Supreme Court Upholds Bhopal Gas Tragedy Settlement, Dismisses Curative Petition: Union of India vs. Union Carbide Corporation (2023)

Date of the Judgment: March 14, 2023
Citation: (2023) INSC 228
Judges: Sanjay Kishan Kaul, J., Sanjiv Khanna, J., Abhay S. Oka, J., Vikram Nath, J., and J.K. Maheshwari, J.

Can a decades-old settlement, reached to provide immediate relief to victims of a mass disaster, be reopened based on claims of inadequate compensation? The Supreme Court of India recently addressed this question in the context of the Bhopal Gas Tragedy, ultimately dismissing a curative petition seeking to enhance the settlement amount. This judgment underscores the importance of finality in legal proceedings, especially in cases involving complex issues and numerous claimants. The five-judge bench, led by Justice Sanjay Kishan Kaul, delivered a unanimous verdict.

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 Union Carbide India Limited (UCIL) in Bhopal. The incident resulted in widespread death and injury, prompting legal actions for compensation.

To address the aftermath, the Indian government enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, granting the Central Government the exclusive right to represent the victims and to seek compensation. The government also framed the Bhopal Gas Leak Disaster (Registration and Processing of Claims) Scheme, 1985, to manage the claims process.

Initially, several compensation actions were initiated in the United States District Court for the Southern District of New York against Union Carbide Corporation (UCC), the parent company of UCIL. However, UCC successfully argued for the case to be heard in India, leading to a suit filed by the Union of India against UCC in Bhopal, seeking approximately US $3.3 billion in compensation.

In 1987, the District Judge, Bhopal, ordered UCC to deposit Rs. 350 crores as interim compensation, which was later reduced to Rs. 250 crores by the Madhya Pradesh High Court. Subsequently, both parties filed Special Leave Petitions (SLPs) before the Supreme Court of India, which encouraged them to negotiate a settlement. This resulted in UCC agreeing to pay US $470 million in full settlement of all claims.

Timeline

Course of Proceedings

The initial legal actions were filed in the United States, but the case was eventually moved to India. The District Judge, Bhopal, initially ordered interim compensation, which was then revised by the Madhya Pradesh High Court. The Supreme Court, in an effort to expedite relief to the victims, facilitated a settlement between the Union of India and UCC.

The settlement was challenged in review petitions, which led to the Supreme Court upholding the settlement, except for the extinguishment of criminal liabilities. The Court also directed the Union of India to ensure that in the event of the settlement fund being found inadequate, the Union of India, as a welfare state, should make good the deficiency. Additionally, the Court directed the Union of India to obtain a medical group insurance cover for those who were asymptomatic at the time but might develop symptoms in the future, as well as for unborn children who might develop congenital defects due to exposure to toxicity.

Several attempts were made by private parties to reopen the settlement, but these were unsuccessful. The Union of India also opposed these attempts. Finally, the Union of India filed curative petitions in 2010, seeking to reopen the settlement, which are the subject of this judgment.

Legal Framework

The legal framework for this case is primarily based on the following:

• The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985: This Act granted the Central Government the exclusive right to represent and act on behalf of the victims of the Bhopal Gas Tragedy. It also empowered the government to institute suits, proceedings, and enter into compromises.
• The Bhopal Gas Leak Disaster (Registration and Processing of Claims) Scheme, 1985: This scheme was framed under Section 9 of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, and established the procedure for filing and processing claims.

The Supreme Court also considered its own inherent powers and curative jurisdiction, as well as the principles of natural justice and the need for finality in legal proceedings.

Arguments

Union of India’s Arguments

The Union of India’s curative petitions were based on three main claims:

1. Claim I: The settlement was based on incorrect assumptions and data, particularly regarding the number of deaths, temporary injuries, and minor injuries. The Union contended that the actual figures were significantly higher than those considered by the Court during the settlement.
   • The Court recorded the estimated number of death cases was 3,000 whereas actual figure of death is 5,295 cases.
   • The Court recorded the estimated number of temporary disability cases was 20,000 whereas actual figure of temporary disability is 35,455 cases.
   • The Court recorded that the estimated number of Minor Injury cases was 50,000 whereas actual figure of Minor Injury is 5,27,894 cases.
   • In certain categories (viz. Permanent disability, utmost severe injuries, loss of property and loss of livestock), the actual number assumed by the court has been found to be on the higher side resulting in the extra provision of compensation in those categories.
2. Claim II: The State incurred actual expenditure towards relief and rehabilitation measures, which was not factored into the original settlement.
3. Claim III: There was a claim for environmental degradation caused by the disaster, which also was not part of the original settlement.

The Union of India argued that due to these errors and omissions, the settlement amount was inadequate and should be increased. The Union also contended that factors such as the devaluation of the rupee, interest rates, purchasing power parity, and the inflation index should be taken into account.

The Union of India, while seeking an increase in the settlement amount, did not seek to set aside the settlement, but rather to “top up” the amount.

Union Carbide Corporation’s Arguments

UCC strongly opposed the curative petitions, raising several objections:

• Maintainability: UCC argued that the curative petitions were not maintainable as they did not meet the limited grounds for curative jurisdiction as specified in Rupa Ashok Hurra v. Ashok Hurra & Anr. [2002] 4 SCC 388. The Union of India had not filed review petitions, a procedural requirement for a curative petition.
• Finality of Settlement: UCC emphasized that the settlement was comprehensive and intended to resolve all claims, rights, and liabilities arising from the Bhopal Gas Tragedy. The settlement was entered into without a finding of liability on UCC and with the understanding that it would bring an end to all legal proceedings.
• No Error in Basic Assumptions: UCC contended that the settlement was not based on any wrong assumptions. The figures were broad estimates, and the increase in the number of minor injury cases was a result of the Union’s own decision to expand the coverage of relief.
• Surplus Funds: UCC pointed out that there were surplus funds from the settlement, which had already been disbursed to the victims on a pro rata basis. The Union of India had also admitted that a sum of Rs. 50 crore was still lying with the Reserve Bank of India to take care of victims.
• No Unilateral Enhancement: UCC argued that a consensual settlement could not be unilaterally enhanced without the consent of both parties.

UCC also argued that if the settlement were to be set aside, then the suit would have to be revived, and UCC would be entitled to have US$ 470 million remitted back to it by the Union of India with interest. UCC highlighted that the review judgment had confirmed the ‘basic assumptions underlying the settlement’ and the settlement itself had been upheld, save the aspect of closure of criminal proceedings.

Intervenors’ Arguments

The intervenors, representing the victims, supported the Union of India’s plea for enhancement of the settlement amount. They also sought digitisation of medical records for the benefit of victims. Their arguments largely mirrored those of the Union of India.

Submissions of Parties

Issues Framed by the Supreme Court

The Supreme Court did not frame any specific issues in the traditional sense. However, the core issue before the Court was whether the curative petitions filed by the Union of India seeking to reopen the settlement could be entertained, given the settled legal position and the facts of the case.

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:

Cases

• Union Carbide Corporation v. Union of India & Ors. (1989) 3 SCC 38: This was the original judgment that recorded the settlement between the parties. The Court referred to this judgment to understand the circumstances and considerations that led to the settlement.
• Union Carbide Corporation & Others v. Union of India & Others (1991) 4 SCC 584: This was the review judgment that upheld the settlement with the exception of the extinguishment of criminal liabilities. The Court relied on this judgment to understand the scope of the settlement and the directions given to the Union of India.
• Bhopal Gas Peedith Mahila Udyog Sangathan & Anr. V. Union of India & Ors. (2007) 9 SCC 707: This case was cited to show that previous attempts to reopen the settlement had been rejected by the Supreme Court.
• Union Carbide Corporation Ltd. V. Union of India (2006) 13 SCC 321: This case was cited to show that surplus funds from the settlement had been disbursed on a pro rata basis to the victims.
• Rupa Ashok Hurra v. Ashok Hurra & Anr. (2002) 4 SCC 388: This case was cited to determine the scope and limitations of the Supreme Court’s curative jurisdiction. The Court held that the curative petitions did not meet the limited grounds for curative jurisdiction as specified in this case.

Statutes

• The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985: The Court considered this Act to understand the powers of the Central Government to represent the victims and to enter into a compromise.

Authorities Considered by the Court

Judgment

The Supreme Court dismissed the curative petitions filed by the Union of India. The Court held that the curative petitions were not maintainable as they did not meet the limited grounds for curative jurisdiction as specified in Rupa Ashok Hurra v. Ashok Hurra & Anr. [2002] 4 SCC 388. The Court also held that the settlement was comprehensive and there was no evidence of fraud. The Union’s claim for a “top up” had no basis in law. The Court also noted that the Union of India was negligent in not taking out the required insurance policy as directed in the review judgment, and could not seek to fix such liability on UCC.

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

How each authority was viewed by the Court?

• Union Carbide Corporation v. Union of India & Ors. (1989) 3 SCC 38*: The Court used this case to understand the background and rationale behind the original settlement.
• Union Carbide Corporation & Others v. Union of India & Others (1991) 4 SCC 584*: The Court relied on this case to understand the scope of the settlement and the directions given to the Union of India, particularly regarding its responsibility as a welfare state and the requirement to obtain insurance policies.
• Bhopal Gas Peedith Mahila Udyog Sangathan & Anr. V. Union of India & Ors. (2007) 9 SCC 707*: The Court used this case to highlight that previous attempts to reopen the settlement had been rejected.
• Union Carbide Corporation Ltd. V. Union of India (2006) 13 SCC 321*: The Court cited this case to demonstrate that surplus funds from the settlement had already been distributed to the victims.
• Rupa Ashok Hurra v. Ashok Hurra & Anr. (2002) 4 SCC 388*: The Court used this case to define the limited scope of its curative jurisdiction, ultimately holding that the present petitions did not meet the criteria for such jurisdiction.

What weighed in the mind of the Court?

The Supreme Court’s decision was influenced by several factors, including:

• Finality of Settlements: The Court emphasized the importance of finality in legal proceedings, particularly in cases where a settlement has been reached to provide immediate relief to a large number of victims.
• Limited Scope of Curative Jurisdiction: The Court reaffirmed that its curative jurisdiction is limited and should not be used to re-examine settled matters unless there is a clear violation of the principles of natural justice or a manifest error.
• Lack of Fraud: The Court noted that there was no evidence of fraud or misrepresentation in the original settlement.
• Adequacy of Compensation: The Court found that the settlement amount was adequate and that surplus funds had already been distributed to the victims.
• Union’s Negligence: The Court criticized the Union of India for failing to take out the required insurance policies as directed in the review judgment.

Fact:Law Ratio

The Court’s reasoning was based on a combination of factual considerations (such as the adequacy of compensation and the availability of surplus funds) and legal principles (such as the finality of settlements and the limited scope of curative jurisdiction). The legal aspects weighed slightly more heavily in the Court’s decision.

Logical Reasoning

The Court considered alternative interpretations but rejected them, emphasizing the need for finality and the absence of any legal basis for reopening the settlement. The Court also considered the fact that the settlement was reached to provide immediate relief to the victims, and that reopening the settlement would not be in their best interests.

The Court’s decision was unanimous, with all five judges agreeing on the outcome.

The Court quoted the following from the judgment:

“We have great hesitation in allowing such a prayer and granting such sui gener generis relief, as it would have a cascading effect on all settlements. We are of the view that the curative petitions, in the given facts and circumstances, are not maintainable, and are accordingly dismissed. We are not inclined to entertain any further applications in this regard.”

Conclusion

The Supreme Court’s judgment in Union of India vs. Union Carbide Corporation (2023) reaffirms the importance of finality in legal settlements, especially in cases involving mass disasters. The Court held that the curative petitions filed by the Union of India were not maintainable and that there was no legal basis to reopen the settlement. The Court also emphasized the need for the Union of India to fulfill its obligations as a welfare state. This judgment brings a long-standing legal battle to a close, underscoring the need for all parties to adhere to the terms of the settlement and for the government to ensure the welfare of its citizens.