M.C. Mehta & ANR Vs. Union of
India & Ors [1986] INSC 282 (20 December 1986)
BHAGWATI, P.N. (CJ) BHAGWATI, P.N. (CJ) MISRA
RANGNATH OZA, G.L. (J) DUTT, M.M. (J) SINGH, K.N. (J)
CITATION: 1987 AIR 1086 1987 SCR (1) 819 1987
SCC (1) 395 JT 1987 (1) 1 1986 SCALE (2)1188
CITATOR INFO :
F 1989 SC1642 (24) RF 1990 SC 273 (28,43)
E&D 1992 SC 248 (13,14,15,16,28,100)
ACT:
Constitution of India 1950--Articles 12 &
21--Private corporation-Engaged in industry vital to public interest with
potential to affect life and health of people--Whether 'other
authority'--Extent of availability of Article 21.
Article 32--Jurisdiction and Power of
Court--Not only injunctive in ambit--Remedial in scope and provides relief for
infringement of fundamental right--Power to award compensation.
Public Interest Litigation--Maintainability
of--Whether letters addressed even to an individual judge
entertainable--Whether preferred form of address applicable--Whether letters to
be supported by affidavits--Hyper-technical approach to be avoided by the
Court--Court must look at the substance and not the form--Court's power to
collect relevant material and to appoint commissions.
Law of Torts--Liability of an enterprise
engaged in a hazardous and inherently dangerous industry for occurrence of
accident--Strict and absolute--Quantum of compensation payable for harm
caused--Determination of--Rule laid in Rylands v. Fletcher--Whether applicable
in India.
Jurisprudence--Law--Should keep pace with
changing socioeconomic norms---Where a law of the past does not fit in to the
present context, Court should evolve new law.
Interpretation of Constitution--Creative and
innovative interpretation in consonance with human rights jurisprudence
emphasised.
Interpretation of statutes--Foreign case
law--Supreme Court of India not bound to follow.
HEADNOTE:
The petitioners, in this writ petition under
Art. 32, sought a direction for closure of the various units of Shriram Foods
& Fertilizers 820 Industries on the ground that they were hazardous to the
community. During the pendency of the petition, there was escape of oleum gas
from one of the units of Shriram. The Delhi Legal Aid and Advice Board and the
Delhi Bar Association filed applications for award of compensation to the
persons who had suffered harm on account of escape of oleum gas.
A Bench of three Hon'ble Judges while
permitting Shriram to restart its power plant as also other plants subject to
certain conditions, referred the applications for compensation to a larger
Bench of five Judges because issues of great constitutional importance were
involved, namely, (1) What is the scope and ambit of the jurisdiction of the
Supreme Court under Art. 32 since the applications for compensation are sought
to be maintained under that Article;
(2) Whether Art. 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 public interest and with
potential to affect the life and health of the people; and (3) What is the
measure of liability of an enterprise which is engaged in an 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,
(1866 Law Report 1 Exchequer 265) apply or is there any other principle on
which the liability can be determined.
Disposing of the applications,
HELD: 1. The question whether a private
corporation like Shriram would fall within the scope and ambit of Art. 12 so as
to be amenable to the discipline of Art. 21 is left for proper and detailed
consideration at a later stage if it becomes necessary to do so. [844F-G]
Rajasthan Electricity Board v. Mohan Lal, [1967] 3 SCR 377; Sukhdev v. Bhagwat
Ram, [1975] 1 SCC 421; Ramanna Shetty v. International Airport Authority,
[1979] 3 SCR 1014; Ajay Hasia v. Khalid Mujib, [1981] 2 SCR 79; Som Prakash v.
Union of India, [1981] 1 S.C.C. 449; Appendix I to Industrial Policy
Resolution, 1948; Industries (Development and Regulation) Act, 1951; Delhi
Municipal Act, 1957 Water
(Prevention and Control of Pollution) Act, 1974; Air (Prevention and
Control of Pollution) Act, 1981; Eurasian Equipment and Chemicals Ltd. v. State
of West Bengal, [1975] 2 SCR 674; Rasbehari Panda v. St.ate, [1969] 3 SCR 374;
Kasturi Lal Reddy v. State of Jammu & Kashmir, [1980] 3 SCR 1338, referred
to.
821
2. The Delhi Legal Aid and Advice Board is
directed to take up the cases of all those who claim to have suffered on
account of oleum gas and to file actions on their behalf in the appropriate
Court for claiming compensation and the Delhi Administration is directed to
provide necessary funds to the Board for the purpose. [844G-H; 845A] 3.(i)
Where there is a violation of a fundamental or other legal right of a person or
class of persons who by reason of poverty or disability or socially or
economically disadvantaged position cannot approach a Court of law for justice,
it would be open to any public-spirited individual or social action group to
bring an action for vindication of the fundamental or other legal right of such
individual or class of individuals and this can be done not only by filing
regular writ petition under Art. 226 in the High Court and under Art. 32 in
this Court, but also by addressing a letter to the Court. [828B-C; E-F] 3.(ii)
Even if a letter is addressed to an individual Judge of the Court, it should be
entertained, provided of course it is by or on behalf of a person in custody or
on behalf of a woman or a child or a class or deprived or disadvantaged
persons. [829B-C] 3.(iii) Letters addressed to individual Justices of this
Court should not be rejected merely because they fail to conform to the
preferred form of address nor should the Court adopt a rigid stance that no
letters will be entertained unless they are supported by an affidavit. If the
Court were to insist on an affidavit as a condition of entertaining the letters
the entire object and purpose of epistolary jurisdiction would be frustrated
because most of the poor and disadvantaged persons will then not be able to
have easy access to the Court and even the social action groups will find it
difficult to approach the Court. [828H;
829B] Bandhua Mukti Morcha v. Union of India
& Ors., [1984] 2 SCR 67; S.P. Gupta v. Union of India, [1981] (Suppl) SCC
87 and Union for Democratic Rights & Ors. v. Union of India, [1983] 1 SCR
456, relied upon.
4.(i) Article 32 does not merely confer power
on this Court to issue direction, order or writ for enforcement of the
fundamental rights but it also lays a constitutional obligation on this Court
to protect the fundamental rights of the people and for that purpose this Court
has all incidental and ancillary powers including the power to forge new
remedies and fashion new strategies designed to enforce the fundamental rights.
It is in realisation of this constitutional obligation that this Court 822 has,
in the past, innovated new methods and strategies for the purpose of securing
enforcement of the fundamental rights, particularly in the case of the poor and
the disadvantaged who are denied their basic human rights and to whom freedom
and liberty have no meaning. [827F-828A] 4.(ii) The power of the Court is not
only injunctive in ambit, that is, preventing the infringement of fundamental
right but it is also remedial in scope and provides relief against a breach of
the fundamental right already committed.
[830A-B] 4.(iii) The power of the Court to
grant such remedial relief may include the power to award compensation in appropriate
cases. The infringement of the fundamental right must be gross and patent, that
is incontrovertible and exfacie glaring and either such infringement should be
on a large scale affecting the fundamental rights of a large number of persons
or it should appear unjust or unduly harsh or oppressing on account of their
poverty or disability or socially or economically disadvantaged position to
require the person or persons affected by such infringement to initiate and
pursue action in the Civil Courts. [830D; E-F]
4. (iv) Ordinarily a petition under Art. 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 Art. 32. [830F-G] 4.(v) The applications for
compensation in the instant writ petition are for enforcement of the
fundamental right to life enshrined in Art. 21 of the Constitution and while
dealing with such applications the Court cannot adopt a hyper-technical
approach which would defeat the ends of justice. The Court must look at the
substance and not the form. Therefore, the instant applications for
compensation are maintainable under Art. 32. [827A-B] Bandhua Mukti Morcha v.
Union of India & Ors., [1984] 2 SCR 67; S.P. Gupta v. Union of India,
[1981] (Suppl.) SCR 87; Union for Democratic Rights & Ors. v. Union of
India, [1983] 1 SCR 456 and Rudul Shah v. State of Bihar, AIR 1983 SC 1086,
relied upon.
5. The rule in Rylands v. Fletcher (supra)
laid down a principle of liability 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 823 damage to another, he is liable to compensate for the damage
caused. This rule applies only to non-natural user of the land and it does not
apply to things naturally on the land or where the escape is due to an act of
God and an act of a stranger or the default of the person injured or where the
thing which escapes is present by the consent of the person injured or in
certain cases where there is statutory authority. This rule evolved in the 19th
century at a time when all these developments of science and technology had not
taken place cannot afford any guidance in evolving any standard of liability
consistent with the constitutional norms and the needs of the present day
economy and social structure. In a modern industrial society with highly developed
scientific knowledge and technology where hazardous or inherently dangerous
industries are necessary to carry on as part of developmental programme, the
Court need not feel inhibited by this rule merely because the new law does not
recognise the rule of strict and absolute liability in case of an enterprise
engaged in hazardous and dangerous activity. [842D-G] Halsburry Laws of
England, Vol. 45 Para 1305, relied upon.
6.(i) Law has to grow in order to satisfy the
needs of the fast changing society and keep abreast with the economic
developments taking place in the country. Law cannot afford to remain static.
The Court cannot allow judicial thinking to be constricted by reference to the
law as it prevails in England or in any other foreign country. Although this
Court should be prepared to receive light from whatever source it comes, but it
has to build up its own jurisprudence, evolve new principles and lay down new
norms which would adequately deal with the new problems which arise in a highly
industrialised economy. If it is found that it is necessary to construct a new
principle of law to deal with -an unusual situation which has arisen and which
is likely to arise in future on account of hazardous or inherently dangerous
industries which are concommitant to an industrial economy the Court should not
hesitate to evolve such principles of liability merely because it has not been
so done in England.
[843A-E] 6(ii) This Court has throughout the
last few years expanded the horizon of Art. 12 primarily to inject respect for
human-rights and social conscience in corporate structure. The purpose of
expansion has not been to destroy the raison d'etre of creating corporations
but to advance the human rights jurisprudence. The apprehension that including
within the ambit of Art. 12 and thus subjecting to the discipline of Art. 21
those private corporations whose activities have the potential of affecting the
life and health of the people, would deal a death blow to 824 the policy of
encouraging and permitting private enterpreneurial activity is not well
founded. It is through creative interpretation and bold innovation that the
human-rights jurisprudence has been developed in India to a remarkable extent
and this forward march of the humanrights movement cannot be allowed to be
halted by unfounded apprehensions expressed by status quoists. [841C-E] 7.(i)
An enterprise which is engaged in a hazardous or inherently dangerous industry
which poses a potential threat to the health and safety of the persons working
in the factory and residing in the surrounding areas owes an absolute
non-delegable duty to the community to ensure that if any harm results to
anyone, the enterprise must be held to be under an obligation to provide that
the hazardous or inherently dangerous activity must be conducted with the
highest standards of safety and if any harm results on account of such activity
the enterprise must be absolutely liable to compensate for such harm
irrespective of the fact that the enterprise had taken all reasonable care and
that the harm occurred without any negligence on its part.
[843E-G] 7.(ii) 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
activity as an appropriate item of its overheads. The enterprise alone has the
resource to discover and guard against hazards or dangers and to provide
warning against potential hazards. [844A-B] 7.(iii) The measure of compensation
in such kind of cases must be co-related to the magnitude and capacity of the
enterprise because such compensation must have a deterrent effect. The larger
and more prosperous the enterprise, the greater must be the amount of
compensation payable by it for the harm caused on account of an accident in
carrying on of the hazardous or inherently dangerous activity by the
enterprise. [844E-F]
8. The historical context in which the
American doctrine of State action evolved in the united States is irrelevant
for the purpose of Indian Courts, especially in view of Art.
15(2) of the Indian Constitution. But, it is
the principle behind the doctrine of State aid, control and regulation so
impregnating a private activity as to give it the colour of State action which
can be applied to the limited extent to which it can be Indianised and
harmoniously blended with Indian constitutional 825 jurisprudence. Indian
Courts are not bound by the American exposition of constitutional law. The
provisions of American Constitution cannot always be applied to Indian
conditions or to the provisions of Indian Constitution and whilst some of the
principles adumberated by the American decisions may provide a useful guide,
close adherence to those principles while applying them to the provisions of
the Indian Constitution is not to be favoured, because the social conditions in
India are different. [840D-H] Ramanna Shetty v. International Airport
Authority, [1979] 3 SCR 1014; Jackson v. Metropolitan Edison Co., 42 L.ed. (2d)
477; Air India v. Nargesh Mirza, [1982] 1 SCR 438 and General Electric Co.
Maratha v. Gilbert, 50 L.ed (2d) 343, relied upon.
ORIGINAL JURISDICTION: Writ Petition (Civil)
No. 12739 of 1985.
(Under Article 32 of the Constitution of
India.) Petitioner-in-person.
B. Datta, Additional Solicitor General, A.B.
Diwan, F.S.
Nariman, B.R.L. lyengar, Hardev Singh, Hemant
Sharma, C.V.S.
Rao, R.D. Aggarwal, Ms. S. Relan, R.S. Sodhi,
S. Sukumaran, Ravinder Narain, D.N. Mishra, Aditya Narayan, Ms. Lira Goswami,
S. Kachwaha, Mohan, Ravinder Bana, K.C. Dua, K.
Kumaramangalam, O.C. Jain and K.R.R. Pilai
for the Respondents.
Raju Ramachandran for the Intervener.
Soli J. Sorabji for Citizens Action
Committee.
The Judgment of the Court was delivered by
BHAGWATI, CJ. This writ petition under Article 32 of the Constitution has come
before us on a reference made by a Bench of three Judges. The reference was
made because certain questions of seminal importance and high constitutional
significance were raised in the course of arguments when the writ petition was
originally heard. The facts giving rise to the writ petition and the subsequent
events have been set out in some detail in the Judgment given by the Bench of
three Judges on 17th February 1986, and it is therefore not necessary to
reiterate the same. Suffice it to state that the Bench of three Judges 826
permitted Shriram Foods and Fertiliser Industries (hereinafter referred to as
Shriram) to restart its power plant as also plants for manufacture of caustic
chlorine including its by-products and recovery plants like soap, glycerine and
technical hard oil, subject to the conditions set out in the Judgment. That
would have ordinarily put an end to the main controversy raised in the writ
petition which was filed in order to obtain a direction for closure of the
various units of Shriram on the ground that they were hazardous to the
community and the only point in dispute which would have survived would have
been whether the units of Shriram should be directed to be removed from the
place where they are presently situate and relocated in another place where
there would not be much human habitation so that there would not be any real
danger to the health and safety of the people.
But while the writ petition was pending there
was escape of oleum gas from one of the units of Shriram on 4th and 6th
December, 1985 and applications were filed by the Delhi Legal Aid & Advice
Board and the Delhi Bar Association for award of compensation to the persons
who had suffered harm on account of escape of oleum gas. These applications for
compensation raised a number of issues of great constitutional importance and
the Bench of three Judges therefore formulated the issues and asked the
petitioner and those supporting him as also Shriram to file their respective
written submissions so that the Court could take up the hearing of these
applications for compensation. When these applications for compensation came up
for hearing it was felt 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 of five Judges and
this is how the case has now come before us.
Mr. Diwan, learned counsel appearing on
behalf of Shriram raised a preliminary objection that the Court should not
proceed to decide these constitutional issues since there was no claim for
compensation originally made in the writ petition and these issues could not be
said to arise on the writ petition. Mr. Diwan conceded that the escape of oleum
gas took place subsequent to the filing of the writ petition but his argument
was that the petitioner could have applied for amendment of the writ petition
so as to include a claim for compensation for the victims of oleum gas but no
such application for amendment was made and hence on the writ petition as it
stood, these constitutional issues did not arise for consideration. We do not
think this preliminary objection raised by Mr. Diwan is sustainable. It is
undoubtedly true that the petitioner could have applied for amendment of the
writ petition so as to include a claim for compensation but merely because he
did 827 not do so, the applications for compensation made by the Delhi Legal
Aid & Advice Board and the Delhi Bar Association cannot be thrown out.
These applications for compensation are for enforcement of the fundamental
right to life enshrined in Article 21 of the Constitution and while dealing
with such applications, we cannot adopt a hypertechnical approach which would
defeat the ends of justice. This Court has on numerous occasions pointed out
that where there is a violation of a fundamental or other legal right of a
person or class of persons who by reason of poverty or disability or socially
or economically disadvantaged position cannot approach a Court of law for
justice, it would be open to any public spirited individual or social action
group to bring an action for vindication of the fundamental or other legal
right of such individual or class of individuals and this can be done not only
by filing a regular writ petition but also by addressing a letter to the Court.
If this Court is prepared to accept a letter complaining of violation of the fundamental
right of an individual or a class of individuals who cannot approach the Court
for justice, there is no reason why these applications for compensation which
have been made for enforcement of the fundamental right of the persons affected
by the oleum gas leak under Article 21 should not be entertained. The Court
while dealing with an application for enforcement of a fundamental right must
look at the substance and not the form. We cannot therefore sustain the
preliminary objection raised by Mr. Diwan.
The first question which requires to be
considered is as to what is the scope and ambit of the jurisdiction of this
Court under Article 32 since the applications for compensation made by the
Delhi Legal Aid and Advice Board and the Delhi Bar Association are applications
sought to be maintained under that Article. We have already had occasion to
consider the ambit and coverage of Article 32 in the Bandhua Mukti Morcha v.
Union of India & Ors., [1984] 2 SCR 67 and we wholly endorse what has been
stated by one of us namely, Bhagwati, J. as he then was in his judgment in that
case in regard to the true scope and ambit of that Article. It may now be taken
as well settled that Article 32 does not merely confer power on this Court to
issue a direction, order or writ for enforcement of the fundamental rights but
it also lays a constitutional obligation on this Court to protect the
fundamental rights of the people and for that purpose this Court has all
incidental and ancillary powers including the power to forge new remedies and
fashion new strategies designed to' enforce the fundamental rights. It is in
realisation of this constitutional obligation that this Court has in the past
innovated new methods and strategies for the purpose of securing enforcement of
the fundamental rights, 828 particularly in the case of the poor and the
disadvantaged who are denied their basic human rights and to whom freedom and
liberty have no meaning.
Thus it was in S,P. Gupta v. Union of India,
[1981] Supp. SCC 87 that this Court held that "where a legal wrong or a
legal injury is caused to a person or to a determinate class of persons by
reason of violation of any constitutional or legal right or any burden is
imposed in contravention of any constitutional or legal provision or without
authority of law or any such legal wrong or legal injury or illegal burden is
threatened, and any such person or determinate class of persons is by reason of
poverty or disability or socially or economically disadvantaged position unable
to approach the court for relief, any member of the public or social action
group can maintain an application for an appropriate direction, order or writ
in the High Court under Article 226 and in case of breach of any fundamental
right of such person or class of persons, in this Court under Article 32
seeking judicial redress for the legal wrong or injury caused to such person or
determinate class of persons." This Court also held in S.P. Gupta's case
(supra) as also in the People's Union for Democratic Rights and Ors. v.
Union of India, [1983] 1 SCR 456 and in
Babdhua Mukti Morcha's case (supra) that procedure being merely a hand-maden of
justice it should not stand in the way of access to justice to the weaker
sections of Indian humanity and therefore where the poor and the disadvantaged
are concerned who are barely eking out a miserable existence with their sweat
and toil and who are victims of an exploited society without any access to
justice, this Court will not insist on a regular writ petition and even a
letter addressed by a public spirited individual or a social action group
acting probono publico would suffice to ignite the jurisdiction of this Court.
We wholly endorse this statement of the law in regard to the broadening of
locus standi and what-has come to be known as epistolary jurisdiction.
We may point out at this stage that in
Bandhua Mukti Morcha's case (supra) some of us apprehending that letters
addressed to individual justices may involve the court in frivolous cases and
that possibly the view could be taken that such letters do not invoke the
jurisdiction of the court as a whole, observed that such letters should not be
addressed to individual justices of the court but to the Court or to the Chief
Justice and his companion judges. We do not think that it would be right to
reject a letter addressed to an individual justice of the court merely on the
ground that it is not addressed to the court or to the Chief Justice and his
companion Judges. We must not forget that 829 letters would ordinarily be
addressed by poor and disadvantaged persons or by social action groups who may
not know the proper form of address. They may know only a particular Judge who
comes from their State and they may therefore address the letters to him. If
the Court were to insist that the letters must be addressed to the court, or to
the Chief Justice and his companion Judges, it would exclude from the judicial
ken a large number of letters and in the result deny access to justice to the
deprived and vulnerable sections of the community. We are therefore of the view
that even if a letter is addressed to an individual Judge of the court, it
should be entertained, provided of course it is by or on behalf of a person in
custody or on behalf of a woman or a child or a class of deprived or
disadvantaged persons.
We may point out that now there is no
difficulty in entertaining letters addressed to individual justice of the
court, because this Court has a Public Interest Litigation Cell to which all
letters addressed to the Court or to the individual justices are forwarded and
the staff attached to this Cell examines the letters and it is only after
scrutiny by the staff members attached to this Cell that the letters are placed
before the Chief Justice and under his direction, they are listed before the
Court. We must therefore hold that letters addressed to individual justice of
the court should not be rejected merely because they fail to conform to the
preferred form of address. Nor should the court adopt a rigid stance that no
letters will be entertained unless they are supported by an affidavit. If the
court were to insist on an affidavit as a condition of entertaining the letters
the entire object and purpose of epistolary jurisdiction would be frustrated
because most of the poor and disadvantaged persons will then not be able to
have easy access to the Court and even the social action groups will find it
difficult to approach the Court. We may point out that the court has so far
been entertaining letters without an affidavit and it is only in a few rare
cases that it has been found that the allegations made in the letters were
false. But that might happen also in cases where the jurisdiction of the Court
is invoked in a regular way:
So far as the power of the court under
Article 32 to gather relevant material bearing on the issues arising in this
kind of litigation, which we may for the sake of convenience call.social action
litigation, and to appoint Commissions for this purpose is concerned, we
endorse. what one of us namely, Bhagwati, J., as he then was, has said in his
Judgment in Bandhua Mukti Morcha's case (supra). We need not repeat what has
been stated in that judgment.' It has our full approval.
We are also of the view that this Court under
Article 32(1) is free 830 to devise any procedure appropriate for the
particular purpose of the proceeding, namely, enforcement of a fundamental
right and under Article 32(2) the Court has the implicit power to issue
whatever direction, order or writ is necessary in a given case, including all
incidental or ancillary power necessary to secure enforcement of the
fundamental right. The power of the Court is not only injunctive in ambit, that
is, preventing the infringement of a fundamental right, but it is also remedial
in scope and provides relief against a breach of the fundamental right already
committed vide Bandhua Mukti Morcha's case (supra).
If the Court were powerless to issue any
direction, order or writ in cases where a fundamental right has already been violated,
Article 32 would be robbed of all its efficacy, because then the situation
would be that if a fundamental right is threatened to be violated, the Court
can injunct such violation but if the violator is quick enough to take action
infringing the fundamental right, he would escape from the net of Article 32.
That would, to a large extent, emasculate the fundamental right guaranteed
under Article 32 and render it impotent and futile. We must, therefore, hold
that Article 32 is not powerless to assist a person when he finds that his
fundamental right has been violated. He can in that event seek remedial
assistance under Article 32. The power of the Court to grant such remedial
relief may include the power to award compensation in appropriate cases. We are
deliberately using the words "in appropriate cases" because we must
make it clear that it is not in every case where there is a breach of a
fundamental right committed by the violator that compensation would be awarded
by the Court in a petition under Article 32. The infringement of the fundamental
right must be gross and patent, that is, incontrovertible and ex facie glaring
and either such infringement should be on a large scale affecting the
fundamental rights of a large number of persons, or it should appear unjust or
unduly harsh or oppressive on account of theft poverty or disability or
socially or economically, disadvantaged position to require the person or
persons affected by such infringement to initiate and pursue action in the
civil courts. Ordinarily, of course, 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 of the nature indicated by us above,
that compensation may be awarded in a petition under Article 32. This is the
principle on which this Court awarded compensation in Rudul Shah v. State of
Bihar, (AIR 1983 SC 1086). So also, this Court awarded compensation to Bhim
Singh, whose fundamental right to personal liberty was grossly violated by the
State of Jammu and Kashmir. If we make a fact analysis of the cases where
compensation has been 831 awarded by this Court, we will find that in all the
cases, the fact of infringement was patent and incontrovertible, the violation
was gross and its magnitude was such as to shock the conscience of the court
and it would have been gravely unjust to the person whose fundamental right was
violated, to require him to go to the civil court for claiming compensation.
The next question which arises for
consideration on these applications for compensation is 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 public
interest and with potential to affect the life and health of the people. The
issue of availability of Article 21 against a private corporation engaged in an
activity which has potential to affect the life and health of the people was
vehemently argued by counsel for the applicants and Shriram. It was
emphatically contended by counsel for the applicants, with the analogical aid
of the American doctrine of State Action and the functional and control test
enunciated by this Court in its earlier decisions, that Article 21 was
available, as Shriram was carrying on an industry which, according to the
Government's own declared industrial policies, was ultimately intended to be
carried out by itself, but instead of the Government immediately embarking on
that industry, Shriram was permitted to carry it on under the active control
and regulation of the Government. Since the Government intended to ultimately
carry on this industry and the mode of carrying on the industry could vitally
affect public interest, the control of the Government was linked to regulating
that aspect of the functioning of the industry which could vitally affect
public interest. Special emphasis was laid by counsel for the applicants on the
regulatory mechanism provided under the Industries Development and Regulation
Act, 1951 where industries are included in the schedule if they vitally affect
public interest. Regulatory measures are also to be found in the Bombay Municipal
Corporation Act, the Air and Water Pollution Control Acts and now the recent
Environment Act, 1986. Counsel for the applicants also pointed to us the
sizable aid in loans, land and other facilities granted by the Government to
Shriram in carrying on the industry. Taking aid of the American State Action
doctrine, it was also argued before us on behalf of the applicants that private
activity, if supported, controlled or regulated by the State may get so
entwined with governmental activity as to be termed State action and it would
then be subject to the same constitutional restraints on the exercise of power
as the State.
832 On the other hand, counsel for Shriram
cautioned against expanding Article 12 so as to bring within its ambit private
corporations. He contended that control or regulation of a private corporations
functions by the State under general statutory law such as the Industries
Development and Regulation Act, 1951 is only in exercise of police power of
regulation by the State. Such regulation does not convert the activity of the
private corporation into that of the State.
The activity remains that of the private
corporation, the State in its police power only regulates the manner in which
it is to be carried on. It was emphasised that control which deems a
corporation, an agency of the State, must be of the type where the State
controls the management policies of the Corporation, whether by sizable
representation on the board of management or by necessity of prior approval of
the Government before any new policy of management is adopted, or by any other
mechanism. Counsel for Shriram also pointed out the inappositeness of the State
action doctrine to the Indian situation. He said that in India the control and
function test have been evolved in order to determine whether a particular
authority is an instrumentality or agency of the State and hence 'other
authority' within the meaning of Article 12. Once an authority is deemed to he
'other authority' under Article 12, it is State for the purpose of all its
activities and functions and the American functional dichotomy by which some
functions of an authority can be termed State action and others private action,
cannot operate here. The learned counsel also pointed out that those rights which
are specifically intended by the Constitution makers to be available against
private parties are so provided in the Constitution specifically such as
Articles 17, 23 and 24. Therefore, to so expand Article 12 as to bring within
its ambit even private corporations would be against the scheme of the Chapter
on fundamental rights.
In order to deal with these rival contentions
we think it is necessary that we should trace that part of the development of
Article 12 where this Court embarked on the path of evolving criteria by which
a corporation could be termed 'other authority' under Article 12.
In Rajasthan Electricity Board v. Mohan Lal,
[1967] 3 SCR 377 this Court was called upon to consider whether the Rajasthan
Electricity Board was an 'authority' within the meaning of the expression
'other authorities' in Article 12.
Bhargava, J. who delivered the judgment of
the majority pointed out that the expression 'other authorities' in Article 12
would include all constitutional and statutory authorities on whom powers are
conferred by law. The learned Judge also said that if any body of persons has
authority to issue directions, the dis833 obedience of which would be
publishable as a criminal offence, that would be an indication that the
concerned authority is 'State'. Shah, J., who delivered a separate judgment
agreeing with the conclusion reached by the majority, preferred to give a
slightly different meaning to the expression 'other authorities'. He said that
authorities, constitutional or statutory, would fail within the expression
"other authorities" only if they are invested with the sovereign
power of the State, namely, the power to make rules and regulations which have
the force of law. The ratio of this decision may thus be stated to be that a
constitutional or statutory authority would be within the expression
"other authorities" if it has been invested with statutory power to
issue binding directions to third parties, the disobedience of which would
entail penal consequences or it has the sovereign power to make rules and
regulations having the force of law.
This test was followed by Ray, C J, in
Sukhdev v. Bhagat Ram, [1975] 1 SCC 421. Mathew, J. however, in the same case
propounded a broader test. The learned Judge emphasised that the concept of
'State' had undergone drastic changes in recent years and today 'State' could
not be conceived of simply as a coercive machinery wielding the thunderbolt of
authority; rather it has to be viewed mainly as a service corporation. He
expanded on this dictum by stating that the emerging principle appears to be
that a public corporation being an instrumentality or agency of the 'State' is
subject to the same constitutional limitations as the 'State' itself. The
preconditions of this are two, namely, that the corporation is the creation of
the 'State' and that there is existence of power in the corporation to invade
the constitutional rights of the individual. This Court in Ram anna Shetty v.
International Airport Authority, [1979] 3 SCR 1014 accepted and adopted the
rational of instrumentality or agency of State put forward by Mathew, J., and
spelt out certain criteria with whose aid such an inference could be made.
However, before we come to these criteria we think it necessary to refer to the
concern operating behind the exposition of the broader test by Justice Mathew
which is of equal relevance to us today, especially considering the fact that
the definition under Article 12 is. an inclusive and not an exhaustive
definition. That concern is the need to curb arbitrary and unregulated power
wherever and howsoever reposed.
In Ramanna D. Shetty v. International Airport
Authority (supra) this Court deliberating on the criteria on the basis of which
to determine whether a corporation is acting as instrumentality or agency of
Government said that it was not possible to formulate an all inclu834 sive or
exhaustive test which would adequately answer this question. There is no out
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 said whilst formulating the criteria that analogical aid can be
taken from the concept of State Action as developed in the United States
wherein the U.S. Courts have suggested that a private agency if supported by
extra-ordinary assistance given by the State may be subject to the same
constitutional limitations as the State. It was pointed out that the State's
general commonlaw and statutory structure under which its people carry on their
private affairs, own property and enter into contracts, each enjoying equality
in terms of legal capacity, is not such assistance as would transform private
conduct into State Action. "But 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 public character, it may be a relevant circumstance supporting an
inference that the corporation is an instrumentality or agency of the
Government".
On the question of State control, the Court
in R.D.
Shetty's case (supra) clarified that some
control by the State would not be determinative of the question, since the
State has considerable measure of control under its police power over all types
of business organisations. But a finding of State financial support plus an
unusual degree of control over the management and policies of the corporation
might lead to the characterisation of the operation as State Action.
Whilst deliberating on the functional
criteria namely, that the corporation is carrying out a governmental function.
the Court emphasised that classification of a function as governmental should
not be done on earlier day perceptions but on what the State today views as an
indispensable part of its activities, for the State may deem it as essential to
its economy that it owns and operate a railroad, a mill or an irrigation system
as it does to own and operate bridges street lights or a sewage disposal plant.
The Court also reiterated in R.D. Shetty's case (supra) what was pointed out by
Mathew, J. in Sukhdev v. Bhagatram that "Institutions engaged in matters
of high public interest or public functions are by virtue of the nature of the
functions performed government agencies. Activities which are too fundamental
to the society are by definition too important not to be considered government
functions." The above discussion was rounded off by the Court in R.D.
835 Shetty's case (supra) by enumerating the
following five factors namely, (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 governmental
functions, as relevant criteria for determining whether a corporation is an
instrumentality or agency of the State or not, though the Court took care to
point out that the enumeration was not exhaustive and that it was the aggregate
or cumulative effect of all the relevant factors that must be taken as
controlling.
The criteria evolved by this Court in Ramanna
Shetty's case (supra) were applied by this Court in Ajay Hasia v.
Khalid Mujib, [1981] 2 SCR 79 where it was
further emphasised that:
"Where constitutional fundamentals vital
to the maintenance of human rights are at stake, functional realism and not
facial cosmetics must be the diagnostic tool for constitutional law must seek
the substance and not the form. Now it is obvious that the Government may
through the instrumentality or agency of natural persons or it may employ the
instrumentality or agency of judicial persons to carry out its functions. It is
really the Government which acts through the instrumentality or agency of the
corporation and the juristic veil of corporate personality worn for the purpose
of convenience of management and administration cannot be allowed to obliterate
the true nature of the reality behind which is the Government ..... (for if the
Government acting through its officers is subject to certain constitutional
limitations it must follow a fortiorari that the Government acting through the
instrumentality or agency of a corporation should be equality subject to the
same limitations".
On the canon of construction to be adopted
for interpreting constitutional guarantees the Court pointed out:
".... constitutional guarantees ...
should not be allowed to be emasculated in their application by a narrow and
constructed judicial interpretation. The Courts should be anxious to enlarge
the scope and width of the fundamental 836 rights by bringing within their
sweep every authority which is an instrumentality or agency of the Government
or through the corporate personality of which the Government is acting, so as
to subject the Government in all its myriad activities, whether through natural
persons or through corporate entities to the basic obligation of the
fundamental rights." In this case the Court also set at rest the
controversy as to whether the manner in which a corporation is brought into existence
had any relevance to the question whether it is a State instrumentality or
agency. The Court said that it is immaterial for the purpose of determining
whether a corporation is an instrumentality or agency of the State or not
whether it is created by a Statute or under a statute: "the inquiry has to
be not as to how the juristic person is born but why it has been brought into
existence. The corporation may be a statutory corporation created by statute or
it may be a Government company or a company formed under the Companies Act,
1956 or it may be a society registered under the Societies
Registration Act, 1860 or any other similar statute". It would come
within the ambit of Article 12, if it is found to an instrumentality or agency
of the State on a proper assessment of the relevant factors.
It will thus be seen that this Court has not
permitted the corporate device to be utilised as a barrier ousting the
constitutional control of the fundamental rights. Rather the Court has held:
"It is dangerous to exonerate
corporations from the need to have constitutional conscience, and so that interpretation,
language permitting, which makes governmental agencies whatever their main amenable
to constitutional limitations must be adopted by the court as against the
alternative of permitting them to flourish as an imperium in imperio". Som
Prakash v. Union of India, [1981] 1 SCC 449.
Taking the above exposition as our guideline,
we must now proceed to examine whether a private corporation such as Shriram
comes within the ambit of Article 12 so as to be amenable to the discipline of
Article 21.
In order to assess the functional role
allocated to private corporation engaged in the manufacture of chemicals and
fertilisers we need 837 to examine the Industrial Policy of the Government and
see the public interest importance given by the State to the activity carried
on by such private corporation.
Under the Industrial Policy Resolution 1956
industries were classified into three categories having regard to the part
which the State would play in each of them. The first category was to be the
exclusive responsibility of the State. The second category comprised those
industries which would be progressively State owned and in which the State
would therefore generally take the initiative in establishing new undertakings
but in which private enterprise would also be expected to supplement the effort
of the State by promoting and development undertakings either on its own or
with State participation. The third category would include all the remaining
industries and their future development would generally be left to the
initiative and enterprise of the private sector. Schedule B to the Resolution
enumerated the industries.
Appendix I to the Industrial Policy
Resolution, 1948 dealing with the problem of State participation in industry
and the conditions in which private enterprise should be allowed to operate
stated that there can be no doubt that the State must play a progressively
active role in the development of industries. However under the present conditions,
the mechanism and resources of the State may not permit it to function
forthwith in Industry as widely as may be desirable. The Policy declared that
for some time to come, the State could contribute more quickly to the increase
of national wealth by expanding its present activities wherever it is already
operating and by concentrating on new units of production in other fields.
On these considerations the Government
decided that the manufacture of arms and ammunition, the production and control
of atomic energy and the ownership and management of railway transport would be
the exclusive monopoly of the Central Government. The establishment of new
undertakings in Coal, Iron and Steel, Aircraft manufacture, Ship building,
manufacture of telephone telegraph and wireless apparatus and mineral oil were
to be the exclusive responsibility of the State except where in national
interest the State itself finds it necessary to secure the co-operation of
private enterprise subject to control of the Central Government.
The policy resolution also made mention of
certain basic industries of importance the planning and regulation of which by
tile Cent838 ral Government was found necessary in national interest.
Among the eighteen industries so mentioned as
requiring such Central control. heavy chemicals and fertilisers stood included.
In order to carry out the objective of the
Policy Resolution the Industries (Development and Regulation) Act of 1951 was
enacted which, according to its objects and reasons, brought under central
control the development and regulation of a number of important industries the
activities of which affect the country as a whole and the development of which
must be governed by economic factors of all India import. Section 2 of the Act
declares that it is expedient in the public interest that the Union should take
under its control the industries specified in the First Schedule. Chemicals and
Fertilisers find a place in the First Schedule as Items 19 and 18 respectively.
If an analysis of the declarations in the
Policy Resolutions and the Act is undertaken, we find that the activity of
producing chemicals and fertilisers is deemed by the State to be an industry of
vital public interest, whose public import necessitates that the activity
should be ultimately carried out by the State itself, in the interim period
with State support and under State control, private corporations may also be
permitted to supplement the State effort. The argument of the applicants on the
basis of this premise was that in view of this declared industrial policy of
the State, even private corporations manufacturing chemicals and fertilisers
can be said to be engaged in activities which are so fundamental to the Society
as to be necessarily considered government functions. Sukhdev v. Bhagat Ram,
Ramanna Shetty and Ajay Hasia (supra).
It was pointed out on behalf of the
applicants that as Shriram is registered under the InduStries Development and
Regulation Act 1951, its activities are subject to extensive and detailed
control and supervision by the Government.
Under the Act a licence is necessary for the
establishment of a new industrial undertaking or expansion of capacity or
manufacture of a new article by an existing industrial undertaking carrying on
any of the Scheduled Industries included in the First Schedule of the Act. By
refusing licence for a particular unit, the Government can prevent over
concentration in a particular region or over-investment in a particular
industry. Moreover, by its power to specify the capacity in the licence it can
also prevent over-development of a particular industry if it has already
reached target capacity. Section 18 G of the Act empowers the Government to
control the supply, distribution, price etc. of the articles manufactured by a
scheduled 839 industry and under Section 18A Government can assume management
and control of an industrial undertaking engaged in a scheduled industry if
after investigation it is found that the affairs of the undertaking are being
managed in a manner detrimental to public interest and under Section 18AA in
certain emergent cases, take-over is allowed even without investigation. Since
Shriram is carrying on a scheduled industry, it is subject to this stringent
system of registration and licensing. It is also amenable. to various
directions that may be issued by the Government from time to time and it is
subject to the exercise of the powers of the Government under Sections 18A, and
18G.
Shriram is required to obtain a licence under
the Factories Act and is subject to the directions and orders of the
authorities under the Act. It is also required to obtain a licence for its manufacturing
activities from the Municipal authorities under the Delhi Municipal Act, 1957.
It is subject to extensive environment regulation under the Water (Prevention and
Control) of Pollution Act, 1974 and as the factory is situated in an air
pollution control area, it is also subject to the regulation of the Air
(Prevention and Control of Pollution) Act, 1981. It is true that control is not
exercised by the Government in relation to the internal management policies of
the Company. However, the control is exercised on all such activities of
Shriram which can jeopardize public interest. This functional control is of special
significance as it is the potentiality of the fertilizer industry to adversely
affect the health and safety of the community and its being impregnated with
public interest which perhaps dictated the policy decision of the Government to
ultimately operate this industry exclusively and invited functional control.
Along with this extensive functional control, we find that Shriram also
receives sizable assistance in the shape of loans and overdrafts running into
several crores of rupees from the Government through various agencies.
Moreover, Shriram is engaged in the manufacture of caustic soda, chlorine etc.
Its various units are set up in a single complex surrounded by thickly
populated colonies.
Chlorine gas is admittedly dangerous to life
and' health. If the gas escapes either from the storage tank or from the filled
cylinders or from any other point in the course of production, the health and
wellbeing of the people living in the vicinity can be seriously affected. Thus
Shriram is engaged in an activity which has the potential to invade the right
to life of large sections of people. The question is whether these factors are
cumulatively sufficient to bring Shriram within the ambit of Article 12. Prima
facie it is arguable that when the States' power as economic agent, economic
entrepreneur and allocator of economic benefits is subject to the limitations
of fundamental rights. (Vide 840 Eurasian Equipment and Chemicals Ltd. v. State
of West Bengal, (1975) 2 SCR 674, Rashbehari Panda v. State, [1983] 3 SCR 374,
Ramanna Shetty v. International Airport Authority, (supra) and Kasturilal Reddy
v. State of Jammu & Kashmir, [1980] 3 SCR 1338) why should a private
corporation under the functional control of the State engaged in an activity
which is hazardous to the health and safety of the community and is imbued with
public interest and which the State ultimately proposes to exclusively run
under its industrial policy, not be subject to the same limitations.
But we do not propose to decide this question
and make any definite pronouncement upon it for reasons which we shall point
out later in the course of this judgment.
We were during the course of arguments,
addressed at great length by counsel on both sides on the American doctrine of
State action. The learned counsel elaborately traced the evolution of this
doctrine in its parent country.
We are aware that in America since the
Fourteenth Amendment is available only against the State, the Courts, in order
to thwart racial discrimination by private parties, devised the theory of State
action under which it was held that wherever private activity was aided,
facilitated or supported by the Slate in a significant measure, such activity
took the colour of State action and was subject to the constitutional
limitations of the Fourteenth Amendment. This historical context in which the
doctrine of State action evolved in the United States is irrelevant for our
purpose especially since we have Article 15(2) in our Constitution. But it is
the principle behind the doctrine of State aid, control and regulation so
impregnating a private activity as to give it the colour of State action that
is of interest to us and that also to the limited extent to which it can be
Indianized and harmoniously blended with our constitutional jurisprudence. That
we in no way consider ourselves bound by American exposition of constitutional
law is well demostrated by the fact that in Ramanna Shetty, (supra) this Court
preferred the minority opinion of Douglas, J. in Jackson v. Metropolitan Edison
Company, 42 L.ed. (2d) 477 as against the majority opinion of Rehnquist, J. And
again in Air India v. Nargesh Mirza, [1982] 1 SCR 438 this Court whilst
preferring the minority view in General Electric Company Martha v. Gilbert, 50
L.ed. (2d) 343 said that the provisions of the American Constitution cannot
always be applied to Indian conditions or to the provisions of our Constitution
and whilst some of the principles adumbrated by the American decisions may
provide a useful guide, close adherence to those principles while applying them
to the provisions of our Constitution is not to be favoured, because the social
conditions in our country are different.
The learned counsel for Shriram stressed the
inapposite841 ness of the doctrine of State action in the Indian context
because, according to him, once an authority is brought within the purview of
Article 12, it is State for all intents and purposes and the functional
dichotomy in America where certain activities of the same authority may be charaterised
as State action and others as private action cannot be applied here in India.
But so far as this argument is concerned, we must demur to it and point out
that it is not correct to say that in India once a corporation is deemed to be
'authority', it would be subject to the constitutional limitation of
fundamental rights in the performance of all its functions and that the
appellation of 'authority' would stick to such corporation, irrespective of the
functional context.
Before we part with this topic, we may point
out that this Court has throughout the last few years expanded the horizon of
Article 12 primarily to inject respect for human-rights and social conscience
in our corporate structure. The purpose of expansion has not been to destroy
the raison d'eter of creating corporations but to advance the human rights
jurisprudence. Prima facie we are not inclined to accept the apprehensions of
learned counsel for Shriram as well-founded when he says that our including within
the ambit of Article 12 and thus subjecting to the discipline of Article 21,
those private corporations whose activities have the potential of affecting the
life and health of the people, would deal a death blow to the policy of
encouraging and permitting private entrepreneurial activity. Whenever a new
advance is made in the field of human rights, apprehension is always expressed
by the status quosits that it will create enormous difficulties in the way of
smooth functioning of the system and affect its stability. Similar apprehension
was voiced when this Court In Ramanna Shetty's case (supra) brought public
sector corporations within the scope and ambit of Article 12 and subjected them
to the discipline of fundamental rights. Such apprehension expressed by those
who may be affected by any new and innovative expansion of human rights need
not deter the Court from widening the scope of human rights and expanding their
reach ambit, if otherwise it is possible to do so without doing violence to the
language of the constitutional provision. It is through creative interpretation
and bold innovation that the human rights jurisprudence has been developed in
our country to a remarkable extent and this forward march of the human rights
movement cannot be allowed to be halted by unfounded apprehensions expressed by
status quoists. But we do not propose to decide finally at the present stage
whether a private corporation like Shriram would fall within the scope and
ambit of Article 12, because we have not had sufficient time to consider and
reflect on this question in depthThe hearing of this case before us 842
concluded only on 15th December 1986 and we are called upon to deliver our
judgment within a period of four days, on 19th December 1986. We are therefore
of the view that this is not a question on which we must make any definite pronouncement
at this stage. But we would leave it for a proper and detailed consideration at
a later stage if it becomes necessary to do so.
We must also deal with one other question
which was seriously debated before us and that question is as to what is the
measure of liability of an enterprise which is engaged in an 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?
The rule in Rylands v. Fletcher was evolved in the year 1866 and it provides
that a person who for his own purposes being on to his land and collects and
keeps there anything likely to do mischief if it escapes must keep it at his
peril and, if he falls to do so, is prima facie liable for the damage which is
the natural consequence of its escape. The liability under this rule is strict
and it is no defence that the thing escaped without that person's wilful act,
default or neglect or even that he had no knowledge of its existence. This rule
laid down a principle of liability 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. Of
course, this rule applies only to non-natural user of the land and it does not
apply to things naturally on the land or where the escape is due to an act of
God and an act of a stranger or the default of the person injured or where the
thing which escapes is present by the consent of the person injured or in
certain cases where there is statutory authority. Vide Halsbury Laws of
England, Vol. 45 para 1305. Considerable case law has developed in England as
to what is natural and what is non-natural use of land and what are precisely
the circumstances in which this rule may be displaced. But it is not necessary
for us to consider these decisions laying down the parameters of this rule
because in a modern industrial society with highly developed scientific
knowledge and technology where hazardous or inherently dangerous industries are
necessary to carry out part of the developmental programme. This rule evolved
in the 19th Century at a time when all these developments of science and
technology had not taken place cannot afford any guidance in evolving any
standard of liability consistent with the constitutional norms and the needs of
the present day economy and social structure. We need not feel inhibited by
this rule which was evolved in this context of a totally different kind of 843
economy. Law has to grow in order to satisfy the needs of the fast changing
society and keep abreast with the economic developments taking place in the
country. As new situations arise the law has to be evolved in order to meet the
challenge of such new situations. Law cannot afford to remain static. We have
to evolve new principles and lay down new norms Which would adequately deal
with the new problems which arise in a highly industrialised economy. We cannot
allow our judicial thinking to be constricted by reference to the law as it
prevails in England or for the matter of that in any other foreign country. We
no longer need the crutches of a foreign legal order. We are certainly prepared
to receive light from whatever source it comes but we have to build up our own
jurisprudence and we cannot countenance an argument that merely because the new
law does not recognise the rule of strict and absolute liability in cases of
hazardous or dangerous liability or the rule as laid down in Rylands v.
Fletcher as is developed in England recognises certain limitations and
responsibilities. We in India cannot hold our hands back and I venture to
evolve a new. principle of liability which English courts have not done. We
have to develop our own law and if we find that it is necessary to construct a
new principle of liability to deal with an unusual situation which has arisen
and which is likely to arise in future on account of hazardous or inherently
dangerous industries which are concommitant to an industrial economy, there is
no reason why we should hesitate to evolve such principle of liability merely
because it has not been so done in England. We are of the view that an
enterprise which is engaged in a hazardous or inherently dangerous industry
which poses a potential threat to the health and safety of the persons working
in the factory and residing in the surrounding areas owes an absolute and
nondelegable duty to the community to ensure that no harm results to anyone on
account of hazardous or inherently dangerous nature of the activity which it
has undertaken. The enterprise must be held to be under an obligation to
provide that the hazardous or inherently dangerous activity in which it is
engaged must be conducted with the highest standards of safety and if any harm
results on account of such activity, the enterprise must be absolutely liable
to compensate for such harm and it should be no answer to the enterprise to say
that it had taken all reasonable care and that the harm occurred without any
negligence on its part. Since the persons harmed on account of the hazardous or
inherently dangerous activity carried on by the enterprise would not be in a
position to isolate the process of operation from the hazardous preparation of
substance or any other related element that caused the harm must be held
strictly liable for causing such harm as a part of the social cost for carrying
on the hazardous or 844 inherently dangerous activity. 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
over-heads.
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.
This principle is also sustainable on the
ground that the enterprise alone has the resource to discover and guardagainst
hazards or dangers and to provide warning against potential hazards. We would
therefore hold that where an enterprise is engaged in a hazardous or inherently
dangerous activity and harm results to anyone on account of an accident in the
operation of such hazardous or inherently dangerous activity resulting, for
example, in escape of toxic gas the enterprise is strictly and absolutely
liable to compensate all those who are affected by the accident and such
liability is not subject to any of the exceptions which operate vis-a-vis the
tortious principle of strict liability under the rule in Rylands v. Fletcher (supra).
We would also like to point out that the
measure of compensation in the kind of cases referred to in the preceding
paragraph must be co-related to the magnitude and capacity of the enterprise
because such compensation must have a deferent effect. The larger and more
prosperous the enterprise, the 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.
Since we are not deciding the question as to
whether Shriram is an authority within the meaning of Article 12 so as to be
subjected to the discipline of the fundamental right under Article 21, we do
not think it would be justified in setting up a special machinery for
investigation of the claims for compensation made by those who allege that they
have been the victims of oleum gas escape. But we would direct that Delhi Legal
Aid and Advice Board to take up the cases of all those who claim to have
suffered on account of oleum gas and to file actions on their behalf in the
appropriate court for claiming compensation against Shriram. Such actions
claiming compensation may be filed by the Delhi Legal Aid and Advice
Board.within two months from 845 today and the Delhi Administration is directed
to provide the necessary funds to the Delhi Legal Aid and Advice Board for the
purpose of filing and prosecuting such actions. The High Court will nominate
one or more Judges as may be necessary for the purpose of trying such actions
so that they may be expeditiously disposed of. So far as the issue of relocation
and other issues are concerned the writ petition will come up for hearing on
3rd February, 1987.
A.P.J. Petition disposed of.
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