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ALLIANCE UNIVERSITY

ALLIANCE SCHOOL OF LAW

TOPIC-

CRITICAL ANALYSIS OF M.C METHA v/s UNION OF

INDIA

SHRIRAM INDUSTRIES CASE

1987 AIR 1086, 1987 SCR (1) 819

SUBJECT-

ENVIRONMENTAL LAW

SUBMITTED BY-

PAYAL P LAWRENCE

15040142142

BBA. LLB- ‘A’

SEM- 7 (2015- 2020)

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TABLE OF CONTENTS

FACTS OF THE CASE

ISSUES RAISED BEFORE THE HON’BLE COURT

DECISION

RULE OF ABSOLUTE LIABILITY

RULE FOR COMPENSATION

CONCLUSION

BIBLIOGRAPHY
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FACTS OF THE CASE

Shriram Food and Fertilizers Industry is a subsidiary of Delhi Cloth Mills Ltd. It was
producing caustic and chlorine. On December 1985, a major leakage of petroleum gas took
place from one of the units of Shriram Food and Fertilizers Industry Ltd, in the capital city of
Delhi which resulted in the death of several persons among them one was a practicing
Advocate.

The leakage was caused by a series of human and mechanical errors. This leakage resulted
from the bursting of a tank containing oleum gas as a result of the collapse of the structure on
which it was mounted. Another disaster took place within few days, another leakage, this
time it was a minor one, which took place due to the leakage of the gas from the joints of the
pipes.

The company was engaged in the manufacturing of caustic soda, chlorine, hydrochloric acid,
bleaching powder, phosphate, vanaspati, soap, sulphuric acid, sodium sulphate, high test
hypochlorite and active earth. All the units were set up in a single complex situated in
approximately 76 acres and surrounded by thickly populated colonies within 3km from the
complex.

District Magistrate, Delhi under Section 133(1) of Code of Criminal Procedure, directed
Shriram that within 2 days it should cease carrying on the manufacturing and processing
hazardous chemicals and gases including chlorine, oleum, super chlorine, phosphate, etc at
their establishments in Delhi within 7 days and to remove such chemical and gases from
Delhi.

A writ petition was filled 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
the densely populated area of Delhi.
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Just after one year from the Bhopal Gas disaster, were a large number of public and workmen
were affected by the gas leakage.

M.C. Mehta filed a PIL (Public Interest Litigation) in the supreme court of India under
Articles 21 and 32 of the Constitution of India for closure and re-location of the Shriram
Caustic Chlorine and Sulphuric Acid Plant in a thickly populated area of Delhi.

Factories were closed immediately by Inspector of Factories and Commissioner issued

separate orders. This incident took place only a few months before Environment Protection
Act came in to force, thus became a guiding force for having an effective laws.
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ISSUES RAISED BEFORE THE HON’BLE COURT

 Whether such hazardous industries to be allowed to operate in such areas?

 If they are allowed to work in such areas, whether any regulating mechanism be
evolved?

 How to determine the liability and amount of compensation

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DECISION

The Supreme Court was of the opinion that total ban on the above industry of public utility
will impede the developmental activities.

It also observed that permanent closure of the factory would result in the unemployment of
several workers, caustic soda factory and add to social problem of poverty and
unemployment. Therefore the court made an order to open the factory temporarily subject to
eleven conditions and appointed an expert committee to monitor the working of the industry.

The court also suggested that a national policy will have to be evolved by the Government for
the location of toxic or hazardous industries and a decision will have to be taken in regard of
relocation of such industries with a view to eliminate risk to the community.

Some of the conditions formulated by the government were-

 The Central Pollution Control Board to appoint an inspector to inspect and see that
pollution standards set under the Water Act and Air Act to be followed.
 To constitute Worker’s Safety Committee.

 Industry to publicise the effects of chlorine and its appropriate treatment.

 Instruct and train its workers in plant safety through audio visual programme, install
loudspeaker to alert neighbours in the event of leakage of any gas.

 Workers to use safety devices like masks, shoes, gloves, etc.

 And that the workers of Shriram to furnish undertaking from Chairman of DCM
Limited, that in case of escape of gas resulting in death or injury to workmen or
people living in vicinity they will be “personally responsible ” for payment of
compensation of such death or injury .
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The Court also directed that Shriram industries would deposit Rs 20 lakhs and to furnish a
bank guarantee for Rs. 15 lakhs for payment of compensation claims of the victims of oleum
gas if there was any escape of chlorine gas within three years from the date of order resulting
in death or injury to any workmen or living public in the vicinity. The quantum of
compensation was determinable by the District Judge, Delhi. It also shows that the court
made the industry “absolutely liable” and compensation to be paid as when the injury was
proved without requiring the industry to be present in the case.

The above mentioned conditions were formulated to ensure continuous compliance with the
safety standards and procedures laid by the committees (Manmohan Singh Committee and
Nilay Choudhary Committee) so that the possibility of hazard or risk to workmen could be
reduced.

This all indicates that Supreme Court in its judgement emphasized that certain standard
qualities to be laid down by the government and further it should also make law on the
management and handling of hazardous substances including the procedure to set up and to
run industry with minimal risk to humans , animals etc.

Further the industries cannot absolve itself of the responsibility by showing either that that
they were not negligent in dealing with the hazardous substance or they took all the necessary
and reasonable precautions while dealing with it. Thus the court applied the principle of no –
fault liability in this case.
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RULE OF ABSOLUTE LIABILITY

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 v/s
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 absolute and it has 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 rules of Rylands v/s Fletcher will all of its exceptions are 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 have 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
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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.
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RULE FOR COMPENSATION

It was held that the measure of compensation must be correlated to the magnitude and
capacity of the industry so that the compensation will have a deterrent effect. The larger and
more prosperous by the industry, the greater will be the amount of compensation payable by
it.

The court did not order payment of compensation to victims since it left open the question
due to lack of time to adjudicate whether Shriram, a private corporation was a state or
authority which could be subjected to the discipline of Article 21 of The Indian Constitution.
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CONCLUSION

If the enterprise is permitted to carry on any hazardous or inherently dangerous activity for its
profit, the law must presume that such permission is conditional on the enterprise absorbing
the cost of any accident arising on account of such hazardous or inherently dangerous activity
as an appropriate item of its overheads. Such hazardous or inherently dangerous activity for
private profit can be tolerated only on condition that the enterprise engaged in such hazardous
or inherently dangerous activity indemnifies all those who suffer on account of the carrying
on of such hazardous or inherently dangerous activity regardless of whether it is carried on
carefully or not. The Court also pointed out that the measure of compensation in the kind of
cases referred to must be correlated to the magnitude and capacity of the enterprise because
such compensation must have a deterrent effect. The larger and more prosperous the
enterprise, greater must be the amount of compensation payable by it for the harm caused on
account of an accident in the carrying on of the hazardous or inherently dangerous activity by
the enterprise.
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BIBLIOGRAPHY

https://www.latestlaws.com/articles/case-analysis-m-c-mehta-v-union-of-india-shriram-
industries-case-by-roopali-lamba/

https://indiankanoon.org/doc/1486949/

https://smhttp-ssl-70271.nexcesscdn.net/wp-content/uploads/2018/05/M.C-Mehta-v.-Union-
of-India1986.pdfmcmef.org/landmark-cases/

https://smhttp-ssl-70271.nexcesscdn.net/wp-content/uploads/2018/05/M.C-Mehta-v.-Union-
of-India1986.pdf