Synopsis

Topic:- M. C. Mehta and Anr. Etc vs. Union of India and Ors. Etc
1986 SCR (1) 312

1. Introduction
2. Facts
3. Issues
4. Judicial proceedings
i. Charges against Shriram Food and Fertilizers and objections.
ii. Application of concept of absolute liability.
iii. Setting up of an inquiry Commission.
iv. Findings of the Committees
v. Recommendations of the Committees.
5. Judgments and Principle of the Supreme Court.
6. Suggestion
7. Conclusion
8. Bibliography
 Introduction

M.C. Mehta v. Union of India originated in the aftermath of oleum gas leak
from Shriram Food and Fertilisers Ltd. complex at Delhi. This gas leak
occurred soon after the infamous Bhopal gas leak and created a lot of panic in
Delhi. One person died in the incident and few were hospitalized.
The Shriram Gas leak case was a very significant case
in the field of environmental activism, as it pitted the Supreme Court, the
representative of the people, against one of the biggest and most wealthy
industrial establishments of India, Shri Ram Food and Fertilizers. Coming just
one year after the Bhopal Disaster, the largest industrial disaster of all times, it
also sought to address and rectify the miscarriage of justice of that time and
reinstate faith in the judiciary. The Shriram gas leak case was also unique of its
kind as it was the first time when an industry was solely held responsible for an
accident and forced to pay compensation regardless of what arguments it made
in its defence. It is also worthy of noting that the findings for the verdict was
made not only on a legal basis but also a scientific one and doing so the
Supreme Court preformed an extra judiciary role. The verdict was also decided,
taking into account the need for industrialisation and the fact that accidents are
an unavoidable consequence of it. Overall it was a fair decision, taking into
account all the social, economical and legal factors and established the Supreme
Court as the protector of the environment and the rights of the public.
 Facts

Delhi Cloth Mills Ltd., a public limited company having its registered in Delhi
runs an enterprise called Shriram Foods and Fertilizer Industries, which has
several units engaged in the manufacture of caustic soda, chlorine
hydrochloric acid, stable bleaching powder, superphosphate, vanaspati, soap,
sulphuric acid, alum anhydrous sodium sulphate, high test hypochlorite and
active earth. These various units are all set up in a single complex situated in
approximately 76 acrea and they are surrounded by thickly populated colonies
such as Punjabi Bagh, West Patel Nagar, Karampura, Ashok Vihar, Trinagar,
Shastri Nagar and within a radius of 3 kilometres from this complex.
Shriram Foods and Fertiliser Plant, Delhi (Shriram) was situated amidst a
population of 200,000 people. The caustic chlorine plant was commissioned
in the year 1949 and it has a strength of about 263 employees' including
executives, supervisors, staff and workers.
In the wake of the Bhopal gas tragedy realising the hazardous character of
caustic chlorine plant of Shriram, the Labour Ministry of the Government of
India commissioned "Technica", a firm of consultants, Scientists and Engineers
of the United Kindgom who set out the areas of concern and potential problems,
in their Report. Thereafter, the Delhi Administration constituted an Expert
Committee under the Chairmanship of Mr. Manmohan Singh. This
Committee made various recommendations in regard to safety and pollution
control measures with a view to minimising hazard to the workmen and the
public.
On December 4, 1985, a major leakage of oleum gas took place from one of
the units of Shri Ram and this leakage affected a large number of persons, both
amongst the workmen and the public and an Advocate practising in the Tis
Hazari Court died on account of inhalation of oleum gas. This leakage
resulted from the bursting of the tank containing oleum gas as a result of the
collapse of the structure on which it was mounted and it created a scare
amongst the people residing in that area. Hardly had the people got out of the
shock of this disaster, when within two days, another leakage, though this time a
minor one took place as a result of escape of oleum gas from the joints of a
pipe. As a result of such leakage several persons were affected and according to
the petitioner and the Delhi Bar Association, one Advocate practicing in the Tis
Hazari Courts died

A writ petition under Art 32 of the Constitution has been brought before the
SC by way of PIL on 1985 for the closure of Sriram plant and its relocation to
an area where it would not be any real danger to the health and safety of the
people on the ground of health hazard and for laying down principle and norms
for determining the liability of the large enterprises engaged in manufacture and
sale of hazardous products.

A question was raised sometimes in March 1985 in parliament in regard to

possibility of major leakage of Liquid chlorine from the Caustic Unit of Shriram
and of danger to the lives of thousands of workers and other

Application were filed by the Delhi Legal Aid and advice Board and the Delhi
Bar Association for award of compensation to the person who had suffered
harm on account of escape of Oleum Gas.

The Supreme Court held that “since the issues raised involved substantial
questions of law relating to the interpretation of Articles 21 and 32 of the
Constitution, the case should be referred to a larger Bench…” The larger bench
was to interpret Article 32 in order to determine whether a writ in conjunction
with compensation could be awarded. Article 21, which establishes the right to
protection of life and liberty, was to be interpreted in relation to a private
corporation “vital to public interest.”
 Issues
 The first issue in contention was whether the caustic chlorine plant of
shriram should be allowed to restart the plant and if so, subject to what
conditions keeping in mind that the operation of the plant should no
longer pose a hazard or risk to the community.
 The second issue brought forth to discuss was whether shriram which
manufactures and is engaged in the production of hazardous substances at
the cost of environment of human n life should be held absolutely liable
 The third issue is whether Shriram could be considered to be a state
within the ambit of article 12?
 The fourth issue raised was whether the application for compensation
filed under the article 21 is available against shriram which is owned by
Delhi cloth mills limited a private corporation and which is engaged in an
industry vital to public interest and with potential to affect the life and
health of the people.
 Judicial Proceedings
I. Charges against Shriram Food and Fertilizers and objections:-

The articles of the Indian Constitution under which the petitioners moved the
Supreme Court were Article 21, Article 32 and an extension of Article 12.
These articles cover the domain of fundamental rights and hence their definition
and enforcement becomes subject to different opinions. This caused the debate
on whether the Supreme Court even had jurisdiction to hear these case. But the
Supreme Court, moved by the plight of the people, went above and beyond its
jurisdiction to set up a president and safeguard the rights of the weaker sections
of society.

The first objection put by Shriram’s legal team was on the scope of Article 32,
that there was no demand for compensation in the first petition by M.C. Mehta,
neither was it added by amendment to it after the accident. They also stated that
both Delhi Legal aid and Advice Board and the Delhi Bar Association were not
even the belligerents in the first petition. It seemed that they were unhappy with
the Supreme Court championing this case against them. In reply the Supreme
Court cited the case of Bandhua Mukti Morcha Vs. The Union of India where it
stated that the Supreme Court is not merely an institution for constitutional
remedy but also confers a responsibility to safeguard the fundamental rights of
the citizens, especially those citizens who are from weaker sections of society
and cannot themselves get justice. The Supreme Court also stated that Shriram
Food and Fertilizers was being hyper-technical and hence its appeals on this
ground were denied.

The second objection was that on the use of Article 21 (on whose violation the
petitions were filed). Shriram Food and Fertilizer was a privately owned
enterprise. It did not fall under Article 12 (being party to the state or state
machinery) and hence if it had violated any fundamental right of a citizen it
could not be taken to court under Article 21. Chief Justice Bhagwati, presiding
over the case replied by saying that the hearing for the case concluded on the
15th December 1986, and the verdict was being delivered on the 19th December
1986, just after 4 days due to the lack of time and considering the urgency it
was not going to go into the details of definition of state and non-state
institutions under Article 12, but since Shriram Food and Fertilizers was
involved in the manufacture of commodities essential to the public life, and
supplemented the state industries in doing so, it enjoyed all the benefits and
liabilities which comes under Article 12, Chief Justice Bhagwati called Shriram
Food and Fertilizers as a “Public Character". The Supreme Court also
explicatively said that any industry, be it private or public, which engages in the
production of goods essential to the public (infrastructure) sector was liable
under Article 21. It also stated that Shriram had been recipients of large
government grants for their manufacture and hence bore the same responsibility
as well.

II. Application of concept of absolute liability:-

Considering that Shriram Food and Fertilizers was in the business of

manufacture and handling to hazardous substances, injurious to public health
the onus of prevention and caution should have been entirely upon them .The
court decided apt to use the concept absolute liability against Shriram Food and
Fertilizers. Citing the case of Rylands Vs. Fletcher 1868 “a person whom for his
own purpose brings onto his land, collects or keeps anything likely to do
mischief must keep at his peril and if he fails to do so is prima facie liable for
the damages which is the natural consequences for its escape." [2] It held
Shriram responsible for all the damages and liable for paying compensation for
its reversal. The only exception for this case was that of a natural calamity or an
act of a third party. The court determined that the" leakage was caused by a
series of mechanical and human errors. This leakage resulted from the bursting
of the tank containing oleum gas as a result of the collapse of the structure on
which it was mounted" [3] and not by an act of sabotage by a third party and
hence the concept of absolute liability was applicable.

III. Setting up of an Inquiry Commission.

Responding to the petition filed by Shriram Food and Fertilizers requesting the
opening of the undamaged caustic chlorine plant, the Supreme Court appointed
two committees of experts; the Manmohan Singh Committee and the Nilay
Choudhary Committee. The committees were formed by the court to obtain a
scientific and objective overview on the situation. These committees were to
advice the court in a matter of their own expertise to help the court make a
better judgement based on scientific principles. The committees were issued
with essentially three mandates.

Whether the caustic chlorine plant can be opened as it is without any

modifications.

The possible measures which can be taken to prevent any excessive pollution or
accidents in the future.

The safety devices which are installed in the complex and the devices that exist
on the market which can be installed to prevent such a tragedy.
IV. Findings of the Committees.

The committees set up by the Supreme Court to investigate the possibility of

safely opening and operating the Shriram Caustic chlorine plant made several
startling findings which reflected the profit over safety norms of that time.

Old and worn out machinery, which were corroded by chemicals and an
accident waiting to happen.

Indifference of the management towards safety, worker awareness and accident

training.

Lack of safety equipment eg. Fire extinguishers, rubber gloves, masks, etc.

V. Recommendations of the Committees:-

Both the Manmohan Singh and Nilay committees on inspection of the plant
made many suggestions to the management. They strictly stated that if at any
time they were violated then the permission for the plant to operate could be
revoked.

Shriram was asked to deposit a sum of Rs. 30,000 to meet the travel, boarding
and other expenses of the committees.

One operator must be specifically designated responsible for each safety device.

The chief inspector was directed to inspect the factory at least once a week.

The Central Pollution Control Board was asked to depute an inspector to inspect
the plant once a week to ensure that it was in compliance with the effluent and
emission limits of the Air and Water Act.

The management of Shriram was made to take an undertaking from the

chairman and managing director of the Delhi Cloth Mills Ltd. (the owners of
Shriram) that in case of any future leak or accident resulting in death or
damages, the management will be personally responsible for the compensation
and must do so within one week of the accident.

A worker’s safety committee must be constituted.

Educational posters on the post-exposure treatment of chlorine must be placed

on the gate and inside the premises of the plant.

Training and making aware of all the labourers of the plant via audio visual
programmes.
Installation of loudspeakers to alert the neighbouring communities on the
event of a chlorine gas leak.

Shriram was made to ensure that the workers made use of safety equipment and
provide regular health check-ups.

Shriram was made to deposit a sum or 20lac with the court registrar to settle any
claims made by aggrieved party in the leak, and the remaining sum was to be
put under interest in a nationalised bank and should there be any further
accident in a period of three years, to be invested by the court registrar as
compensation.
 Judgment and Principle laid down by Supreme Court
This is a landmark judgment in which the principle of Absolute Liability was
laid down. The fertilizer plant was situated very close to human habitation and
the court held that the carrying on of a hazardous industry in such proximity to
population could not be permitted and the factory was relocated. The deep
pocket principle was also laid down in the instant case. This judgment also
ushered in a period of dramatic legislative progress in India. The Parliament
added an entirely new chapter to the 1948 Factory Act, incorporating sections
almost verbatim from the Judgment. The Public Liability Insurance Act was
passed and the policy for the abatement of Pollution Control was established.
Moreover, the Environment Protection Act was passed and the Policy for the
Abatement of Pollution Control was established.

The Supreme Court delivered its judgement on the 19th of December 1986 and
on the basis of absolute liability and deemed Shriram responsible for the
accident and resultant compensation of the victims. The court also instructed
Shriram to comply with all the recommendations of the Nilay Choudhary and
Manmohan Singh Committees and issued a strict notice that failure to do so will
result in the immediate closure of the plant. The court also instructed the victims
of the Oleum gas leak to file their complain for compensation in the Tis Hazari
lower court of Delhi.

On the point of a technical flaw pointed out by counsel for Shriram, the Court
noted that the substance, not the form, of the writ should be its concern, and that
a hyper-technical approach was inappropriate in applying fundamental rights.
In relation to awarding compensation for a violation of fundamental rights, the
Court held that it had “all incidental and ancillary power including the power to
forge new remedies.” This was necessary to grant compensation as otherwise
the fundamental rights provisions of the Constitution would be frustrated. The
Court noted that compensation for violation of a fundamental right could be
sought under Article 32 only when the breach is “gross and patent,”
“incontrovertible and ex facie glaring.” Otherwise, a claim for compensation
must be sought in the civil courts.
In order to address the alleged fundamental rights violations under Article 21,
the Court had to first determine whether Shriram, a private corporation, could
fall within the definition of State. The Court outlined the five criteria enunciated
in R. D. Shetty v. Airport Authority of India ((1979) 3 SCR 1014) to decide
whether a corporation could be deemed to be an “instrumentality or agency of
the State”, for the purposes of enforcing fundamental rights against them. It
listed the factors as follows
 1. Financial assistance given by the State and magnitude of such assistance
2. any other form of assistance whether of the usual kind or extraordinary
3. control of management and policies of the corporation by the State-
nature and extent of control
4. State conferred or State protected monopoly status and
5. functions carried out by the corporation, whether public functions
closely related to government functions.

The Court held that the government exercised control on all those activities of
Shriram which jeopardized public interest and that not only did the government
exercise “extensive functional control” over Shriram but also assisted it
financially in terms of loans and overdrafts. The Court also held that Shriram
was engaged in an activity “which has the potential to invade the right to life of
large sections of people.” The Court, however, declined to rule whether Shriram
was “State” for the purposes of Article 21, preferring to leave the questions
open for a later date.

Regarding the liability of a corporation due to injurious consequences of

hazardous activities conducted by it, the Court held that a corporation “owes an
absolute and non-delegable duty to the community to ensure that no harm
results to anyone on account of the hazardous or inherently dangerous nature of
the activity which it has undertaken.” Extending the principle of strict liability
in Rylands v. Fletcher (L.R. 3 H.L.330), the Court, for the first time, enunciated
the principle of absolute liability of corporations when they undertake
hazardous and dangerous activity. Such activity, according to the Court, should
be allowed only on the condition that the enterprise “indemnifies all those who
suffer on account of the carrying on of such hazardous or inherently dangerous
activity regardless of whether it is carried on carefully or not.

Suggestion
In my opinion the verdict on the Shriram Gas Leak case by the Supreme Court
was fair, balanced and adequate for many reasons. I had previously thought
before reading this case that this accident draws many parallels to the Bhopal
Gas Tragedy, which was a complete miscarriage of justice. Therefore only
making them pay a compensation and not imprisoning an executive or shutting
down the whole plant was being too light on Shriram. As I read on and analysed
how objectively, and scientifically the Supreme Court decided the case my
opinion changed and I now think that the verdict reached by the Supreme Court
is apt and fitting.

There must be a balance between industrialisation and quality of human life.

The fact of the matter is that Shriram was doing more good than it did harm, it
provided employment for at least 4000 people and their families who otherwise
would have been destitute. The factory was also in the business of
manufacturing daily commodities for the public and also purification of water.
So the decision had to be in such a way as to obtain justice for the victims and
not impede industrial growth or frighten future industrialists. Once the accident
did occur the victims were in more need of immediate compensation to alleviate
their pain than to imprison members of the management.

The Supreme Court by using the precedent of absolute liability greatly crippled
Shriram’s chances of making counter arguments and not accept the blame for
the accident. And via constituting an expert committee to recommend changes it
handled the case very scientifically. This case set an example for all the other
industries to adopt more stringent standards of safety and established the
supreme court of India as the de facto defender of the environment and the
fundamental rights of the people.

Conclusion
If the enterprise is permitted to carry on an hazardous or inherently
dangerous activity for its profit, the law must presume that such
permission is conditional on the enterprise absorbing the cost of any
accident arising on account of such hazardous or inherently dangerous
activity as an appropriate item of its overheads. Such hazardous or
inherently dangerous activity for private profit can be tolerated only
on condition that the enterprise engaged in such hazardous or
inherently dangerous activity indemnifies all those who suffer on
account of the carrying on of such hazardous or inherently dangerous
activity regardless of whether it is carried on carefully or not. The
Court also pointed out that the measure of compensation in the kind
of cases referred to must be correlated to the magnitude and capacity
of the enterprise because such compensation must have a deterrent
effect. The larger and more prosperous the enterprise, greater must be
the amount of compensation payable by it for the harm caused on
account of an accident in the carrying on of the hazardous or
inherently dangerous activity by the enterprise.
 Bibliography

1. www.legalservices.com

2. www.lawteacher.net

3. Environmental law, S.R. Myneni