# UNION CARBIDE CORPORATION ETC. ETC v. UNION OF INDIA ETC. ETC

- **Citation:** [1991] Supp. 1 S.C.R. 251
- **Court:** Supreme Court of India
- **Decided:** 1991-10-03
- **Case number:** Civil Appeal Nos. 3187-88 of 1988
- **Bench:** Ranganath Misra, K.N. Singh, M.N. 'B Venkatachaliah, A.M. Ahmadi, N.D. Ojha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/union-carbide-corporation-etc-etc-v-union-of-india-etc-etc-11248
- **Pages:** 130

## Headnote

Bhopal Gas Disaster (Processing of Claims) Act, 1985:
'
~
Sections 3, 4, 9: Settlement of claims before lite Apex Cou11-Not affording 'Faimess Heari11g'-Non-incorporation of re-opener clause-Whether C
vitiates the settlement- Review of settlement-If set aside by Court~1ether
Court has inhere11t jurisdiction to order restitutio11 of the fend to tlte companJ-:;-Review proceedings - Court would not refuse to afford opportunity to
parties on rigid technical grounds-In case funds found inadequate in future-Wlzether Union of India as ·Welfare State to make good the deficiency--Whether settlement could be set aside on mere possibility that medical D
documentation and categorisation were faulty and figures of various ki11ds
of injuries and disableinent were undependable-Liability of tortfeasor--Award of compensation--To be proportionate to economic superiority of the off ender.
Constitution of India, 1950:
Article 136, 137, 139-A, 142, 145: Inherent jurisdiction under Articles
136 and 142 to withdraw or transfer and finally dispose of the main suits
and pending Criminal proceedings in the course of hearing of appeals arising
out of interlocutory orders in suits-Whether taken away by Article 139A--Words 'Cause"Or matter' appearing in Article 142---Meaning and scope
of--Apex Court's power to quash criminal proceedings--Court's order
recording settlement between parties-:-Such agreement if opposed to public
polic_y- Whether void and order of settlement liagle to be set aside--Special
Nave jurisdiction-Nature and scope of-Main object-To meet ends of justic~ven specific provision for appeal under the Constitlllion of other laws
not to limit the j11risdictio11-'Stifli11g of prosecution d9.ctrine' -Whether attracted where the motive is to drop Criminai ai also Civil proceed:
ings-Doctrine of resti1111ion~1ether applicable to appeals under Article
136-Confennent of immunity from crimihal proceedings~1etlzer legislative ft111ctio11~1ether amounts to preferential treatment-Settlement of
claims recorded-Review. of~iether settlement could be set aside on
251
E
F
G
H
252
SUPREME COURT REPORTS
(1991} SUPP. 1 ·s. C.R.
A ground of insufficiency of settlement fund-In the event of funds being found
¥.
insufficient to meet the compensation detennined-Wlzether Union of India
as Welfare State to make good the deficiency.
Civil Procedure Code, 1908:
Order XX/II, Rule 3B; Sections 112 and 114: Settlement recorded by
B Court-Principles of natural justice-Persons whose interests affected not
made co-nomine parties--Order recording settlement not preceded by notice
to such persons-Whether renders the proceedings void-Doctrine of restitu-
'
tion---Applicability of.
,.Ar-_
Law of Torts:
C
Mass tort actio~ourt assisted settlement-Non-affording of presettlement 'Fairness Hearing' and non-incorporation of 'reopener' clause in
tlze settlement-Whether vitiate the settlement-Assessment of once and for
· all damages in personal injury actions--Unf oreseen but likely future manif estation of the injmy--.4.11 important factor to be kept in mind.
D
Administrative Law:
E
. Principles of Natural Justice~Audi alteram partem rule-Non-compliance with the rule--:-Effect of-To be viewed in circumstamial flexibility.
Practice & Procedure:
Plea of invaliditj based on public policy-Not ban'ed by rule of estoppel.
Procedural teclm~calities-· -To yield to paramount considerations of
justice and fairness where matter involves moral and humanitorian considerations.
The ~nion Carbide (India) Ltd •. (UCIL), a sister concern of Union
F Carbide Corporation (UCC) owned and operated in Bhopal, a chemical
plant manufacturing pesticides, one ·of the ingredients in the composition
being Methyl Isocyanat~ (MIC), considered to be the most toxie chemical
in industrial use.
G
On the 2nd December, 1984 night there was escape of MIC from the
tanks in which it was stored. And the fumes blew into the hutments
abutting the plant premises affecting the residents as also the flora and
fauna. About 4000 p

## Text

_Characters 0–39,957 of 324,584. This is a partial read: ask again with offset=39957 for what follows._

UNION CARBIDE CORPORATION ETC. ETC.
A
v.
UNION OF INDIA ETC. ETC.
OCTOBER 3, 1991
[RANGANATH MISRA, CJ, K.N. SINGH, M.N.
'B
VENKATACHALIAH, A.M. AHMADI AND N.D. OJHA, JJ.}
Bhopal Gas Disaster (Processing of Claims) Act, 1985:
'
~
Sections 3, 4, 9: Settlement of claims before lite Apex Cou11-Not affording 'Faimess Heari11g'-Non-incorporation of re-opener clause-Whether C
vitiates the settlement- Review of settlement-If set aside by Court~1ether
Court has inhere11t jurisdiction to order restitutio11 of the fend to tlte companJ-:;-Review proceedings - Court would not refuse to afford opportunity to
parties on rigid technical grounds-In case funds found inadequate in future-Wlzether Union of India as ·Welfare State to make good the deficiency--Whether settlement could be set aside on mere possibility that medical D
documentation and categorisation were faulty and figures of various ki11ds
of injuries and disableinent were undependable-Liability of tortfeasor--Award of compensation--To be proportionate to economic superiority of the off ender.
Constitution of India, 1950:
Article 136, 137, 139-A, 142, 145: Inherent jurisdiction under Articles
136 and 142 to withdraw or transfer and finally dispose of the main suits
and pending Criminal proceedings in the course of hearing of appeals arising
out of interlocutory orders in suits-Whether taken away by Article 139A--Words 'Cause"Or matter' appearing in Article 142---Meaning and scope
of--Apex Court's power to quash criminal proceedings--Court's order
recording settlement between parties-:-Such agreement if opposed to public
polic_y- Whether void and order of settlement liagle to be set aside--Special
Nave jurisdiction-Nature and scope of-Main object-To meet ends of justic~ven specific provision for appeal under the Constitlllion of other laws
not to limit the j11risdictio11-'Stifli11g of prosecution d9.ctrine' -Whether attracted where the motive is to drop Criminai ai also Civil proceed:
ings-Doctrine of resti1111ion~1ether applicable to appeals under Article
136-Confennent of immunity from crimihal proceedings~1etlzer legislative ft111ctio11~1ether amounts to preferential treatment-Settlement of
claims recorded-Review. of~iether settlement could be set aside on
251
E
F
G
H
252
SUPREME COURT REPORTS
(1991} SUPP. 1 ·s. C.R.
A ground of insufficiency of settlement fund-In the event of funds being found
¥.
insufficient to meet the compensation detennined-Wlzether Union of India
as Welfare State to make good the deficiency.
Civil Procedure Code, 1908:
Order XX/II, Rule 3B; Sections 112 and 114: Settlement recorded by
B Court-Principles of natural justice-Persons whose interests affected not
made co-nomine parties--Order recording settlement not preceded by notice
to such persons-Whether renders the proceedings void-Doctrine of restitu-
'
tion---Applicability of.
,.Ar-_
Law of Torts:
C
Mass tort actio~ourt assisted settlement-Non-affording of presettlement 'Fairness Hearing' and non-incorporation of 'reopener' clause in
tlze settlement-Whether vitiate the settlement-Assessment of once and for
· all damages in personal injury actions--Unf oreseen but likely future manif estation of the injmy--.4.11 important factor to be kept in mind.
D
Administrative Law:
E
. Principles of Natural Justice~Audi alteram partem rule-Non-compliance with the rule--:-Effect of-To be viewed in circumstamial flexibility.
Practice & Procedure:
Plea of invaliditj based on public policy-Not ban'ed by rule of estoppel.
Procedural teclm~calities-· -To yield to paramount considerations of
justice and fairness where matter involves moral and humanitorian considerations.
The ~nion Carbide (India) Ltd •. (UCIL), a sister concern of Union
F Carbide Corporation (UCC) owned and operated in Bhopal, a chemical
plant manufacturing pesticides, one ·of the ingredients in the composition
being Methyl Isocyanat~ (MIC), considered to be the most toxie chemical
in industrial use.
G
On the 2nd December, 1984 night there was escape of MIC from the
tanks in which it was stored. And the fumes blew into the hutments
abutting the plant premises affecting the residents as also the flora and
fauna. About 4000 people lost their lives and the health of tens of
thousands of people was affected in various degrees of seriousness.
H
The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 was
,.
UNION CARBIDE v. U.O.I.
253
passed on 29.3.1985 authorising the Government of India, as parent patriae
A
exclusively to represent the victims so that the interests of victims of the
disaster could be fully protected and that the claims for compensation
were pursued speedily, effectively and to the best advantage of the
claimants. In exercise of the power conferred under the Act, the Union of
India instituted an action on behalf of the victims against Union Carbide B
Corporation before the U.S. District Court, Southern District of New York
for award of compensation for the damage caused by the disaster. A large
number of fatal accidents and personal injury actions filed by and on
behalf·of about 1,86,000 victims were already pending in courts in U.S.A.
All these claims came to be consolidated by the Judicial Panel on Multi
District Litigation and assigned to U.S. District Court, Southern District C
of New York, presided over by Judge Keenan. The claim brought by the.
Union of India was also consolidated with them.
However, the UCC resisted the choice of the American Forum on the
plea of/otum-non-conveniens. Judge Keenan allowed the plea of UCC and D
the Union of India was constrained to ~lter its choice of forum and to
pursue the remedy in the District Court at Bhopal by ,filing a suit seeking a
compensation of 3.3 Billion Dollars against the UCC and UCIL. Efforts
for a settlement were not fruitful. The District Court made an order
directing payment of Rs. 350 cores as interim compensation. UCC
challenged this award before the High Court and the quantum of interim E
compensation came to be reduced to Rs. 250 cores. Both Union of India
and UCC preferred appeals by special leave against the High Court's
order.
On 14th February, 1989 this Court recorded an overall settlement of
the claims in the suit for 470 million U.S. Dollars and the consequential F
·termination of Civil and Criminal proceedings. On 15th February, 1989
the terms of the settlement signed by the Attorney General for the Union of
India and the Counsel for. UCC was filed and on the basis of the
settlement, this Court passed an order recording the terms of settlement
and issuing directions as to the mode of payment of the sum of 470 million G
U.S. Dollars pursuant to and in terms of the settlemenL
The said settlement was assailed in the present Petitions on various
grounds.
H
254
SUPREME COURT REPORTS
(1991) SUPP. 1 S. C.R.
A
The petitioners contended that this Court had no jurisdiction to
wit~draw and dispose of the main suits and the Criminal proceedings in
~
...
the course of hearing of appeals arising out of an interlocutory order in
the suits. It was further contended that the settlement recorded by this
Court was void under Order XXIll Rule 38 of the Code of Civil Procedure
as the order was not preceded by notice to the persons whose interests
B would be affected and who were not Co·nomine parties to the proceedings.
It was also contended that the orders quashing the criminal proceedings
which were serious non-compoundable offences would not amount to
withdrawal of the prosecution even under the inherent powers of this
Court either under Section 482 Cr. P.C. or under Article 142 of the
C Constitution of India.
Conferment of criminal immunity, by this Court, it was contended,
was without jurisdiction, since it was essentially a legislative function and
grant of immunity to a particular person or persons may amount to a
D preferential treatment violative of the equality clause. The settlement was
also assailed on the ground that the stipulation for abstention from future
· criminal proceedings amounted to stifling of the prosecution and,
therefore, it was unlawful and opposed to public policy. The settlement was
also assailed on the ground that 'Fairness Hearing' procedure was not·
followed that the quantum was inadequate and that there was no
E 're-opener' clause which was very essential in view of the fact that the
latency period for the manifestation of the effects of the toxic injuries was
unpredictable.·
It was contended that even if the settlement was to be set aside, the
funds should not be allowed to be repatriated as that would embroil the
F victims in endless litigations to realise the fruits of the decree that might
be made in the suit and to realise the order for interim payment. It was
also contended that since notices to and opportunities for hearing of the
victims represented by the Union of India, were imperative before the
settlement was recorded and the denial of the same amounted to violation
G of the rules of natural justice.
It was further contended that a large number of genuine claims
stood excluded on the ground that despite notices the claimants did not
appear for· medical documentation and so the medical documentation
H done was not reliable.
,
UNION CARBIDE v. U.0.1.
255
'i'bough the Union of India did not assail the settlement, it sought to A
support the petitioners' challenge to the validity of the settlement. It was
contended on behalf of the Union of India that though it did not dispute
the settlement, it was not precluded from pointing out the circumstances
ln the case which, if accepted, would detract from the legal validity of the
settlement.
·
Disposing of the petitions, this Court,
B
HELD: (By The Court) •
-----
1. Under Article 142(1) of the Constitution, this Court, did have the
jurisdiction to withdraw to itself the original suits pending in the District
Court at Bhopal and dispose of the same in terms of the settlement. So C
also this Court has the jurisdiction to withdraw the criminal proceed~ngs.
However, in the particular facts and ·circumstances, the quashing of the
criminal proceedings was not justified. (372 B-C & FJ
2. The settlement ordered by this Court is not void for nonD
compliance with the requirements of Order XXIll Rule 3B of the Code of
Civil Procedure. (372-E]
3. The orders recording the settlement in so far as they seek to
prohibit future criminal proceedings do not amount to conferment of
criminal immunity; but merely consequential to the qt1ashing of the E
criminal proceedings. (372-G]
4. The orders recording the settlement are not void, as they are not
opposed to public policy and do not amount to stifling of criminal
proceedings. [373-A]
5. Having regard to the scheme of the Bhopal Gas Leak Disaster
(Processing of Claims) Act, 1985, 'Fairness Hearing' procedure is not
strictly attracted to the Court's sanctioning of a settlement. Likewise, the
absence of a 'Re-opener' clause does aot, ipso- facto, vitiate the settlement.
[373-B-C]
.
6. If the settlement is set aside, UCC shall be entitled to the
restitution of the amount brought in by it pursuant to the orders of this
Court, subject to its complying with the terms of the order dated 30th Nov.,
1986 made by the Bhopal District Court. [373 C-D]
F
G
H
256
SUPREME COURT REPORTS
(1991} SUPP. 1 S. C.R.
A
7. The settlement is not vitiated for not affording the victims and
victim-groups an opportunity oftJeing heard. [373-E]
8. If the settlement fund is found to be insumcient, the deficiency is
to be made good by the Union of India. (373 E]
B
9. For expeditious dispos.al or the claims, a time-bound
consideration and determination of the claims are necessary. [373-F]
. Per Majority: (Venkatachaliah, J. for himself, K.N. Singh and N.D.
Ojha, JJ. ):
I
C
1. Article 139-A of the Constitution in terms does not apply to the
facts of the case. The appeals were by special leave under Article 136 of the
Constitution against an lnterlCM:utory order. Article 136 vests In the
Supreme Court a plenary juriscJictio~ in the matter of entertaining and
hearing of appeals by granting special leave against any kind of judgment
D or order made by a Court or Tribunal in any cause or matter and the
'powers can be exercised inspite of the limitations under the specific
provisfons for appeal contained in the Constitution or other laws. The
powers given by ~ticle 136 are, however, in the nature of special or
residuary powers which are exertisable outside the purview of the ordinary
laws in cases where the needs of justice demand interference by the
E Supreme Court. (303-A-C]
Durga Sliankar Melita v • . Thakur Raghuraj Singh & Others, (1955)
SCR267, relied on.
2. Any limited interpretation of the expression 'cause or matter'
F having regard to the wide and sweeping powers under Article 136 which
Article 142(2) seeks to effectuate, limiting it only to the short compass of
the actual dispute before the Court and not to what might necessarily and
I
reasonably be connected with Of related to such matter in such a way that
their withdrawal to the Apex Court :would enable the court to do 'complete
°' justice', would stultify tht very Wide constitutional powers. Situations may
present themselves before the court where the court with the aid of the .
powers under Article 142(1) c~uld bring about a finality to the matters,
and it is common experience that day-in-and-day-out such matters are
taken up and decided in this Court. It is true that mere practice, however
long, will not legitimise issues of jurisdiction. But the argument, pushed
H
y'
UNION CARBIDE v. U.0.1.
257
to its logical conclusions, would mean that when an interlocutory appeal A
comes up before this Court by special leave, even with the consent of the
parties, the main matter cannot be finally disposed of by this Court as
such a step would imply an impermissible transfer of the main matter.
Such technicalities do not belong to the content and interpretation of
constitutional powers. (304 B·G]
B
Halsbury's Laws of England, Fourth Edition, Vol. 37, para 22,
•-..... referred to.
_,
3. To the extent power of withdrawal and transfer of cases to the
Apex Court is, in the opinion of the Court, necessary for the purpose of
effectuating the high purpose of Articles 136 and 142(1), the power under C
Article 139A does not to exhaust the power of withdrawal and transfer.
Article 139A, was Introduced as part of the scheme of the· 42nd
Constitutional Amendment. That amendment proposed to invest the
Supreme Court exclusive juris~iction to determine the constitutional
validity of central laws by Inserting Articles 131A, 139A and 144A. But D
Articles 131A and 144A were omitted by the 43rd Amendment Ac:t 1977,
leaving Article 139A in tact. That Article enables the litigants to approach
the Apex Court for transfer of proceedings if the con~itlons envisaged In
that Article are satisfied. Article 139A was not intended, nor does it
operate, to whittle down the existing wide powers under Articles 136 and E
142 of the Constitution. The purposed constitutional plenitude of the
powers of the Apex Court to ensure due and proper administration of
justice is Intended to be co-extensive in each case with the needs of justice
of a given case and to meeting any exigency. (304-H; 305 A-CJ
Harbatls Singh v. U.P. State, (1982] 3 SCR 235, relied on.
4. In relation to the proceedings and decisions of superior Courts of
unlimited jurisdiction, imputation of nullity is not quite appropriate. They
decide all questions of their own jurisdiction. [309-F)
Isaacs v. Robertson, 1984(3) AER 140, relied on.
5. Under Order 32 of Supreme Court Rules, Order XXIII Rule 3B
CPC is not one of the rules expressly invoked and made applicatile. Even
if the principle of natural justice underlying Order XXIll Rule 3B
CPC is made to apply, the consequences of non-compliance should not be
F
G
H
258
SUPREME COURT REPORTS
(1991] SUPP. 1 S. C.R.
A different from the consequent\es of the breach of rules of natural justice
·~
implicit in Section 4 of the Bhopal Gas Leak Disaster (Processing of
Claims) Act, 1985. Having regard to the circumstances of the case, this
•
Court, in Saliu's case declined to push the effect of non-compliance to its
logical conclusion and declare the settlement void. In that case, this Court
I
B considered it appropriate to suggest the remedy and curative of an
opportunity of being heard in
1 the proceedings for review. Even assuming
that the right of the affected Rt!rsons of being heard is also available at a
~
stage where a settlement.is plated before the Court for its acceptance, such
a right is not referable to, and ~loes not stem from, Rule 38 of Order XXIII
CPC. The pronouncement in Saliu's case as to what the consequences of
C non-compliance are conclusive. [309 A-DJ
i
Charan Lal Sahu v. Union of India, [1990) 1 SCC 613, relied on.
6. The proposition that ~ provision in any ordinary law irrespective
of the importance of the public policy on which it is founded, operates to
D limit the powers oi' the Apex Court under Article' 142(1) Is unsound and
,...-
erroneous. The power of the court under Article 142 in so far as quashing
.......-
of criminal proceedings are coricerned is not exhausted by Sections 320 or
321 or 482 Cr.P.C. or all of them put together. The power under Article 142
is at an entirely different level and of a different quality. Prohibitions or
E limitations on provisions con~ined in ordinary laws cannot, ipso-/ acto, act
as prohibitions or limitations. on the constitutional powers under Article
142. Such prohibitions or limitations in the statutes might embody and
·~
,_
reflect the scheme of a particular law, taking Into account the nature and
'
status of the authority or the court on which conferment of powers--
limited in some appropriate way-is contemplated. The limitations may
F not necessarily reflect or be based on any fundamental considerations of
public policy. It wiil be wholly, incorrect to say that powers under Article
142 are subject to express statutory prohibitions. That would convey the
idea that statutory provisions override a constitutional. In exercising
powers under Article 142 and ~n assessing the needs of 'complete justice'
G of a cause or matter, the Apex Court will take note of the express
y
prohibitions in any substantive statutory provisions based on some
fundamental principles of public policy and regulate the exercise of its
I
•
power and discretion accordingly. The proposition does not relate to the
powers of the Court under Article 142, but only to what is or is not
H 'complete justice' of a cause or matter and in the ultimate analysis of the
UNION CARBIDE v. U.0.1.
259
propriety of lb~ exercise of the power. No question of lack of jurisdiction or A
of nullity can arise. (313 H, 314 B·C, E·GJ
Prem Chand Garg v. Excise Commissioner, U.P., Allahabad, [1963)
Suppl. 1 SCR 885; A.R. Antulay v. R.S. Nayak and Anr., [1988) 2 SCC 602,
referred to.
7.1 The proposition that State is the Dominus Litis in criminal cases,
is· not an absolute one. The Society for its orderly and peaceful
development is interested in the punishment of the offender. The power
under Article 142 is exercised with the aid of the principles or Section 321
CPC which enables withdrawal of prosecutions. But whether on the merits
there were justifiable grounds to quash the criminal proceedings is a
different matter. There must be grounds to permit withdrawal of the
prosecution. It is really not so much a question of the existence of the
power as one of justification for its exercise. A prosecution .is not quashed
for no other reason than that the Court has the power to do so~ The
withdrawal must be justified on grounds and principles recognised as
proper and relevant. There is no indication as to the grounds and criteria
justifying the withdrawal of the prosecution. The considerations that guide
the exercise of power of withdrawal by Government could be and are many
and varied. Government must indicate what those considerations are. (315
E, H, 316 B·C]
7.2 In the . instant case, the offences relate to and arise out of a
terrible and ghastly tragedy. Nearly 4,000 lives were lost and tens of
thousands of citizens have suffered injuries in various degrees of severity.
At one point of time UCC itself reeognised the possibility of the accident
having been-the result ofacts ofsabotage. It is a matter of importance that
offences alleged in the context of a 'disaster of such gravity and magnitude
should not remain uninvestigated. The shifting stand of the Union of India
on the point should not by itself lead to any miscarriage· of justice. Since
there is no speciflc ground for withdrawal of the prosecutions set out at
that stage, the quashing of the pi:'osecutions requires to be set aside. [317
-B-i>J
State of Punjab v. Union of India, (1986] 4 SCC 335; M.N.
Sankarayaraya11a11 Nair· v. P. V. Balakrislma11 & Ors., (1972) 2 SCR 599,
rt\\tdon.
B
c
D
E
F
G
H
260
SUPREME COURT REPORTS
(1991) SUPP. 1 S. C.R.
A
Sankar Rangayya v. Sankar Ramayya, AIR 1916 Mad. 463; Biswabahan v. Gopen Chandra, (1967] 1 SCR 447; Majibar Rahman v. Mu/clashed Hossein, ILR 40 Cal. 113; A.R. Antulay v. R.S. Nayak & Anr., (1984)
2 SCC 500; Sheonandan Paswan v. State of Bihar& Ors., (1987) 1SCC289,
referred to.
B
8. Grant of blanket immunity .is a legislative function. There is no
power or jurisdiction vested in courts to confer immunity for criminal
prosecution and punishment. Grant of such immunity to a particular
person or persons would amount to a preferential treatment. However, the
direction that future criminal proceedings shall not be Instituted or
proceeded with must be understood as a concomitant and a logical
C consequence of the decision to withdraw the pending prosecutions. In that
context, the stipulation that no future prosecution shall be entertained
may not amount to conferment of any immunity but only to a reiteration of
the consequences of such termination of pending prosecutions. Thus
understood any appeal to the principal as to the power to confer criminal
D Immunity becomes lnapposlte In this case, However, in view ofthls Court's
finding that the quashing of criminal proceedings was not Justified and
that the orders dated 14th and 15th of February~ 1989 in that behalf
require to be reviewed and set aside, as a logical corollary and
consequence thereof It ls directed that all portions In the orders of tbls
E Court which relate to the Incompetence of any future prosecutions be
deleted. However, in so far as the dropping of the proceedings in contempt
envisaged by clause (b) of para 4 of the order dated 15th February, 1989 ls
concerned, the same is left undisturbed. (321 B-F]
Apodaca v. Viramonies, 13 ALR 1427; Doyle v. Hafstader, 257 NY
p 244; Richard Nixon v. Ernest Fitzgerald, 451US731, referred to.
Jurisprudence by Wortley, p. 297; Commentaries i11 the Constitution of
United States by Justice Storey, p. 363, referred to.
9.1. The validity and durability of a consent order are wholly
G dependent on the legal validity of the agreement on which it rests. Such an
order is amenable to be set aside on any ground which would justify the ·
setting aside of the agreement itself. Though the Union of India was a
consenting party to the settlement recorded by this Court, it cannot be
precluded from urging a plea as to invalidity or nullity of the settlement on
the ground of public policy. [323 D-E].
H
UNION CARBIDE v. U.O.I.
261
9.2. A contract whose object is opposed to public policy is invalid and A
it is not any the less ~o by reason alone of the fact that unlawful terms are .
embodied in a consensual decree. [324-E].
State of Kera/a & Anr., v. The Gwalior Rayon Silk Manufacturing
(Wvg.) Co. Ltd. etc., [1974) 1 SCR 671; State of Punjab v. Amar Singh,
[1974) 2.SCC 70, relied on.
B
A Bankruptcy Notice, 1924(2) Ch.D. 76; Maritime Electric Co. Ltd. v.
General Dairies Ltd., AIR 1937 PC 114; Huddersfield Banking Company
Ltd. v. Henry Lister & Son Ltd., 1895(2) Ch. 273; Great North-West Central
Railway Co.~ Ors. v. Charlebois and Ors., 1899AC114, referred to.
Corpus Juris Secondum, Vol. 1, p.473, referred to.
c
10. The essence of the doctrine of stifling prosecution is that no
private person should be allowed to take the administration or criminal
justice out of the hands of the Judges and place it in his own hands. A
private party is not taking administration of law in its own hands in this D
:y
case. It is the Union or India, as the Dominus Litis, that consented to the
quashing of the proceedings. What was purported to be done was not a
compounding of the offence. The arrangement which purported .to
terminate the criminal cases was one of a purported withdrawal not
forbidden by any law but one which was clearly enabled. Whether valid E
grounds to permit such withdrawal existed or not is another matter.
(328-A; 329 A,D]
V. Narasimha Raju v. V. Gurumurthy Raju & Ors., [1963] 3 SCR 687;
Rameshwar v. Upendranath, AIR 1926 Calcutta 451; Ouseph Poulo & Ors.
v. Catholic U11ion Bank Ltd. & Ors., [1964) 7 SCR 745, relied on.
F
Fry LJ. in Windhill Local Board of Health v. Vist, [1890] 45 Ch.J).
351; Keir v •. Leeman, 6 Queen's Bench 308; Majibar Rahma11 v. Muktashed
Hossein, ILR 40 Calcutta page 113, referred to.
11.1 The distinction between the 'motive' for entering into agreement G
and the 'consideration' for the agreement must be kept clearly
distinguished. Where dropping of the criminal proceedings is a motive for
entering into the agreement-and not its consideration the doctrine of
stifling of prosecution is not attracted. Where there is also a pre-existing
civil liability, the dropping of criminal proceedings need not necessarily be
H
']Jj2
SUPREME COURT REPORTS
[19'J1} SUPP. 1 S. C.R.
A a consideration for the agreement to satisfy that liability. (329 G-H; 330-A]
B
C.
11.2 The doctrine of stifling of prosecution is not attracted in the
· present case. It is inconceivable that Union of India would, under the
threat of a prosecution, coerce UCC to pay 470 million US dollars or any
part thereof as consideration for stifling of the prosecution. [331-D]
Adhikanda Sahu & Ors. v. Jogi. Sahu & Ors., AIR 1922 Patna 502; Deb
Kumar Ray Choudhury v.Anath Bandhu Sen and Ors., AIR 1931Cal.421;
Babu Hamarain Kapur v. Babu Ram SwaTUp Nigam & Anr., AIR 1941.
Oudh 593; Ouseph Pou/o & Ors., v. Catholic Union Bank Ltd. & Ors.,
[1964) 7 SCR 745; relied on.
12.1 On the basis of the medical research literature placed on
record, it can· reasonably be posited that the exposure in such
concentrations of MIC might involve delayed manifestations of toxic
morbidity, though the exposed population may not have manifested any
D immediate symptomatic medical status. But the long latency period of
toxic injuries renders the medical surveillance costs a permissible claim
even though ultimately the exposed persons may not actually develop the
apprehended complications. [334 B-C]
12.2. It is not the reasonable probability that the persons put at risk
E will actually suffer toxic injury in future that determines whether the
medical surveillance is necessary. But what _determines it is whether, on
tne basis of medical opinion, a person who has been exposed to a toxic
substance kno~ to cause long time serious injury should undergo
periodical medical tests in order to look for timely warning signs of the
F . on-set of the feared consequences. These costs constitute a relevant and
admissible head of compensation and may have to be borne in mind in
forming an opinion whether a proposed settlement-even as a
settlement-is just, fair and adequate. (336 B·D]
G
Ayers v.Jackson, TP, 525 A 2d 'li,7 (NJ.1987), referred to.
"Law of Toxic Torts" by Michael Dore; "Health Problems of Bhopal
Gas Victims", ICMR Report· April, 1986, referred to.
13. In personal injury actions the possibilty of the future
aggravatjon of the condition are of consequent aggravation of damages are
H taken into account in the assessment of damages. The estimate of damages
Y.'
UNION CARBIDE v. U.0.1.
263
in that sense is a very delicate exercise requiring evaluation of many A
criteria some of which may border on the imponderable. Generally
speaking actions for damages are limited by the general doctrine of
remoteness. and mitigation of damages. But the hazards of assessment of
once and for all damages in personal injury actions lie in many yet
inchoate factors requiring to be assessed. The likelihood of future B
complkation&-thougb they may mean mere assessment or evaluation or
mere cbances--are also put into the scales in quantifying damages. This
principle may, take care of the victims who have manifest symptoms. But
there mu.st be provision in the settlement for medical sunreillance costs
and compensation for those who are presently wholly asymptomatic and
have no material to support a present claim, but may become symptomatic C
after a drawn-out of latency period. Even if the award is an "Once and for
all" determination, these aspects must be taken into account. [337 F -H; 338
A-8)
14. The right of the victims read into Section 4 of the Act to express
their views on a proposed settlement does not contribute to a position D
analogous to that in United States in which fairness hearings are
imperative. Section 4 of the 'Act' to which the right is traceable merely
enjoins Government ~f India to have 'due-regard' to the views expressed by
victims. The power of the Union of India under the Act to enter into a
compromise is not necessarily confined to a situa.tion where suit has come E
to be instituted by it on behalf of the victims. Statute enables the Union of
India to enter into a compromise even without such a suit. Right of being
heard read into Section 4-and subject to which its constitutionality has
been upheld in .Sahu's case-subjects the Union of India to a
corresponding obligation. But that obligation does not envisage or compel F
9a procedure like it 'Fairness Hearing' as a condition precedent to a
compromise that Union of India may reach, as the situation in which it
may do so are not necessarily confined to a suit. (340 G-H; 341 A·B).
Charan Lal Sahu v. Union of India, [1990) 1 SCC 613, referred to.
Agent Orange Litigation, 597 Federal Supplement 740(1984); Florida
Trailer and Equipment Co. v •. Deal, 284 F .2d 567 (1960), referred to.
G
15. The settlement is not vitiated by reason alone of want of a
'Fairness Hearing' procedure preceding it. Ukewise, the settlement is not
vitiated by reason oftbeabsenceofa 're-opener' clause built into it. [341 Cl
H
SUPREME COURT REPORTS
-(1991) SUPP. 1 S. C.R.
A
16.1 Strictly speaking no restitution in the sense that any funds
obtained and appropriate by the Union of India requiring to be paid back,
arises. The funds brought in by the UCC are deposited in the Rese"e
Bank of India and remain under this Court's control and jurisdiction.
Restitution ·is an equitable principle and is subject to the discretion of the
B Court.!Section 144, Code of Civil Procedure, embodying the doctrine of
restitution does not confer any new substantive right tO the party not
already obtaining under the general law. The section merely regulates the
power of the court in t~at behalf. But, in the present case, Section 144 CPC
does not in terms apply. There is always an inherent jurisdiction to order
restitution a /ortiorari where a party bas acted on the faith of an order of
C the court. A litigant should not go back with the impression that the
judicial-process so operated as to weaken bis position and whatever it did
on the faith of the court's order operated to its disadvantage. It is the duty
of the court to ensure that no litigant goes back with a feeling that he was
prejudiced by an act which be did on-the faith of the court order. Both on
D principle and authority it becomes the duty of the court to-es much
moral as it is legal-to order refund and restitution or the amount to the
UCC--if the settlement is set aside. [342 ff; 343 A-D]
16.2 In the instant case, the UCC transported the funds to India and
deposited the foreign currency in the Reserve Bank of India on the faith of
E the Court's order. If the settlement is set aside they shall be entitled to
have their funds remitted to them back in the United States together with
such interest as bas accrued thereon. A direction to the UCC to prove and
establish compliance with the District Court's order dated 30th November,
1986, should be sufficient safeguard and should meet the ends of justice.
F Accordingly, in the event of the settlement being set aside the UCC shall be
entitled to have 420 million US Dollars brought in by it. It will be remitted .,
to UCC by the Union of India at the United States along with such interest'
as has accrued on it in the account. But this right to have the restitution
shall be strictly subject to the condition that the UCC shall restore its
undertaking dated 27.11.1986 which was recorded. on 30.11.1986 by the
G District Court at Bhopal and on the strength of which the court vacated
the order of injunction earlier granted against the UCC. Pursuant to the
orders recording the settlement, the said order dated 30.11.1986 of the
District Court was set aside by this Court. If the settlement goes, the order
dated 30.11.1986 of the District Court will automatically stand restored
H and the UCC would .be required to comply with that order to keep and_
' \
UNION CARBIDE v. U.O.L
265
maintain unencumbered assets of the value of 3 billion US dollars during A
the pendency of the suit. The right of the UCC to· obt&ln the refund of and
to repatriate the funds shail be subject to the performance and .
etTectuatlon of its obligations under the said order of 30.11.1986 of the
District Court at Bhopal. nu then the funds shall relnain withi~ the
jurisdiction or· this Court and shall not be amena.ble to any other legal
process. (344 G-H; 345 A-OJ
B
Binayak v. Ramesh, [1966) 3 SCR24;Jai Berham and Ors. v •. Kedar
Nath Marwari and Ors. [1922) P.C. 269; L. Guran Ditta v. T.R. Ditta, [1935)
PC 12; Jagendra Nath Singh v. ilira Sahu and Ors., AIR 1948 All. 252 F.B;
referred to.
17.1 Omission to comply with the requirement of the rule of audi
alteram partem, as a general rule, vitiates a decision. Where there is
· violation of natural justice no resultant or independent prejudice need be
shown, as the denial of natural justice is, in itself, sufficient prejudice and
c
it is no answer to say that even with observance of natural justice the D
same conclusion would have been reached. But the effects and
x
consequences of non-compliance may alter with situational variations and
particularities. [349 C-D].
__ ,
17.2 In Sahu case this Court held that there was no compliance with
the principles of natural justice but also held that the result of the E
non-compliance should not be a mechanical invalidation. The Court
suggested curatives. The Court was not only sitting in judicial review of
legislation, but was a court of construction also, for, it is upon proper
construction of the provisions, questions of constitutionality come to be
decided. The Court was considering the scope and content of the F
obligations to afford a hearing implicit in Section 4 of the Act. It cannot be
said to have gone beyond the pale of the enquiry when it considered the
further question as to the different ways in which that obligation could be
complied with or satisfied. It cannot be said that the observations in this·
regard were made by the way and had no binding force. [349 F-H]
Charan Lal Sahu v. Union of India, [1990) 1 SCC 613, relied on.
National TeXtile Workers Union v. P.R. Ramakrishnan [1983) 1 SCC
228; Institute of Chartered Accountants v. L.K Rama, [1986) 4 SCC 537;
Kl. Shephard v~ llnion of India, [1987] 4 SCC 431; R.B. Shreeram Durga
G
H
266
SUPREME COURT REPORTS
(1991) SUPP. 1 S. C.R.
A Prasad v. Settlement Commission, (1989) 1 SCC 628; H.L. Trehan' v. Union
of India, (1989) 1 SCC 764, referred to.
B
Wiseman v. Borneman, 1971 AC 297; Leary v. National Union of
Vehicle Builders, 1971 Ch.34; Calvin v. Cart, 1980 AC 576; Llyod v.
Memahan, 1987 AC 625, referred to.
'Administrative Law' by Prof. Wade, referred to.
18. The question in the instant case is not so much as to the
consequences of the omission on the part of the Union oflndia to have 'due
regard' to the views of the victims on the settlement or the omission on the
C parf of the Court to afford an opportunity to the victim of being heard
before recording a settlement as it is one of the effects and implications of
the pr.~mouncement in Sahu case. In that case the Court expressly held that
the non-compliance with the obligation to issue notices did not, by such
reason alone, in the circumstances of the case; vitiate the settlement, and
that the affected persons may avail themselves of an opportunity of being
D heard in the course of the review petitions. It is not proper to isolate and
render apart the two implications and hold the suggested curative as a
mere obiter. Also, the petitioners who were litigating the matter did not
represent all the victims and victim-groups. (351 C-E,F]
E
Charan Lal Sahu v. Union of India, [1990) 1 SCC 613, relied on.
19. What was transacted with the court's assistance between the
Union of India on one side and the UCC on the other is now sought to be
made binding oaa the tens of thousands of innocent victims who, as the law
bas now declared, had a right to be heard before the settlement could be
F reached or approved. The implications of the settlement and its effect on
the lakhs of citiuns of this country are, indeed, crucial in their grim
struggle to reshape and give meaning to their torn lives. Any paternalistic
candescension that what has been done is after all for their own good is out
__ of place. Either they should have been heard before a settlement was
G approved in accordance with the law declared by this Court or at least it
must become demonstrable in a process in which they have a reasonable
sense of participation that the settlement has been to their evident
advantage or, at least, the adverse consequences are effectively
neutralised. It is of utmost importance that in an endeavour of such great
magnitude where the court is trusted With the moral responsibility nf
H
UNION CARBIDE v. U.0.1.
11)7
ensuring justice to these tens of thousand innocent victims, the issues of A
human suffering do not become obscure in procedural thickets. In a
situation of this nature and magnitude, the Review-proceeding should not
be strict, orthodox and conventional but one whose scope would
accommodate the great netids of justice. That apart, quite obviously, the
individual petitioners and the petitioner-organisations which have sought B
review cannot, be held to represent and exhaust the interest of all the ·
victims. (352 F ·H; 353 A·C)
26. The scope of the review in the present case is to ensure that no
miscarriage of justice occurs in a matter of such great moment. This is,
perhaps, the last opportunity to verify our doubts and to undo injustice, if
any, which may have occurred. ·The fate and fortunes of tens of thousands C
of persons depend on the effectiveness and fairness of these proceedinp.
The legal and procedural technicalities should yield to the paramount
considerations of justice and fairness. The considerations go beyond
legalism and are largely humanitarian. It is of utmost importance that
great issues of human suffering are not subordinated to legal tech·
nicalities. [354 F-G]
D
Shivdeo Singh & Ors. v. State of Punjab & Ors., AIR 1963.SC 1909,
relied on.
21. The whole controversy about the adequacy of the settlement·
fund arises on account of the possibility that the totality of the awards
made on all the claims may exceed the settlement-fund in which event the E
settlement-fund will be insufficient to satisfy all the awards. This is the
main concern of the victims and victim-groups. There is, as it now stands,
a fund of one thousand two hundred crores of rupees for the benefit of the
victims.