Which rule is to be followed Absolute Liability or Rylands v. Fletcher case?

M.C.Mehta Vs Union of India AIR 1987 SC 965 (Oleum Case)

A writ petition was filed by M.C Mehta, a social activist lawyer, he sought closure for Shriram Industries as it was engaged in manufacturing of hazardous substances and located in a densely populated area of Kirti Nagar.While the petition was pending, on 4 and 6 December 1985, there was leakage of oleum gas from one of its units which caused the death of an advocate and affected the health of several others. The incident took place on December 4, 1985.

Reported orders are relevant and important as they shed new light on how highly toxic and hazardous substances industry should be dealt with and contained and controlled to minimize hazards to the workers and general public.

Issue before court was that 
Which rule to be followed Absolute Liability or Rylands v. Fletcher case?

Regarding the measure of liability of an industry engaged in hazardous or inherently dangerous activity in case of an accident the court examined whether the rule in Rylands vs Fletcher would be applicable in such cases.

This rule laid down if a person who brings on to his land and collects and keep there anything likely to do harm and such thing escapes and does damage to another he is liable to compensate for the damage caused. The liability is thus strict and it is no defence that the thing escaped without the person's wilful act, default or neglect.

The exceptions to this rule are that it does not apply to things naturally on the land or where the escape is due to an act of god, act of stranger or the default of the person injured or where there is statutory authority .

The court held that the rule in Rylands v. Fletcher with all of its exceptions is not applicable for the industries engaged in hazardous activities.

Supreme Court expounded that,

"This rule evolved in the 19th century at a time when all these developments of science and technology has not taken place. We have to evolve new principles and lay down new norms which would adequately deal with the new problems which arise in highly industrialized economy "

The court introduced new "no fault " liability standard (absolute liability). An industry engaged in hazardous activities which poses a potential danger to health and safety of the persons working and residing near owes an absolute and non-delegable duty to the community to ensure that no harm results to anyone. Such industry must conduct its activities with highest standards of safety and if any harm results, the industry must be absolutely liable to compensate for such harm. It should be no answer to industry to say that it has taken all reasonable care and that harm occurred without negligence on its part. Since the persons harm would not be in position to isolate the process of operation from the hazardous preparation of the substance that caused the harm, the industry must be held absolutely liable for causing such harm as a part of the social cost of carrying on the hazardous activities. This principle is also sustainable on the ground that the industry alone has the resource to discover and guard against hazards or dangers and to provide warning against potential hazards.