Supreme Court Dismisses Curative Petition in Bhopal Gas Tragedy Case: Union of India vs. Union Carbide Corporation (2023)

Date of the Judgment: 14 March 2023

Citation: 2023 INSC 222

Judges: Sanjay Kishan Kaul, J., Sanjiv Khanna, J., Abhay S. Oka, J., Vikram Nath, J., J.K. Maheshwari, J.

Can a settlement reached in the aftermath of a mass disaster, like the Bhopal Gas Tragedy, be reopened after many years based on claims of inadequate compensation and errors in the initial assessment of damages? The Supreme Court of India recently addressed this critical question in a curative petition filed by the Union of India, seeking to enhance the compensation awarded to the victims of the Bhopal Gas Tragedy. This judgment examines whether the court should re-evaluate a settlement that had been previously upheld in multiple reviews. The five-judge bench, comprising Justices Sanjay Kishan Kaul, Sanjiv Khanna, Abhay S. Oka, Vikram Nath, and J.K. Maheshwari, delivered the unanimous judgment, dismissing the curative petition.

Case Background

The Bhopal Gas Tragedy, a catastrophic industrial disaster, occurred on the night of December 2nd and 3rd, 1984, due to the leakage of deadly chemical fumes from a factory owned and operated by M/s Union Carbide India Limited (UCIL) in Bhopal. This event led to numerous deaths and severe injuries, prompting legal actions for compensation.

Initially, the Government of India enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, granting the Central Government exclusive rights to represent and act on behalf of the victims. Subsequently, several lawsuits were filed in the United States against Union Carbide Corporation (UCC), the parent company of UCIL. However, these cases were dismissed on the grounds of forum non conveniens, with UCC agreeing to submit to the jurisdiction of Indian courts.

Following this, the Union of India filed a suit against UCC in the District Court of Bhopal, seeking compensation of approximately US$3.3 billion. The District Court ordered UCC to deposit Rs. 350 crores as interim compensation, which was later reduced to Rs. 250 crores by the Madhya Pradesh High Court. Both parties then filed Special Leave Petitions (SLPs) before the Supreme Court.

During the proceedings, the parties negotiated a settlement, agreeing that UCC would pay US$470 million to the Union of India in full settlement of all claims related to the Bhopal Gas Disaster. This settlement was formalized in the Supreme Court’s orders on February 14th and 15th, 1989. The Supreme Court, in its detailed order on May 4, 1989, noted that the settlement was motivated by the urgent need to provide immediate relief to the victims.

Timeline

Course of Proceedings

Following the initial settlement, private parties filed review petitions seeking to reopen the settlement, which were opposed by the Union of India. The Supreme Court, in its review judgment, upheld the settlement but reviewed the extinguishment of criminal liabilities. The Court also addressed the issue of potential future victims by directing the Union of India to secure medical group insurance and that the Union of India would be responsible for any shortfall in compensation.

Subsequently, various attempts were made to reopen the settlement, which were consistently opposed by the Union of India. In 2007, the Supreme Court rejected a plea by private organizations to enhance the settlement fund, stating that the issue had already been decided. The Union of India had also taken a stand that claims had been adjudicated and compensation had been paid as per the scheme under the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985.

Legal Framework

The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, was enacted to provide a legal framework for compensating the victims of the Bhopal Gas Tragedy. This Act granted the Central Government the exclusive right to represent the victims and to institute legal proceedings on their behalf. Section 9 of the said Act empowered the government to create a scheme for processing claims. The Bhopal Gas Leak Disaster (Registration and Processing of Claims) Scheme, 1985, was subsequently framed to manage the filing and processing of claims.

The Supreme Court also considered its own curative jurisdiction, which is a mechanism to re-examine final judgments. The scope of this jurisdiction was outlined in Rupa Ashok Hurra v. Ashok Hurra & Anr. [(2002) 4 SCC 388], which specifies limited grounds for entertaining a curative petition, such as a violation of natural justice or bias on the part of a judge. The Court noted that its inherent power should not be exercised as a matter of course.

The Supreme Court also referred to the earlier judgment in Union Carbide Corporation v. Union of India & Ors. [(1989) 3 SCC 38] which detailed the reasons for the settlement. The Court also referred to the review judgment in Union Carbide Corporation & Others v. Union of India & Others [(1991) 4 SCC 584] which upheld the settlement with a caveat regarding the extinguishment of criminal liabilities.

Arguments

Union of India’s Arguments:

• The Union of India argued that the settlement was based on incorrect assumptions of facts and data. Specifically, they claimed that the actual number of deaths, temporary injuries, and minor injuries were significantly higher than what was initially estimated by the Court.
• The Union contended that the actual number of death cases was 5,295, compared to the court’s estimate of 3,000. Similarly, the number of temporary disability cases was 35,455, against the court’s estimate of 20,000, and the number of minor injury cases was 527,894, far exceeding the estimated 50,000.
• The Union also claimed Rs. 1,743.15 crores for actual expenditures on relief and rehabilitation measures, later updated to Rs. 4,949.67 crores, and Rs. 315.70 crores for environmental degradation, later updated to Rs. 486.78 crores.
• The Union of India argued that the revised amount should take into account the devaluation of the rupee, interest rates, purchasing power parity, and the inflation index.
• The Union of India sought to ‘top up’ the settlement amount, maintaining the settlement but increasing the compensation, and asked for the Court to use its powers under Article 142 of the Constitution of India to achieve this.

Union Carbide Corporation’s (UCC) Arguments:

• UCC argued that the curative petitions were not maintainable, as they did not meet the criteria specified in Rupa Ashok Hurra v. Ashok Hurra & Anr. [(2002) 4 SCC 388] for curative petitions. They emphasized that the Union of India had not filed review petitions, which is a prerequisite for a curative petition.
• UCC contended that the settlement was comprehensive and final, and that the company had deposited the US$470 million as agreed. If the settlement were to be set aside, the suit would have to be revived, and UCC would be entitled to have the US$470 million remitted back with interest.
• UCC highlighted that the issues raised in the curative petitions had been addressed in previous review petitions and that the settlement had been upheld.
• UCC argued that the settlement was not an adjudication on liability or quantum of compensation, but a consensual settlement that cannot be unilaterally enhanced.
• UCC pointed out that the increase in the number of minor injury cases resulted from the Union’s own categorization and expansion of relief coverage, which was possible due to the large amount of funds available.
• UCC stated that there was no basic assumption that could be considered to have gone wrong, and that the settlement was made to avoid protracted litigation.

Intervenors’ Arguments:

• The intervenors, representing victims, mirrored the arguments of the Union of India, seeking enhancement of the settlement amount.
• They also requested the digitization of medical records for a fair assessment of injuries.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section but addressed the following key points:

1. Whether the curative petitions filed by the Union of India were maintainable, considering the limited scope of curative jurisdiction and the fact that the Union had not filed review petitions.
2. Whether the settlement reached in 1989 could be reopened based on claims of errors in the initial assessment of the number of victims and the adequacy of compensation.
3. Whether the Union of India’s claim for additional compensation, including relief and rehabilitation costs and environmental degradation, was valid.
4. Whether the Union of India’s request to ‘top up’ the settlement amount was legally permissible.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• Rupa Ashok Hurra v. Ashok Hurra & Anr. [(2002) 4 SCC 388]: The Supreme Court relied on this case to emphasize the limited scope of its curative jurisdiction. The Court stated that this jurisdiction should not be used to re-examine final judgments unless there is a violation of natural justice or bias on the part of a judge.
• Union Carbide Corporation v. Union of India & Ors. [(1989) 3 SCC 38]: The Supreme Court referred to this case to understand the basic considerations that motivated the settlement, including the need for urgent relief and the broad estimation of compensation. The Court noted that the settlement was a result of careful consideration and negotiation.
• Union Carbide Corporation & Others v. Union of India & Others [(1991) 4 SCC 584]: The Supreme Court referred to this case to understand the Court’s observations on the path to be followed if the compensation was found to be inadequate, and the direction to the Union of India to provide insurance cover. The Court noted that the review judgment had upheld the settlement, except for the criminal liabilities.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to uphold the finality of the settlement, the limited scope of its curative jurisdiction, and the fact that the Union of India had already disbursed more than what was reasonably awardable to the victims. The Court also noted that the Union had failed to take out the insurance policy as directed by the Court in its review judgment. The Court emphasized the importance of providing closure to legal disputes, particularly in cases of mass disasters where delays can be detrimental to the victims. The Court also took note of the fact that the Union had opposed all previous attempts to reopen the settlement.

Fact:Law Ratio

The Court’s reasoning was primarily based on legal principles and precedents, with a lesser emphasis on the factual aspects of the case. The Court considered the legal framework of curative jurisdiction and the finality of settlements.

Logical Reasoning:

The Court considered alternative interpretations, such as the possibility of reopening the settlement based on the increased number of victims and the additional costs. However, the Court rejected these interpretations, emphasizing the finality of the settlement and the need for closure. The Court also noted that the Union of India had failed to take out the insurance policy as directed by the Court in its review judgment, and that the Union had already disbursed more than what was reasonably awardable to the victims.

The Supreme Court concluded that the curative petitions filed by the Union of India were not maintainable and dismissed them. The Court held that the settlement reached in 1989 was comprehensive and final, and that there was no legal basis for reopening it or for ‘topping up’ the settlement amount. The Court also noted that the Union had already disbursed more than what was reasonably awardable to the victims. The Court also directed that a sum of Rs. 50 crore lying with the Reserve Bank of India be utilized by the Union of India to satisfy pending claims, if any, in accordance with the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 and the Scheme framed thereunder.

“We are thus of the view that for all the aforesaid reasons the curative petitions cannot be entertained and we thus dismiss it leaving the parties to bear their own costs.”

“The very basis for the original settlement was the need to provide immediate succour to the victims – through medical relief, rehabilitation measures, setting up of facilities etc.”

“Union of India’s claim for a ‘top up’ has no foundations in any known legal principle. Either a settlement is valid or it is to be set aside in cases where it is vitiated by fraud.”

Key Takeaways

• The Supreme Court’s curative jurisdiction is limited and should not be used to re-examine final judgments unless there is a clear violation of natural justice or bias.
• Settlements reached in mass disaster cases are considered comprehensive and final, and should not be reopened unless there is a clear case of fraud.
• The responsibility for ensuring adequate compensation to victims rests with the Union of India, as a welfare state.
• The Union of India is obligated to follow the directions given by the Court, including taking out insurance policies for potential future victims.
• The Court emphasized the importance of providing closure to legal disputes, particularly in cases of mass disasters.

Directions

The Supreme Court directed that a sum of Rs. 50 crore lying with the Reserve Bank of India shall be utilized by the Union of India to satisfy pending claims, if any, in accordance with the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 and the Scheme framed thereunder.

Development of Law

The ratio decidendi of this case is that the Supreme Court’s curative jurisdiction is limited and should not be used to re-examine final judgments unless there is a clear violation of natural justice or bias. The Court also held that settlements reached in mass disaster cases are considered comprehensive and final, and should not be reopened unless there is a clear case of fraud. This case reinforces the principle of finality in legal proceedings and clarifies the limited scope of the Supreme Court’s curative jurisdiction.

Conclusion

In conclusion, the Supreme Court dismissed the curative petitions filed by the Union of India, upholding the finality of the 1989 settlement in the Bhopal Gas Tragedy case. The Court emphasized the limited scope of its curative jurisdiction and the need for closure in long-standing legal disputes. The Court also noted that the Union had already disbursed more than what was reasonably awardable to the victims and directed that a sum of Rs. 50 crore lying with the Reserve Bank of India be utilized by the Union of India to satisfy pending claims, if any. This judgment reinforces the principle that settlements should not be reopened unless there is a clear case of fraud, and it underscores the importance of adhering to the directions given by the Court.