SC dismisses plea for more compensation from Union Carbide

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The court noted previous proceedings related to the incident before it unequivocally recorded the settlement amount of $470 million was sufficient to meet the present and future claims of the victims

A Supreme Court constitution bench on Tuesday dismissed the Union government’s curative petition demanding an additional compensation of over ₹7,400 crore from American company Union Carbide for the victims of the 1984 Bhopal gas tragedy.

The bench, headed by justice Sanjay Kishan Kaul, noted all previous proceedings related to the incident before the top court unequivocally recorded that the settlement amount of $470 million was sufficient to meet the present and future claims of the victims. It added therefore the matter cannot be reopened after two decades.

The five-judge bench, which also included justices Sanjiv Khanna, AS Oka, Vikram Nath and JK Maheshwari, pulled up the government for not framing an insurance policy for the victims as per an undertaking given to the court in 1991.

The bench called it “gross negligence”. It added it is for the government to address all financial deficiencies if any.

Through the curative plea moved in 2010, the government sought reconsideration of the court’s 1989 and 1991 orders. The government argued the 1989 settlement of $470 million was grossly inadequate. It added the Union Carbide, which is now a wholly-owned subsidiary of The Dow Chemical Company, must be asked to pay more.

The government sought additional funds of over ₹7,400 crore from the company, which was held accountable for the loss of over 5,000 lives in December 1984 when the toxic Methyl Isocynate gas leaked from its plant in Bhopal. The leak led to one of the worst disasters in the world.

The toll was pegged at 5,295 and the number of people suffering serious ill effects was put at 40,399, according to the latest official estimate submitted in the court.

The bench on January 12 reserved its verdict in the matter while stressing the Union government and the company mutually agreed to the $470 million settlement in 1989 towards “all past, present and future claims”. It added the court did not thrust the settlement upon the parties.

Attorney general R Venkataramani, who led the arguments on behalf of the government before the bench, argued in January that the curative petition was being pursued since it was an “extraordinary case”.

He said the 1989 settlement relied on “incorrect and wrong assumption of facts and data” regarding deaths and other cases of injuries. Venkataramani said therefore the government was pressing for additional compensation. His submissions were supported by a group of victims and NGOs.

The bench during the final hearings in January expressed doubts over the legality of the government’s demand. It observed populism cannot form the basis of judicial intervention and that the government’s move may send a wrong signal globally.

“If we allow the government to reopen a settlement 25 years after, the sanctity of a settlement goes away. What signal does it send that the Union government can reopen anything even if it settles something today? In this [connected] world of trade and commerce, the message may go that the Indian government may not agree to a settlement even if it enters into one today,” the bench observed on January 10.

It remarked the court has full sympathy with the victims but it cannot shut its eyes to the fact that the government was present in the proceedings when the settlement took place in 1989. The bench added then the government chose not to even seek a review of the order on compensation.

“Did it take 25 years for the government to realise that the compensation was very less? Can you say reopen the whole thing after 100 years? You walked away after a settlement in the court and on terms that you are trying to reopen now,” said the bench on January 10.

Senior counsel Harish Salve and Sidharth Luthra, appearing for the company, implored the court to examine at the threshold the legal question of whether the government can maintain the curative petition in law when it did not even file a review petition.

The lawyers read out from the previous orders of the court to argue that not only did the Union government record its statement that it would not press for any additional claim in this case, but the victims were paid twice because the company was asked to pay $470 million and there was appreciation in the value of the dollar. The company contended that it cannot be asked to pay anything more beyond the settlement amount.

On January 11, the bench said every tragedy has to have a closure at some point. “At that time [when the settlement was agreed upon by the government in 1989], a closure was contemplated. A review petition was also brought which ended in 1991. Now, can we keep opening the same wounds time and again?” it asked Venkataramani.

The government enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, to assume the exclusive right to fight for compensation for the victims. In April 1985, immediately after the law was passed, the government sued Union Carbide in the US.

In 1986, a US district court declined to entertain the claims on the grounds that Union Carbide consented to submit to the jurisdiction of the courts of India.

Subsequently, the Union government filed a suit before a civil court in Bhopal, which awarded an interim payment of ₹350 crore.

After the company challenged this interim order, the Madhya Pradesh high court reduced the interim award by 30%. The Union government challenged the high court order in the Supreme Court where a five-judge bench heard the case and the settlement amount of $470 million was arrived at.