M.C. Mehta v. Union of India (Oleum Gas Leak case)

Facts

Oleum gas leaked on 4th and 6th December 1985 from a unit of Shriram Foods and Fertilisers Industries (Delhi Cloth Mills Ltd.) in densely populated Delhi. An advocate practising in the Tis Hazari Court was alleged to have died and several others were affected. The matter came before the Court by a writ petition under Article 32 as public interest litigation, only a year after the Bhopal MIC gas disaster.

Issues

• What is the measure of liability of an enterprise engaged in a hazardous or inherently dangerous activity for harm caused by escape of a toxic substance?
• Whether the strict-liability rule in Rylands v. Fletcher, with its exceptions, adequately governs such modern industrial hazards in India.

Arguments

The petitioner urged that hazardous enterprises must bear absolute responsibility for harm caused to the public. The enterprise relied on the strict-liability framework with its exceptions (such as act of a stranger / sabotage) to limit or avoid liability.

Held

The Supreme Court declined to be bound by the 19th-century English rule and evolved a new rule suited to India's social and economic conditions. It held that an enterprise engaged in a hazardous or inherently dangerous activity owes an absolute and non-delegable duty to the community to ensure no harm results, and if harm does result it is absolutely liable to compensate, with no defence that all reasonable care was taken or that there was no negligence. This absolute liability is not subject to any of the exceptions recognised under Rylands v. Fletcher. The Court justified the rule on the grounds that such an enterprise carries on the activity for private profit and must absorb accident costs as overheads, and alone has the resources to discover and guard against the hazards. It further held that compensation must be correlated to the magnitude and capacity of the enterprise so as to have a deterrent effect.

Ratio decidendi

Where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results from an accident in its operation (e.g. escape of toxic gas), the enterprise is absolutely liable to compensate all affected, and such liability is not subject to any of the exceptions applicable to strict liability under Rylands v. Fletcher.

Significance

Landmark that created the indigenous Indian doctrine of absolute liability, going beyond Rylands v. Fletcher by removing all defences and linking compensation to the enterprise's capacity. It shaped India's environmental and toxic-tort jurisprudence, underpinned the Bhopal litigation, and was followed in Indian Council for Enviro-Legal Action v. Union of India and applied by the Delhi High Court in Klaus Mittelbachert v. East India Hotels Ltd.

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