. Dollars and termination of all civil and criminal
proceedings. On May 4, 1989 the Court pronounced its reasons
for its aforesaid order dated 14.2.89thus:
The Statement of the reasons is not made with any sense
of finality as to the infallibility of the decision; but
with an open mind to be able to appreciate any tenable and
compelling legal or factual infirmities that may be brought
out, calling for remedy in review under Article 137 of
the Constitution. [132C-D]
 The basic consideration motivating the conclusion of the
settlement was the compelling need for urgent relief. Con-
siderations of excellence and niceties of legal principles
were greatly over-shadowed by the pressing problems of very
survival for a large number of victims. [133A, C]
The instant case is one where damages are sought on
behalf of the victims of a mass disaster, and having regard
to the complexities and the legal question involved, any
person with an unbiased vision would not miss the time
consuming prospect for the course of the litigation in its
sojourn through the various courts, both in India and later
in United States. This Court considered it a compelling
duty. both judicial and humane, to secure immediate relief
to the victims. In doing so, the Court did not enter upon
any forbidden ground. What this Court did was in continua-
tion of what had already been initiated. [133E-F, H; 134A]
The rangeof choice for the Court in regard to the
figures was, therefore, between the maximum of 426 million
U.S. Dollars offered by Shri Nariman and the minimum of 500
million U.S. Dollars suggested by the Attorney General.
[134F-G]
Having regard to all the circumstances including the
prospect of delays inherent in the judicial process in India
and thereafter in the matter of domestication of the decree
in the United States for the purpose of execution, the Court
directed that 470 million U.S. Dollars which upon immediate
payment and with interest over a reasonable period, pending
actual distribution amongst the claimants, would aggregate
very nearly to 500 million U.S. Dollars or its rupee equiva-
lent of approximately Rs.750 crores which the Attorney
General had suggested. be made the basis of the Settlement.
[134G-H; 135A-B]
The Settlement proposals were considered on the premises
that the Government had the exclusive statutory authority to
represent and act on behalf of the victims and neither
counsel had any reservation as to this. The order was also
made on the premises that the Bhopal Gas Leak Disaster
(Registration and Processing of Claims) Act 1985 was a valid
law. [135B-C]
There might be different opinions on the interpretation
of laws or on questions of policy or even on what may be
considered wise or unwise; but when one speaks of justice
and truth, these words mean the same thing to all men whose
judgment is uncommitted. [140B-C]
The compulsions of the need for immediate relief to tens of

thousands of suffering victims could not wait till these

questions, vital though they be, are resolved in due course
of judicial proceedings. [142D-E]
A settlement has been recorded upon material and in
circumstances which persuaded the Court that it was a just
settlement. This is not to say that this Court will shut out
any important material and any compelling circumstances
which might impose a duty on it to exercise the powers of
review. Like all other human institutions, this Court is
human and fallible. What appears to the Court to be just and
reasonable in that particular context and setting, need not
necessarily appear to others in the same day. Which view is
right, in the ultimate analysis, is to be judged by what it
does to relieve the undeserved suffering of thousands of
innocent citizens of this country. [142F-G]
Decisions of courts cannot be reacted or altered or
determined by agitational pressures. If a decision is wrong,
the process of correction must be in a manner recognised by
law. All of those who invoke the corrective processes in
accordance with law shall be heard and the court will do
what the law and the course of justice requires. The matter
concerns the interests of a large number of victims of a
mass disaster. The Court directed the settlement with the
earnest hope that it would do hem good and bring them imme-
diate relief, for, tomorrow might be too ate for many of
them. But the case equally concerns the credibility of, and
the public confidence in, the judicial process. [143B, D-E]
Those who trust this Court will not have cause for despair.
[143F]
M.C. Mehta v. Union of India, AIR 1987 SC 1(186; Theo-
ries of Compensation, R.E. Goodin: Oxford journal of Legal
Studies, 1989 p.57 and Wallace Mendelson.. Supreme Court
Statecraft--The Rule of Law and men, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3187 and
3188 of 1988.
From the Judgment and Order dated 4.4.1988 of the Madhya
Pradesh High Court in CR No. 26 of 1988.
Anil B. Dewan, J.B. Dadachanji, Mrs. A.K. Verma for the
appellant.
K. Parasaran, A. Mariarputham, Miss A. Subhashini and
C.L. Sahu for the Respondents.

ORDER

The following Order of the Court was delivered:

The Bhopal Gas Leak tragedy that occurred at midnight on

2nd December, 1984, by the escape of deadly chemical fumes
from the appellant's pesticide-factory was a horrendous
industrial mass disaster, unparalleled in its magnitude and
devastation and remains a ghastly monument to the de-huma-
nising influence of inherently dangerous technologies. The
tragedy took an immediate toll of 2,660 innocent human lives
and left tens of thousands of innocent citizens of Bhopal
physically impaired or affected in various degrees. What
added grim poignance to the tragedy was that the
industrial-enterprise was using Methyl Iso-cyanate, a lethal
toxic poison, whose potentiality for destruction of life and
biotic-communities was, apparently, matched only by the lack
of a pre-package of relief procedures for management of any
accident based on adequate scientific knowledge as to the
ameliorative medical procedures for immediate neutralisation
of its effects.
It is unnecessary for the present purpose to refer, in
any detail, to the somewhat meandering course of the legal
proceedings for the recovery of compensation initiated
against the multi-national company initially in the Courts
in the United States of America and later in the District
Court at Bhopal in Suit No. 113 of 1986. It would suffice to
refer to the order dated 4 April, 1988 of the High Court of
Madhya Pradesh which, in modification of the interlocutory-
order dated 17 December, 1987 made by the learned District
Judge, granted an interim compensation of Rs.250 crores.
Both the Union of India and the Union Carbide Corporation
appealed against that order.
This Court by its order dated 14 February, 1989 made in
those appeals directed that there be an overall settlement
of the claims in the suit, for 470 million US dollars and
termination of all civil and criminal proceedings. The
opening words of the order said:
"Having given our careful considera-
tion for these several days to the facts and
circumstances of the case placed before us by
the parties in these proceedings, including
the pleadings of the parties, the mass of data
placed before us, the material relating to the
proceedings in the Courts in the United States
of America, the offers and counter-offers made
between the parties at different stages

during the various proceedings, as well as the

complex issues of law and fact raised before
us and the submission made thereon, and in
particular the enormity of human suffering
occasioned by the Bhopal Gas disaster and the
pressing urgency to provide immediate and
substantial relief to victims of the disaster,
we are of opinion that the case is pre-emi-
nently fit for an overall settlement between
the parties covering all litigations, claims,
rights and liabilities related to and arising
out of the disaster ..... "
(Emphasis Supplied)
It appears to us that the reasons that
persuaded this Court to make the order for
settlement should be set-out, so that those
who have sought a review might be able effec-
tively to assist the Court in satisfactorily
 dealing with the prayer for a review. The
statement of the reasons is not made with any
sense of finality as to the infallibility of
the decision; but with an open mind to be able
to appreciate any tenable and compelling legal
or factual infirmities that may be brought
out, calling for remedy in Review under Arti-
cle 137 of the Constitution.
The points on which we propose to set-out
brief reasons are the following:
(a) How did this Court arrive at the sum of
470 million US dollars for an over-all settle-
ment?
(b) Why did the Court consider this sum of 470
million US dollars as 'just, equitable and
reasonable'?
(c) Why did the Court not pronounce on certain
important legal questions of far reaching
importance said to arise in the appeals as to
the principles of liability of monolithic,
economically entrenched multi-national compa-
nies operatingwith inherently dangerous
technologies in the developing countries of
the third world--questions said to be of great
contemporary relevance to the democracies of
the third-world?
There is yet another aspect of the Review pertaining to
the part of the settlement which terminated the criminal
proceedings. The questions raised on the point in the Re-
view-petitions, prima facie, merit consideration and we
should, therefore, abstain from saying anything which might
tend to pre-judge this issue one way or the other.

The basic consideration motivating the conclusion of the

settlement was the compelling need for urgent relief. The
suffering of the victims has been intense and unrelieved.
Thousands of persons who pursued their own occupations for
an humble and honest living have been rendered destitute by
this ghastly disaster. Even after four years of litigation,
basic questions of the fundamentals of the law as to liabil-
ity of the Union Carbide Corporation and the quantum of
damages are yet being debated. These, of course, are impor-
tant issues which need to be decided. But, when thousands of
innocent citizens were in near destitute conditions, without
adequate subsistential needs of food and medicine and with
every coming morrow haunted by the spectre of death and
continued agony, it would be heartless abstention, if the
possibilities of immediate sources of relief were not ex-
plored. Considerations of excellence and niceties of legal
principles were greatly over-shadowed by the pressing prob-
lems of very survival for a large number of victims.
The Law's delays are, indeed, proverbial. It has been
the unfortunate bane of the judicial process that even
ordinary cases, where evidence consists of a few documents
and the oral testimony of a few witnesses, require some
years to realise the fruits of litigation. This is so even
in cases of great and unquestionable urgency such as fatal
accident actions brought by the dependents. These are hard
realities. The present case is one where damages are sought
on behalf of the victims of a mass disaster and, having
regard to the complexities and the legal questions involved,
any person with an unbiased vision would not miss the time
consuming prospect for the course of the litigation in its
sojourn through the various courts, both in India and later
in United States.
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.
This Court, considered it a compelling duty, both judi-
cial and humane, to secure immediate relief to the victims.
In doing so, the Court did not enter upon any forbidden
ground. Indeed, efforts had
earlier been made in this direction by Judge Keenan in the
United States and by the learned District Judge at Bhopal.
What this Court did was in continuation of what had already
been initiated. Even at the opening of the arguments in the
appeals, the Court had suggested to learned counsel on both
sides to reach a just and fair settlement. Again, when
counsel met for re-scheduling of the hearings the suggestion
was reiterated. The response of learned counsel on both
sides was positive in attempting a settlement, but they
expressed a certain degree of uneasiness and scepticism at
the prospects of success in view of their past experience of
such negotiations when, as they stated, there had been
uninformed and even irresponsible criticism of the attempts
at settlement. The learned Attorney General submitted that
even the most bona fide, sincere and devoted efforts at
settlement were likely to come in for motivated criticism.
The Court asked learned counsel to make available the
particulars of offers and counter offers made on previous
occasions for a mutual settlement. Learned counsel for both
parties furnished particulars of the earlier offers made for
an overall settlement and what had been considered as a
reasonable basis in that behalf. The progress made by previ-
ous negotiations was graphically indicated and these docu-
ments form part of the record. Shri Nariman stated that his
client would stand by its earlier offer of Three Hundred and
Fifty Million US dollars and also submitted that his client
had also offered to add appropriate interest, at the rates
prevailing in the U.S.A., to the sum of 350 million US
dollars which raised the figure to 426 million US dollars.
Shri Nariman stated that his client was of the view that
amount was the highest it could go upto. In regard to this
offer of 426 million US dollars the learned Attorney-General
submitted that he could not accept this offer. He submitted
that any sum less than 500 million US dollars would not be
reasonable. Learned counsel for both parties stated that
they would leave it to the Court to decide what should be
the figure of compensation. The range of choice for the
Court in regard to the figure was, therefore, between the
maximum of 426 million US dollars offered by Shri Nariman
and the minimum of 500 million US dollars suggested by the
learned Attorney General.
In these circumstances, the Court examined the prima
facie material as to the basis of quantification of a sum
which, having regard to all the circumstances including the
prospect of delays inherent in the judicial-process in India
and thereafter in the matter of domestication of the decree
in the United States for the purpose of execution and di-
rected that 470 million US dollars, which upon immediate
payment

and with interest over a reasonable period, pending actual

distribution amongst the claimants, would aggregate very
nearly to 500 million US dollars or its rupee equivalent of
approximately Rs.750 crores which the learned Attorney
General had suggested, be made the basis of the settlement.
Both the parties accepted this direction.
The settlement proposals were considered on the premise
that Government had the exclusive statutory authority to
represent and act on behalf of the victims and neither
counsel had any reservation as to this. The order was also
made on the premise that the Bhopal Gas Leak Disaster
(Registration and Processing of Claims) Act, 1985 was a
valid law. In the event the Act is declared void in the
pending proceedings challenging its validity, the order
dated 14, February, 1989 would require to be examined in the
light of that decision.
We should make it clear that if any material is placed
beforethis Court from which a reasonable inference is
possible that the Union Carbide Corporation had, at any time
earlier, offered to pay any sum higher than an out-right
down payment of US 470 million dollars, this Court would
straightaway initiate suo motu action requiring the con-
cerned parties to show cause why the order dated 14 Febru-
ary, 1989 should not be set aside and the parties relegated
to their respective original positions.
The next question is as to the basis on which this Court
considered this sum to be a reasonable one. This is not
independent of its quantification, the idea of reasonable-
ness for the present purpose is necessarily a broad and
general estimate in the context of a settlement of the
dispute and not on the basis of an accurate assessment by
adjudication. The question is how good or reasonable it is
as a settlement, which would avoid delays, uncertainties and
assureimmediate payment. The estimate, in the very nature
of things, cannot share the accuracy of an adjudication.
Here again one of the important considerations was the range
disclosed by the offers and counter offers which was between
426 million US dollars and 500 million US dollars. The Court
also examined certain materials available on record includ-
ing the figures mentioned in the pleadings, the estimate
made by the High Court and also certain figures referred to
in the course of the arguments.
There are a large number of claims under the Act. In the
very nature of the situation, doubts that a sizeable number
of them are either without any just basis or were otherwise
exaggerated could not

be ruled out. It was, therefore, thought not unreasonable to

proceed on some prima facie undisputed figures of cases of
death and of substantially compensatable personal injuries.
The particulars of the number of persons treated at the
hospitals was an important indicator in that behalf. This
Court had no reason to doubt the bona fides of the figures
furnished by the plaintiff itself in the pleadings as to the
number of persons suffering serious injuries.
From the order of the High Court and the admitted posi-
tion on the plaintiff's own side, a reasonable, prima facie,
estimate of the number of fatal cases and serious personal
injury cases, was possible to be made. The High Court said:
" ..... In the circumstances, leaving a
small margin for the possibility of some of
the claims relating to death and personal
injuries made by the multitude of claims
before the Director of Claims of the State
Government being spurious, there is no reason
to doubt that the figure furnished by the
plaintiff Union of India in its amended plaint
can be safely accepted for the purpose of
granting the relief' of interim payment of
 damages. It has been stated by the plaintiff
Union of India that a total number of 2660
persons suffered agonising and excruciating
deaths and between 30,000 to 40,000 sustained
serious injuries as a result of the disas-
ter ..... "
(Emphasis supplied)
There is no scope for any doubt that the cases referred
to as those of 'Serious injuries' include both types of
cases of permanent total and partial disabilities of various
degrees as also cases of temporary total or partial disabil-
ities of different degrees. The High Court relied upon the
averments and claims in the amended pleadings of the plain-
tiff, the Union of India, to reach this prima facie finding.
Then, in assessing the quantum of interim compensation
the High Court did not adopt the standards of compensation
usually awarded in fatal-accidents-actions or personal-
injury-actions arising under the Motor Vehicles Act. It is
well-known that in fatal-accidentactions where children are
concerned, the compensation awardable is in conventional
sums ranging from Rs.15,000 to Rs.30,000 in each case. In
the present case a large number of deaths was of children of
very young age. Even in the case of adults, according to the
general run of damages in comparable cases, the damages
assessed on the
137
usual multiplier-method in the case of income groups com-
parable to those of the deceased-persons, would be anywhere
between Rs.80,000 and Rs. 1,00,000.
But the High Court discarded, and rightly, these ordi-
nary standards which, if applied, would have limited the
aggregate of compensation payable in fatal cases to a sum
less than Rs.20 crores in all. The High Court thought it
should adopt the broader principle in M.C. Mehta v. Union of
India, AIR 1987 SC 1086. Stressing the need to apply such a
higher standard, the High Court said:
"As mentioned earlier, the measure of damages
payable by the alleged tort-teaser as per the
nature of tort involved in the suit has to be
correlated to the magnitude and the capacity
 of the enterprises because such compensation
must have a deterrent effect .........
(Emphasis supplied)
Applying these higher standards of compensa-
tion, the High Court proceeded to assess
damage in the following manner:
"Bearingin mind, the above factors, in the
opinion of this Court, it would not be unrea-
sonable to assume that if the suit proceeded
to trial the plaintiff-Union of India would
obtain judgment in respect of the claims
relating to deaths and personal injuries at
least in the following amounts: (a) Rs.2 lakhs
in each case of death: (b) Rs.2 lakhs in each
case of total permanent disability; (c) Rs.1
lakh in each case of permanent partial disa-
blement and (d) Rs.50,000 in each case of
temporary partial disablement."
(Emphasis supplied)
Half of these amounts were awarded as interim compensation.
An amount of Rs.250 crores was awarded.
The figures adopted by the High Court in regard to the
number of fatal cases and cases of serious personal injuries
do not appear to have been disputed by anybody before the
High Court. These data and estimates of the High Court had a
particular significance in the settlement. Then again, it
was not disputed before us that the total number of fatal
cases was about 3000 and of grievous and serious personal
injuries, as verifiable from the records of the hospitals of
cases treated

at Bhopal, was in the neighbourhood of 30,000. It would not

be unreasonable to expect that persons suffering serious and
substantially compensable injuries would have gone to hospi-
tals for treatment. It would also appear that within about 8
months of the occurrence, a survey had been conducted for
purposes of identification of cases of death and grievous
and serious injuries for purposes of distribution of certain
ex gratia payments sanctioned by Government. These figures
were, it would appear, less than ten thousand.
 In these circumstances, as a rough and ready estimate,
this Court took into consideration the prima facie findings
of the High Court and estimated the number of fatal cases at
3000 where compensation could range from Rs.l lakh to Rs.3
lakhs. This would account for Rs.70 crores, nearly 3 times
higher than what would, otherwise, be awarded in comparable
casses in motor vehicles accident claims.
Death has an inexorable finality about it. Human lives
that have been lost were precious and in that sense price-
less and invaluable. But the law can compensate the estate
of a person whose life is lost by the wrongful act of anoth-
er only in the way of the law is equipped to compensate i.e.
by monetary compensations calculated on certain well-recog-
nised principles. "Loss to the estate" which is the entitle-
ment of the estate and the 'loss of dependancy' estimated on
the basis of capitalised present-value awardable to the
heirs and dependants, are the main components in the compu-
tation of compensation in fatal accident actions. But, the
High Court in estimating the value of compensation had
adopted a higher basis.
So far as personal injury cases are concerned, about
30,000 was estimated as cases of permanent total or partial
disability. Compensation ranging from Rs.2 lakhs to
Rs.50,000 per individual according as the disability is
total or partial and degrees of the latter was envisaged.
This alone would account for Rs.250 crores. In another
20,000 cases of temporary total or partial disability com-
pensation ranging from Rs. 1 lakh down to Rs.25,000 depend-
ing on the nature and extent of the injuries and extent and
degree of the temporary incapacitation accounting for a
further allocation of Rs. 100 crores, was envisaged. Again,
there might be possibility of injuries of utmost severity in
which case even Rs.4 lakhs per individual might have to be
considered. Rs.80 crores, additionally for about 2000 of
such cases were envisaged. A sum of Rs.500 crores approxi-
mately was thought of as allocable to the fatal cases and
42,000 cases of such serious personal injuries leaving
behind in their trail total or partial incapacitation either
of permanent or temporary character.
 It was considered that some outlays would have to be
made for specialised institutional medical treatment for
cases requiring such expert medical attention and for reha-
bilitation and after care. Rs.25 crores for the creation of
such facilities was envisaged.
That would leave another Rs.225 crores. It is true that
in assessing the interim compensation the High Court had
taken into account only the cases of injuries resulting in
permanent or temporary disabilities--total--or partial--and
had not adverted to the large number of other claims, said
to run into lakhs, filed by other claimants.
Such cases of claims do not, apparently, pertain to
serious cases of permanent or temporary disabilities but are
cases of a less serious nature, comprising claims for minor
injuries, loss of personal belongings, loss of live-stock
etc. for which there was a general allocation of Rs.225
crores. If in respect of these claims allocations are made
at Rs.20,000, Rs. 15,000 and Rs. 10,000 for about 50,000
person or claims in each category--accounting for about one
and half lakhs more claims--the sums required would be met
by Rs.225 crores.
Looked at from another angle, if the corpus of Rs.750
crores along with the current market rates of interest on
corporate borrowings, of say 14% or 14 1/2 % is spent over a
period of eight years it would make available Rs. 150 crores
each year; or even if interest alone is taken, about Rs. 105
to 110 crores per year could be spent, year-afteryear,
perpetually towards compensation and relief to the victims.
The court also took into consideration the general run
of damages in comparable accident claim cases and in cases
under workmens compensation laws. The broad allocations made
are higher than those awarded or awardable in such claims.
These apportionments are merely broad considerations gener-
ally guiding the idea of reasonableness of the overall basis
of settlement. This exercise is not a predetermination of
the quantum of compensation amongst the claimants either
individually or category-wise. No individual claimant shall
be entitled to claim a particular quantum of compensation
even if his case is found to fall within any of the broad
categories indicated above. The determination of the actual
quantum of compensation payable to the claimants has to be
done by the authorities under the Act, on the basis of the
facts of each case and without reference to the hypothetical
quantifications made only for purposes of an overall view of
the adequacy of the amount.

These are the broad and general assumptions underlying

the concept of 'justness' of the determination of the quan-
tum. If the total number of cases of death or of permanent,
total or partial, disabilities or of what may be called
'catastrophic' injuries is shown to be so large that the
basic assumptions underlying the settlement become wholly
unrelated to the realities, the element of 'justness' of the
determination and of the 'truth' of its factual foundation
would seriously be impaired. The 'justness' of the settle-
ment is based on these assumptions of truth. Indeed, there
might be different opinions on the interpretation of laws or
on questions of policy or even on what may be considered
wise or unwise; but when one speaks of justice and truth,
these words mean the same thing to all men whose judgment is
uncommitted. Of Truth and Justice, Anatole France said:
"Truth passes within herself a penetrating
force unknown alike to error and falsehood. I
say truth and you must understand my meaning.
For the beautiful words Truth and Justice need
not be defined in order to be understood in
their true sense. They bear within them a
shining beauty and a heavenly light. I firmly
believe in the triumph of truth and justice.
That is what upholds me in times of trial
......"
As to the remaining question, it has been said that many
vital juristic principles of great contemporary relevance to
the Third World generally, and to India in particular,
touching problems emerging from the pursuit of such danger-
ous technologies for economic gains by multi-nationals arose
in this case. It is said that this is an instance of lost
opportunity to this apex Court to give the law the new
direction on vital issues emerging from the increasing
dimensions of the economic exploitation of developing coun-
tries by economic forces of the rich ones. This case also,
it is said, concerns the legal limits to be envisaged, in
the vital interests of the protection of the constitutional
rights of the citizenry, and of the environment, on the
permissibility of such ultra-hazardous technologies and to
prescribe absolute and deterrent standards of liability if
harm is caused by such enterprises. The prospect of exploi-
tation of cheap labour and of captive-markets, it is said,
induces multi-nationals to enter into the developing coun-
tries for such economic-exploitation and that this was
eminently an appropriate case for a careful assessment of
the legal and Constitutional safeguards stemming from these
vital issues of great contemporary relevance.
These issues and certain cognate areas of even wider signif-
icance

and the limits of the adjudicative disposition of some of

their aspects are indeed questions of seminal importance.
The culture of modern industrial technologies, which is
sustained on processes of such pernicious potentialities, in
the ultimate analysis, has thrown open vital and fundamental
issues of technology-options. Associated problems of the
adequacy of legal protection against such exploitative and
hazardous industrial adventurism, and whether the citizens
of the country are assured the protection of a legal system
which could be said to be adequate in a comprehensive sense
in such contexts arise. These, indeed, are issues of vital
importance and this tragedy, and the conditions that enabled
it happen, are of particular concern.
The chemical pesticide industry is a concomitant, and
indeed, an integral part, of the Technology of Chemical
Farming. Some experts think that it is time to return from
the high-risk, resource-intensive, high-input, anti-ecologi-
cal, monopolistic 'hard' technology which feeds, and is fed
on, its self-assertive attribute, to a more human and hu-
mane, flexible, eco-conformable, "soft" technology with its
systemic-wisdom and opportunities for human creativity and
initiative. "Wisdom demands" says Schumacher" a new orienta-
tion of science and technology towards the organic, the
gentle, the non-violent, the elegant and beautiful". The
other view stressing the spectacular success of agricultural
production in the new era of chemical farming, with high-
yielding strains, points to the break-through achieved by
the Green Revolution with its effective response to, and
successful management of, the great challenges of feeding
the millions. This technology in agriculture has given a big
impetus to enterprises of chemical fertilizers and pesti-
cides. This, say its critics, has brought in its trail its
own serious problems. The technology-options before scien-
tists and planners have been difficult.
Indeed, there is also need to evolve a national policy
to protect national interests from such ultra-hazardous
pursuits of economic gains. Jurists, technologists and other
experts in Economics, environmentology, futurology, sociolo-
gy and public health etc. should identify areas of common
concern and help in evolving proper criteria which may
receive judicial recognition and legal sanction.
One aspect of this matter was dealt with by this Court
in M.C. Mehta v. Union of India, (supra) which marked a
significant stage in the development of the law. But, at the
hearing there was more than a mere hint in the submissions
of the Union Carbide that in this case the law was altered
with only the Union Carbide Corporation in mind, and

was altered to its disadvantage even before the case had

reached this Court. The criticism of the Mehta principle,
perhaps, ignores the emerging postulates of tortious liabil-
ity whose principal focus is the social-limits on economic
adventurism. There are certain things that a civilised
society simply cannot permit to be done to its members, even
if they are compensated for their resulting losses. We may
note a passage in "Theories of Compensation," R.E. Goodin:
Oxford Journal of Legal Studies, 1989, P. 57.
"It would, however, be wrong to presume that
we as a society can do anything we like to
people, just so long as we compensate them for
their losses. Such a proposition would mistake
part of the policy universe for the whole. The
set of policies to which it points--policies
that are 'permissible' but only with compensa-
 tion'--is bounded on the one side by a set of
policies that are 'permissible, even without
compensation' and on the other side by a set
of policies that are 'impermissible, even with
compensation'."
But, in the present case, the compulsions of the need
for immediate relief to tens of thousands of suffering
victims couldnot, in our opinion, wait till these ques-
tions, vital though they be, are resolved in the due course
of judicial proceedings. The tremendous suffering of thou-
sands of persons compelled us to move into the direction of
immediate relief which, we thought, should not be subordi-
nated to the uncertain promises of the law, and when the
assessment of fairness of the amount was based on certain
factors and assumptions not disputed even by the plaintiff.
A few words in conclusion. A settlement has been record-
ed upon material and in circumstances which persuaded the
Court that it was a just settlement. This is not to say that
this Court will shut out any important material and compel-
ling circumstances which might impose the duty on it to
exercise the powers of review. Like all other human institu-
tions, this court is human and fallible. What appears to the
court to be just and reasonable in that particular context
and setting, need not necessarily appear to others in the
same way. Which view is right,in the ultimate analysis, is
to be judged by what it does to relieve the undeserved
suffering of thousands of innocent citizens of this country.
As a learned author said: Wallace Mendelson: Supreme Court
Statecraft--The Rule of Law and Men.
"In this imperfect legal setting we expect
judges to clear
143
their endless dockets, uphold the Rule of Law,
'and yet not utterly disregard our need for
the discretionary justice of Plato's philoso-
pher king. Judges must be sometimes cautious
and sometimes bold. Judges must respect both
the traditions of the past and the convenience
of the present........"
But the course of the decisions of courts cannot be reached
or altered or determined by agitational pressures. If a
decision is wrong, the process of correction must be in a
manner recognised by law. Here, many persons and social
action groups claim to speak for the victims, quite a few in
different voices. The factual allegations on which they rest
their approach are conflicting in some areas and it becomes
difficult to distinguish truth from false-hood and half-
truth, and to distinguish as to who speaks for whom.
However, all of those who invoke the corrective-process-
es in accordance with law shall be heard and the court will
do what the law and the course of justice requires. The
matterconcerns the interests of a large number of victims
of a mass disaster. The Court directed the settlement with
the earnest hope that it would do them good and bring them
immediate relief, for, tomorrow might be too late for many
of them. But the case equally concerns the credibility of,
and the public confidence in, the judicial process. If,
owing to the pre-settlement procedures being limited to the
main contestants in the appeal, the benefit of some contrary
or supplemental information or material, having a crucial
bearing on the fundamental assumptions basic to the settle-
ment, have been denied to the Court and that, as a result,
serious miscarriage of justice, violating the constitutional
and legal rights of the persons affected, has been occa-
sioned, it will be the endeavour of this Court to undo any
such injustice. But that, we reiterate, must be by proce-
dures recognised by law. Those who trust this Court will not
have cause for despair.
 CASE STUDY INDEX

• Introduction
• Presence of UCC in India
• The Loopholes
• The Tragic day
• Claims
• The final settlement
GAS DIASASTER AT UCIL BHOPAL : CASE STUDY

INTRODUCTION

In the early hours of Monday, Dec. 3, 1984,( or midnight Dec. 2) a

toxic cloud of Methyl IsoCyanate (MIC) gas enveloped the hundreds of
houses and huts surrounding a pesticide plant in Bhopal, India. Later, as the
deadly cloud slowly drifted in the cool night air through streets in
surrounding sections, sleeping residents awoke, coughing, choking, and
rubbing painfully stinging eyes. By the time the gas cleared at dawn,
thousands were dead or injured. Four months after the tragedy, the Indian
government reported to its Parliament that 1,430 people had died. In 1991
the official Indian government panel charged with tabulating deaths and
injuries updated the count to more than 3,800 dead and approximately
11,000 with disabilities.
Later on in Supreme court the figures that were presented were “2,660
persons suffered agonizing and excruciating deaths, between 30,000 to
40,000 persons sustained serious injuries”.
On the tragic day the killer gas spread through the city, sending
residents scurrying through the dark streets. No alarm ever sounded a
warning and no evacuation plan was prepared. When victims arrived at
hospitals breathless and blind, doctors did not know how to treat them, as
UCIL (Union Carbide Industrial Limited) had not provided emergency
information.

Itas only when the sun rose the next morning that the magnitude of the
devastation was clear. Dead bodies of humans and animals blocked the
streets, leaves turned black, the smell of burning chilli peppers lingered in
the air. Unofficial estimates suggested that as many as 10,000 (compared to
3800)may have died immediately and 30,000 to 50,000 (compared to 11000)
were too ill to ever return to their jobs.
In February 1989, the Supreme Court of India directed a final settlement of
all Bhopal litigation in the amount of $470 million( For 2660 deaths and
30000 – 40000 Injuries). Both the GOI and UCC accepted the Court’s
direction.

PRESENCE OF UCC IN INDIA

UCC (Union carbide corporation), a US company was born of a

merger of four US companies producing batteries and arc lamps for street
lighting and headlamps for cars. By the second half of the 20th century,
UCC had 130 subsidiaries in 40 countries, approximately 500 production
sites and 120,000 employees. UCC manufactured industrial gases, such as
nitrogen, oxygen, methane, ethylene and propane, used in petroleum
industry as well as chemical substances like ammonia and urea used in the
manufacture of fertilizers.
Divided by industry segments,it had sales encompassing
petrochemicals (28 percent); technology, services, and specialty products
(26 percent); consumer products such as batteries, automotive supplies, and
plastic wraps and bags (20 percent); industrial gases (16 percent); and metals
and carbon products (10 percent).
In the 1950s, parasites were creating havoc in the United States, as
well as Mexico, Central America and several South American countries,
destroying fodder crop, and plantations.
In 1954, UCC embarked on a mission of devising a product to
exterminate a wide range of parasites, within the prevailing standards for the
protection and safety of human beings and their environment. Thus was born
the 'Experimental Insecticide Seven Seven' which soon came to be known as
'Sevin.' To manufacture Sevin phosgene gas (Chemical Formula COCL2)
was made to react with another gas called MonoMethylAmine ( Chemical
Formula CH3NH2).
The reaction of these two gases produced a new molecule, MIC
( MethylIsoCyanate). This was one of the most dangerous compounds ever
invented in the chemical history. UCC's toxicologists had tested it on rats
and the results had been so terrifying that the company banned publication
of their work. Other experiments had shown that animals exposed to MIC
vapours would face instantaneous death. MIC was so volatile that as soon as
it came into contact with a few drops of water or a few ounces of metal dust,
it starts an uncontrollably violent reaction. To prevent explosion, MIC had to
be kept permanently at a temperature near zero.
In 1924, one assembly plant for batteries was opened in Kolkata. By
1983 UCC had 14 plants in India manufacturing chemicals pesticides,
batteries and other products. UCC held a 50.9 % stake in the Indian
subsidiary. The balance of 49.1% was owned by various Indian investors.
Normally foreign investors were limited to 40% ownership of equity
in Indian companies, but GoI ( Govt of India ) waived this requirement in
the case of UCC because of the sophistication of its technology and the
company's potential for export.
In 1966, an agreement was signed between GoI and UCIL. Under the
agreement, UCIL would import 1,200 tons of Sevin from the parent
company in the United States. UCC would build a factory in India to
produce Sevin within five years.
In 1969, UCC set up its pesticide unit in Bhopal. The GoI granted a
license to UCIL to manufacture 5,000 tons of Sevin a year. UCIL would
produce Sevin and all the chemical ingredients required in India itself.
Eduardo Munoz, the Argentinean agronomic engineer, who was with UCC,
was entrusted the responsibility of making the project a success.
But Eduardo Munoz was not in favour of storing huge quantity of
MIC ( that would be used for manufacturing 5,000 tons of Sevin), Instead
he proposed Batch wise production to avoid the hazards of storing a highly
toxic chemical in such a large quantity. But UCC officials turned down his
suggestion. Eduardo Munoz was also against the proposed site (Kali
Ground) of the factory as it was too close to areas where people lived, such
as the slums in Oriya Bustee, Jayprakash Nagar and Chola.
According to municipal planning regulations, no industry likely to
give off toxic emissions could be set up on a site where the prevailing wind
might carry effluents into densely populated areas.
At the Kali Grounds the wind usually blew from north to south,
towards the slums, the railway station and finally towards the overpopulated
parts of the old town. Under such circumstances, the application should have
been rejected. But the UCC officials did not mention that their proposed
factory would be making pesticides out of the most toxic gases available in
the chemical industry.
In 1979, the Bhopal plant was inaugurated and the work started. In
May 1980, the chemical reactors of the Bhopal plant produced their first
gallons of MIC and dispatched them into three huge tanks.
 THE LOOPHOLES

In May 1982, Three US engineers From the chemical products and

household plastics division of UCC came to bhopal to inspect the Plant to
confirm that everything was functioning according to the standards laid
down by UCC.The report submitted by them was quite astonishing.
-The report described the surroundings of the site as being 'strewn
with oily old drums, used piping, pools of used oil and chemical waste
likely to cause fire.'
-Condemned the shoddy workmanship on certain connections, the
warping of equipment, the corrosion of several circuits, the absence of
automatic sprinklers in the MIC and phosgene production zones, and
the risk of explosion in the gas evacuation flares.
-Reported leaks of phosgene, MIC and chloroform, ruptures in
pipework and sealed joints, absence of any earth wire on one of the
three MIC tanks and poor adjustment of certain devises where
excessive pressure could lead to water entering the circuits.
-The report expressed concern at the inadequately trained staff,
unsatisfactory instruction methods and sloppy maintenance reports.

In 1983, under Mukund Jagannathan (New CEO) UCC devoted all its
energies to cost cutting. Two hundred skilled workers and technicians were
asked to resign.
The manpower in each shift was cut by half. In the control room, only
one man was left to oversee some seventy dials, counters and gauges, which
relayed, among other things, the temperature and pressure of the three tanks
containing the MIC.
The issue of the danger posed by the pesticide plant to Bhopal was
raised in the Madhya Pradesh Assembly in December 1982. However, T S
Viyogi, labour minister in the Arjun Singh government allayed all fears
saying, "A sum of Rs. 250 million has been invested in this unit. The factory
is not a small stone, which can be shifted elsewhere. There is no danger to
Bhopal, nor will there ever be."
 In the autumn of 1983, Mukund ordered the shutting down of the
principal safety systems in the plant. He felt that because the factory was no
longer active, these systems were no longer needed. But it violated a
fundamental rule laid down by UCC's chemists, which stipulated that MIC
must in all circumstances be kept at a temperature close to zero degree
celsius.
In order to save coal, the flames which burnt off any toxic gases
emitted into the atmosphere in the event of an accident that burned day and
night at the top of the flare, was also extinguished. Other essential
equipment, such as the scrubber cylinder used to decontaminate any gas
leaks, were subsequently deactivated.Between one-half and two-thirds of the
skilled engineers who had worked with the plant right from the project stage
had left the plant by 1983. It seemed that the top officials at UCC were
neglecting the Bhopal plant and they were no longer interested in it.
 THE TRAGIC DAY
Dec, 2 1984 at about 9.30 p.m., a large quantity of water entered
storage tank no. 610 containing over 40 tons of MIC. The reason still not
clear on how did it enter, some analysts say it happened during a routine
maintenance, some says it was done intentionally by some miscreants.
This entering triggered off a reaction, resulting in a tremendous
increase of temperature and pressure in the tank. 40 tonnes of MIC, along
with Hydrogen Cyanide and other reaction products burst past the (already)
ruptured disc into the night air of Bhopal at around 12.30 a.m.
Safety systems were grossly under-designed and inoperative.
The siren to warn neighbourhood communities was sounded more than one
hour after the leak started.

By then, the poisonous MIC gas had covered a huge area of around 40
sq.kms killing thousands of people and thousands experienced acute
breathlessness, pain in the eyes, and vomiting as they inhaled the deadly
vapours. They ran in panic to get away from the poisonous cloud that hung
close to the ground for more than four hours.
People started pouring into the hospitals in thousands. The hospitals
were not able to manage and people were lying here and there in agony. ,
their eyes and lungs in burning and
choking, the doctors called up the plant medical officer to find out what has
happened and what they ought to do. The UCIL’s official doctor in Bhopal
at that time did not answer clearly neither did she
tell that it was a deadly gas (MIC).
According to an epidemiological study sponsored by Jawaharlal
Nehru University, New Delhi, in October 1989, 70% to 80% of the people in
the severely affected communities and 40% to 50% in the mildly affected
communities continued to suffer from MIC exposure related illnesses five
years after the disaster. A house to house symptom survey in one
community, conducted as part of a doctoral dissertation in Delhi University
in early 1993, showed 65.7% people suffering from respiratory symptoms,
68.4% with neurological problems and 49% with ophthalmic symptoms.
Among the women in the reproductive age, 43.2% suffered from
reproductive disorders.

CLAIMS

Following the accident, the GoI filed a compensation lawsuit against the
UCC for an estimated US$3 billion. However, UCC felt that the GoI was to
blame for the disaster. In December 1986, UCC filed a countersuit against
the GoI and the State of Madhya Pradesh. The company charged the
governments with "contributory" responsibility for the leak of poisonous
gases, saying both governments knew of the toxicity of MIC but failed to
take adequate precautions to prevent a disaster.

FINAL SETTLEMENT

Just after a few months of the diasaster GoI issued an ordinance

appointing itself as the sole representative of the victims for any legal
dealings with UCC as regards compensation. The ordinance was later
replaced by the Bhopal Gas Leak (Processing of Claims) Act, 1985. Armed
with this power, the GoI filed its suit for compensation and damages against
UCC in the United States District Court for the Southern District of New
York. In May 1986, Judge J.F. Keenan ruled that India and not the US was
the appropriate forum for the Bhopal compensation litigation. In the first pre
trial hearing in the consolidated Bhopal litigation in US federal courts, John
F Keenan, asked UCC as 'a matter of fundamental human decency' to
provide an interim relief payment of $5 - 10 million. UCC agreed to provide
$5 million interim relief.
In November 1985, the parties agreed to channel the money through
the American Red Cross to the Indian Red Cross. Even after one year of the
tragedy, no one-not even the official of the MP Government in charge of
relief for the victims-had any idea what the Red Cross would do with the
money. On December 17, 1987, a Bhopal District Court Judge passed an
order directing UCC to pay Rs. 3.5 billion as interim relief. UCC challenged
this order in the MP high court (at Jabalpur) on the grounds that the trial
judge was not authorized to pass the order under any provisions of the Indian
Civil Penal Code. On April 4, Justice S. K. Seth of the High Court upheld
the liability of UCC for the Bhopal disaster, but reduced the interim
compensation to Rs 2.5 billion.
UCC appealed to the Supreme Court of India against the High Court
order saying "No court that we know of in India or elsewhere in the world
has previously ordered interim compensation where there is no proof of
damages or where liability is strongly contested."

On February 14, 1989, the Supreme Court directed UCC to pay up US $ 470
million in "full and final settlement" of all claims, rights, and liabilities
arising out of the disaster. The Supreme Court of India ruled that the $470
million settlement was "just, equitable and reasonable." UCC described the
court's decision as fair and reasonable, and the company's stock soared in the
London market.
Select Bibliography:
www.bhopal.com
http://bhopal.org/
http://www.hinduonnet.com
UNION CARBIDE: DISASTER AT BHOPAL
by Jackson B. Browning
Retired Vice President, Health, Safety,
and Environmental Programs
Union Carbide Corporation

The Black Box of Bhopal: A Closer Look at the World's

Deadliest Industrial Diasaster(Google Books)
By Themistocles D'Silva
Madhya Pradesh High Court CR No. 26 of 1988. Judgment and
Order dated 4.4.1988.

INVESTIGATION OF LARGE-MAGNITUDE INCIDENTS:

BHOPAL AS A CASE STUDY:Presented At
The Institution of Chemical Engineers Conference On
Preventing Major Chemical Accidents.London England.
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