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

Days after a leak of oleum gas from a Shriram Foods and Fertilizers unit in Delhi caused widespread harm, including one death, the Supreme Court had to decide what standard of liability applied to a hazardous industry operating in a densely populated area. The obvious starting point was Rylands v. Fletcher, the 19th-century English rule of strict liability for escapes of dangerous substances — a rule riddled with exceptions for acts of God, third-party sabotage and statutory authority.

Facts

The petition had originally been filed by environmental lawyer M.C. Mehta regarding pollution from tanneries near the Ganga, but the oleum leak occurred while the matter was pending before the Court, prompting the bench to address the more urgent question of an enterprise engaged in a hazardous activity that had already caused injury to people living nearby.

Legal issues

• What standard of liability should apply to an enterprise engaged in an inherently hazardous or dangerous activity that causes harm to persons or property.
• Whether the English rule of strict liability, with its established exceptions, was suited to conditions in a developing economy with hazardous industries operating close to residential areas.
• Whether the Court had the constitutional authority to fashion a new common law liability standard rather than apply the existing one.

Decision

The Court declined to apply the Rylands v. Fletcher rule and instead laid down a new, stricter standard for Indian law: absolute liability. An enterprise engaged in a hazardous or inherently dangerous activity owes an absolute and non-delegable duty to the community, and is liable for any harm caused, without any of the exceptions available under the older strict liability rule.

We are of the view that an enterprise which is engaged in a hazardous or inherently dangerous industry... owes an absolute and non-delegable duty to the community... and if any harm results, the enterprise must be absolutely liable to compensate for such harm.M.C. Mehta v. Union of India, (1987) 1 SCC 395

Reasoning

The Court reasoned that a legal system built around 19th-century English industrial conditions was not automatically suited to a country where hazardous industries frequently operated in close proximity to dense residential populations. It held that Indian courts were not bound to import English common law unchanged where local conditions demanded a different rule, and that an enterprise profiting from a hazardous activity should bear the full cost of the risk it created, as a cost of doing that business at all — with no room for it to escape liability by pointing to an act of a third party or an unforeseen event.

Significance

The absolute liability standard set here has since governed Indian industrial disaster litigation and strongly influenced the later Bhopal gas tragedy litigation and the drafting of the Public Liability Insurance Act, 1991. It is frequently cited as one of the clearest examples of the Indian Supreme Court departing from inherited English common law to build a doctrine specific to Indian conditions, rather than treating imported precedent as fixed.