Sunday, 11 August 2013

Concept of mass tort action

Per Ranganath Misra, J. (concurring): 1. It is interest- ing to note that there has been no final adjudication in a mass tort action anywhere. The several instances which were placed before this Court were cases where compensation had been paid by consent or where settlement was reached either directly or through a circuitous process. Such an alternate procedure has been adopted over the years on account of the fact that trial in a case of this type would be protracted and may not yield any social benefit. Assessment of compen- sation in cases of this type has generally been by a rough and ready process. In fact, every assessment of compensation to some extent is by such process and the concept of just compensation is an attempt to approximate compensation to the loss suffered.
Supreme Court of India
Union Carbide Corporation Etc. ... vs Union Of India Etc. Etc on 3 October, 1991
Equivalent citations: 1992 AIR 248, 1991 SCR Supl. (1) 251

Bhopal Gas Disaster (Processing of Claims) Act 1985: Sections 3, 4, 9: Settlement of claims before the Apex Court--Not affording 'Fairness Hearing'- Non-incorporation of re-opener clause - Whether vitiates the settlement- Review of settlement---If set aside by Court-- Whether Court has inherent jurisdiction to order restitution of the fund to the company-Review proceedings-Court would not refuse to afford opportunity to parties on rigid technical grounds--In case funds found inadequate in future--Whether Union of India as Welfare State to make good the deficiency-Whether settlement could be set aside on mere possibility that medical documentation and categorisation were faulty and figures of various kinds of injuries and disablement were undependable--Liability of tortfeasor--Award of compensa- tion--To be proportionate to economic superiority of the offender.
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 poli- cy- Whether void and order of settlement liable to be set aside-Special leave jurisdiction--Nature and scope of--Main object--To meet ends of justice--Even specific provision for appeal under the Constitution of other laws not to limit the jurisdiction--'Stifling of prosecution doctrine' --Whether attracted where the motive is to drop Criminal as also Civil proceedings----Doctrine of restitution---Whether applicable to appeals under Article 136--Conferment of immunity from criminal proceedings--Whether legislative function--Whether amounts to preferential treatment---Settlement of claims recorded-Review of---Whether settlement could be set aside on
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ground of insufficiency of settlement fund-In the event of funds being found insufficient to meet the compensation determined Whether Union of India as Welfare State to make good the deficiency.
Civil Procedure Code, 1908:
Order XXIII, Rule 3B; Sections 112 and 114: Settlement recorded by 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 restitution --Applicability of
Law of Torts:
Mass tort action--Court assisted settlement--Non-affording of pre-settlement 'Fairness Hearing' and non-incorporation of 'reopener' clause in the settlement---Whether vitiate the settlement---Assessment of once and for all damages in personal injury actions---Unforeseen but likely future manifestation of the injury-- An important factor to be kept in mind.
Admnistrative Law:
Principles of Natural Justice-Audi alteram pattern rule-Non-compliance with the rule-Effect of--To be viewed in circumstantial flexibility.
Practice & Procedure:
Plea of invalidity based on public policy--Not barred by rule of estoppel.
Procedural technicalities--To yield to paramount considerations of justice and fairness where matter involves moral and humanitarian considerations.
HEADNOTE:
The Union Carbide (India) Ltd.. (UCIL), a sister concern of Union Carbide Corporation (UCC) owned and operated in Bhopal, a chemical plant manufacturing pesticides, one of the ingredients in the composition being Methyl Isocyanate (MIC), considered to be the most toxic chemical in industri- al use.
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. The Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 was
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passed on 29.3.1985 authorising the Government of India, as parent patriae 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 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 Litiga- tion and assigned to U.S. District Court, Southern District 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 forum-non-conveniens. Judge Keenan allowed the plea of UCC and the Union of India was con- strained to alter 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 compensa- tion 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 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 U.S. Dollars pursuant to and in terms of the settlement.
The said settlement was assailed in the present Petitions on various grounds.
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The petitioners contended that this Court had no juris- diction to withdraw 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 XXIII Rule 3B of the Code of Civil Procedure as the order was not preceded by notice to the persons whose interests 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 with- drawal of the prosecution even under the inherent powers of this Court either under Section 482 Cr. P.C. or under Arti- cle 142 of the Constitution of India.
Conferment of criminal immunity, by this Court, it was contended, was without jurisdiction, since it was essential- ly a legislative function and grant of Immunity to a partic- ular person or persons may amount to a preferential treat- ment violative of the equality clause. The settlement was also assailed on the ground that the stipulation for absten- tion 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 '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 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 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 done was not reliable. 255
Through the Union of India did not assail the settle- ment, it sought to 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 set- tlement, it was not precluded from pointing out the circum- stances in the case which, if accepted, would detract from the legal validity of the settlement.
Disposing of the petitions, this Court,
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 also this Court has the jurisdiction to withdraw the criminal proceedings. However, in the particular facts and circumstances, the quashing of the criminal proceedings was not justified. [372 B-C & F]
2. The settlement ordered by this Court is not void for noncompliance with the requirements of Order XXIII Rule 3B of the Code of Civil Procedure. [372-E]
3. The orders recording time settlement in so far as they seek to prohibit future criminal proceedings do not amount to conferment of criminal immunity; but merely conse- quential. to the quashing of the 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 Hear- ing' procedure is not strictly attracted to the Court's sanctioning of a settlement. Likewise, the absence of a 'Re-opener' clause does not, ipso-facto, vitiate the settle- ment. [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]
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7. The settlement is not vitiated for not affording the victims and victim-groups an opportunity of being heard. [373-E]
8. If the settlement fund is found to be insufficient, the deficiency is to be made good by the Union of India. [373 E]
9. For expeditious disposal of 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.
Ojja, jj);:
1. Article 139-A of the Constitution in terms does not apply to the facts of the ease. The appeals were by special leave under Article 136 of the Constitution against an interlocutory order. Article 136 vests in the Supreme Court a plenary Jurisdiction in the matter of entertaining and hearing of appeals by granting special leave against any kind of judgment 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 provisions for appeal contained In the Constitution or other laws. The powers given by Article 136 are, however, in the nature of special or residuary powers which are exercisable outside the pur- view of the ordinary laws In cases where the needs of jus- tice demand Interference by the Supreme Court. [303-A-C] Durga Shankar Mehta v. Thakur Raghuraj Singh & Others, [1955] SCR 267, relied on.
2. Any limited interpretation of the expression 'cause or matter' 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 reasonably be connected with or 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 the very wide constitutional powers. Situations may present themselves before the court where the court with the aid of the powers under Article 142(1) could 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 argu- ment, pushed
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to its logical conclusions, would mean that when an inter- locutory appeal 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 interpreta- tion of constitutional powers. [304 B-G] 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 tile opinion of the Court, necessary for the purpose of effectuating the high purpose of Articles 136 and 142(1), the power under 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 jurisdiction to determine the constitutional validity of central laws by inserting Articles 131A, 139A and 144A. But Articles 131A and 144A were omitted by the 43rd Amendment Act 1977, leaving Article 1'39A In tact. That Article enables the litigants to ap- proach the Apex Court for transfer of proceedings if the conditions 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 142 of the Constitution. The purposed constitutional plenitude of the powers of the Apex Court to ensure due and proper admin- istration of Justice is Intended to be co-extensive in each case with the needs of justice of a given case and to meet- ing any exigency. [304-H: 305 A-C]
Harbans 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 applicable. Even if the principle of natural justice underlying Order XXIII Rule 3B CPC is made to apply, the consequences of non-compliance should not be 258
different from the consequences 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 Sahu's case declined to push the effect of non-compliance to its logical conclusion and declare the settlement void. In that case, this Court considered it appropriate to suggest the remedy and curative of at opportunity of being heard in the pro- ceedings for review. Even assuming that the right of the affected persons of being heard is also available at a stage where a settlement is placed before the Court for its ac- ceptance, such a right Is not referable to, and does not stem from, Rule 3B of Order XXIII CPC. The pronouncement in Sahu's case as to what the consequences of non-compliance are conclusive. [309 A-D]
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