|CITATION||1987 SCR (1) 819|
|COURT||Supreme Court of India|
|JUDGES/CORAM||Chief Justice P.N. Bhagwati|
|DATE OF JUDGEMENT||20.12.1986|
This case has played a vital role in framing rather guiding the Environment (Protection) Act, 1986; it deals with the functioning of factories and other enterprises dealing with hazardous resources or materials.
The facts of the case are as follows: A writ petition was filed by M.C Mehta, a social activist lawyer; seeking closure of Shriram Industries as it was engaged in the manufacturing of hazardous substances and located in a densely populated area of Kirti Nagar, Delhi. While the petition was pending, on 4 December 1985, there was leakage of oleum gas from one of its units which caused the death of an advocate and affected the health of several others. 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 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.
M.C Mehta filed a PIL under Articles 21 and 32 of the Constitution and sought closure and relocation of the Shriram Caustic Chlorine and Sulphuric Acid Plant which was located in a thickly populated area of Delhi and also for compensation of people who got affected or/and lost their life.
The main issues in the case were:
- What is the scope and ambit of the jurisdiction of the Supreme Court under Article 32?
- Whether Article 21 is available against Shriram which is owned by Delhi Cloth Mills Limited, a public company limited by shares and which is engaged in an industry vital to the public interest and with potential to affect the life and health of the people; and
- What is the measure of liability of an enterprise which is engaged in a hazardous or inherently dangerous industry, if by reason of an accident occurring in such industry, persons die or are injured.
- Does the rule in Rylands v. Fletcher apply or is there any other principle on which the liability can be determined?
Summary of court decision and judgment
The Court observed that apart from issuing directions, it also has the power to forge new remedies and fashion new strategies designed to enforce fundamental rights under Article 32. The power under Article 32 is not confined to preventive measures when fundamental rights are threatened to be violated but it also extends to remedial measures when the rights are already violated. The Court however held that it has the power to grant remedial relief in appropriate cases where violation of fundamental rights is gross and patent and affects persons on a large scale or where affected persons are poor and backward.
But the Court also specified that a petition under Article 32 should not be used as a substitute for enforcement of the right to claim compensation for infringement of a fundamental right through the ordinary process of Civil Court. It is only in exceptional cases that compensation may be awarded in a petition under Article 32. The Court refrained from deciding on the issue of whether Article 21 is available Shriram Industries as it was of the opinion that this question needs time and detail discussion and due to lack of time the Court believed that it would be better if the question is left undecided.
In Rylands vs. Fletcher rule laid down was that if a person who brings on to his land and collects and keeps there anything likely to do harm and such thing escapes and does damage to another he is liable to compensate for the damage caused. The liability is thus strict and it is no defence that the thing escaped without the person’s willful act, default or neglect. The exceptions to this rule are that it does not apply to things naturally on the land or where the escape is due to an act of God, act of stranger or the default of the person injured or where there is a statutory authority.
The Court held that the rule in Rylands v. Fletcher with all of its exceptions is not applicable for the industries engaged in hazardous activities expounding that this rule was laid down in the 19th century and due to advancement in science and technology and our way of living it is the demand of the century to propound new rule; thus the Court introduced new rule popularly known as Absolute Liability Rule which states that an industry engaged in hazardous activities which poses a potential danger to health and safety of the persons working and residing near owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone. Such an industry must conduct its activities with the highest standards of safety and if any harm results, the industry must be absolutely liable to compensate for such harm. It should be no answer to industry to say that it has taken all reasonable care and that harm occurred without negligence on its Article. Since the persons harmed would not be in a position to isolate the process of operation from the hazardous preparation of the substance that caused the harm, the industry must be held absolutely liable for causing such harm as a part of the social cost of carrying on the hazardous activities. This principle is also sustainable on the ground that the industry alone has the resource to discover and guard against hazards or dangers and to provide warning against potential hazards.
On the question of how to determine the compensation a simple rule was noted by the Court that “The larger and more prosperous the industry, the greater will be the amount of compensation payable by it.”
In my opinion, the three out of four issues raised in this case were rightly dealt by the Supreme Court and thus I couldn’t criticize the decisions in each respective issue the introduction of the Absolute Liability rule gave a new dimension and a wider scope to the remedy of compensation available to the affected parties. I would instead focus my analysis on the one question which was left undecided by the Court for the lack of time. The issue was whether Article 21 is available against Shriram which is owned by Delhi Cloth Mills Limited, a public company limited by shares and which is engaged in an industry vital to the public interest and with potential to affect the life and health of the people or not? Article 21 will be available only if it is determined that the Shriram Fertilizers Industries is State under Article 12.
The Court in the case has already accepted that the Government doesn’t exercise powers and functions in the internal management of the company but as the fertilizer industry has potential to adversely affect the health and safety of the community and it’s being impregnated with public interest which perhaps dictated the policy decision of the Government to ultimately operate this industry exclusively. Along with this extensive functional control, Shriram also receives sizable assistance in the shape of loans and overdrafts running into several crores of rupees from the Government through various agencies.
The Court in many previously decided case like – R. D. Shetty vs. International Airport Authority, Ajay Hasia vs. Khalid Mujib, Kasturilal Reddy vs. State of J&K and more held that the authorities concerned are to be included under the term ‘State” under article 12 as follows:
In R. D. Shetty v. International Airport Authority, the Court held that there is no cut and dried formula which would provide the correct division of corporations into those which are instrumentalities or agencies of Government and those which are not. The Court made an analogy on the concept of State Action as developed in the United States wherein private agency if supported by extra-ordinary assistance given by the State may be subject to the same constitutional limitations as the State. The Court also held that if extensive and unusual financial assistance is given and the purpose of such assistance coincides with the purpose for which the corporation is expected to use the assistance and such purpose is of a public character, it may be a relevant circumstance supporting an inference that the corporation is an instrumentality or agency of the Government. Further, the Court enumerated the following factors to determine whether a body comes under the definition of State as defined in Article 12,
- financial assistance given by the State and magnitude of such assistance
- any other form of assistance whether of the usual kind or extraordinary
- control of management and policies of the corporation by the State – nature, and extent of control
- State conferred or State protected monopoly status and
- Functions carried out by the corporation, whether public functions closely related to governmental functions, would determine whether a corporation is an instrumentality or agency of the State or not.
In Ajay Hasia v. Khalid Mujib, where it was further emphasized that: where constitutional fundamentals vital to the maintenance of human rights are at stake, the Government may act through the instrumentality or agency or it may employ the instrumentality or agency of judicial persons to carry out its function. It is really the Government which acts through the instrumentality or agency of the corporation and for the purpose of convenience of management and administration. If the Government acting through its officers is subject to certain constitutional limitations it must follow a fortiori that the Government acting through the instrumentality or agency of a corporation should be equally subject to the same limitations.
Thus the Court could have included the Industry in Article 12 and granted defence under article 21 to the petitioner.
As mentioned before this case guided the Environment (Protection) Act, 1986 as this case raised many issues which shed light on the lack of regulating mechanisms in such cases and also lack of proper legislations to curb such acts. One of the important decision made in this case was that of scope of Article 32 where the Supreme Court said that the Article is not only available to provide remedy after a fundamental right has been abridged or violated nut also when there is reasonable apprehension that such abridgment or violation can happen. Apart from the one question left the judgment delivered was in my opinion according to the laws and principles of fair, equity and good conscience.
 Bandhua Mukti Morcha v. Union of India.
 1866 Law Report 1 Exchequer 265.