TRINITY INSTITUTE OF PROFESSIONAL STUDIES, DWARKA

DEPARTMENT OF LAW

B.A.LLB (SEMESTE-2)
BY: PRANAVI CHALLA
Enrolment no: 01420603821

PSDA: UNION CARBIDE COPORATION V. UNION OF INDIA (1984)

PRINCIPLES:
1) This case became a landmark case to establish absolute liability or “No fault liability” in
India. Which is a liability where the accused is held liable without any exception of
getting out from the liability. The term absolute liability was introduced in the landmark
case of M.C. Mehta v. Union of India by Justice P. N. Bhagwati.
CASE FACTS:
1.The Union Carbide was a well-known corporation which is known to produce pesticides in
India, the corporation wanted to produce a new pesticide which required a special chemical
called MIC which was imported in India from abroad. The corporation wanted to develop the
chemical in India, which is the main reason to this accident. The Union Carbide corporation was
suffering losses and this led to the low maintenance of factories in factory.
2.On 3-4 December, 1984, the MIC gas got leaked from the plant and got mixed with the fresh
air in Bhopal. Suddenly, people started feeling uneasy, started vomiting, were having trouble
while breathing, people started dying within a few minutes of inhaling the toxic gas. It was not
only the human beings that suffered but animals, too, suffered and lost their lives. It was reported
that nearly 3000 people lost their lives and more than 6 lacs were severely injured. 3) The
Parliament passed the Bhopal Gas Leak Disaster (Processing of Claims) Act on 29th March 1985
which gave the government powers to file a suit on behalf of all the victims (surviving or
deceased).
3.The Government of India filed a suit against UCC in New York’s district court claiming 3.3
billion US Dollars. This suit was dismissed on jurisdictional issues. As a result, the suit was then
filed in the District Court of Bhopal, claiming damages of Rs. 3.5 billion. This interim
compensation was awarded by the district court.
4.The UCC appealed in the High Court of Madhya Pradesh for reducing this interim
compensation amount and they succeeded. On 4 April 1998, the High Court of Madhya Pradesh
reduced this amount to Rs. 2.5 billion. The appeal was then filed in the Apex Court which
applied the doctrine of absolute liability and granted a compensation order of 470 million dollars
which was not even 15% of the original claim.

ISSUES: The validity of the settlement order given by the High Court of Madhya Pradesh was
challenged in the case at hand on the grounds-

 Whether the settlement amount was justifiable or not?

 Is dropping of criminal proceedings against the Union Carbide justified?
JUDGEMENT:
The majority opinion was given by Justice Venkatacharya on behalf of himself and K.N. Singh
and N.D. Ojha JJ. while CJ Mishra concurred with him and Ahmadi J. wrote the minority
opinion.

 The majority opinion directed that the quashing of criminal proceedings against Union
Carbide was not justified and held that the criminal proceedings must be initiated. On
the point that whether such compensation is adequate or not the majority bench held
that the said compensation is adequate, reasonable and fair and in case any deficiency
arises in money for rehabilitation, such money shall be tendered by the Union & State
government.
 The Union Carbide Corporation was ordered to indemnify 470 million dollars to the
Union of India to settle all claims payable on or before March 31, 1989.