Vizag Gas Leak: Strict Liability or Absolute Liability?

NGT cites ‘obsolete law’ in gas leak case: LAWgical Interpretation

With due respect to the choice of words and application of principle by the National Green Tribunal vide its order in the aforesaid matter, we believe that the principle of Absolute Liability should have been applied instead of Strict Liability. Why? Let’s have a look at the scenario below.

Strict Liability- Woefully Inadequate!

The principle of strict liability evolved in the year 1868 in the case of Rylands Vs. Fletcher,has become obsolete now with the evolution of the ‘absolute liability’ principle. As per this principle, any person who indulges in non-natural use of land and who keeps hazardous substances on his premises will be held strictly liable if such substance escapes the premises and causes any damage.

Essentials of strict liability:

1. Dangerous Substances:The defendant will be held strictly liable only if a “dangerous” substances escapes from his premises. For the purpose of imposing strict liability, a dangerous substance can be defined as any substance, which will cause some mischief or harm if it escapes. Things like explosives, toxic gasses, electricity, etc. can be termed as dangerous things.

2. Escape:One more essential condition to make the defendant strictly liable is that the material should escape from the premises and shouldn’t be within the reach of the defendant after its escape.

3. Non-Natural Use:To constitute a strict liability, there should be a non-natural use of the land. In the case of Rylands v. Fletcher, the water collected in the reservoir was considered to be a non-natural use of the land. Storage of water for domestic use is considered to be natural use. But the Court considered storing water for the purpose of energizing a mill non-natural. When the term “non-natural” is to be considered, it should be kept in mind that there must be some special use, which increases the danger to others. Supply of cooking gas through the pipeline, electric wiring in a house, etc. is considered to be the natural use of land. For instance, if the defendant lights up a fire in his fireplace and a spark escapes and causes a fire, the defendant will not be held liable, as it was a natural use of the land.

These three condition needs to be satisfied simultaneously to constitute a strict liability.

Exception to the Rule of Strict Liability- A backdoor for Industries!

The above-quoted words form the essentials for continuing the strict liability of an industry. This principle came with a drawback due to its exception clauses, which were as below:

A. Act of God: Acts which are occasioned by the forced nature and cannot be controlled by the agency of men such as earthquake, lightning, severe frost, storm etc. Comes under the category of the act of god.

B. The wrongful act of the third party:The defendant cannot be held liable if the damaged caused is due to an inevitable accident or wrongful act of a third party.

C. Plaintiff’s fault:The defendant cannot be held liable in case damage caused to the plaintiff is because of his own default. For example, if the plaintiff enters into defendant’s garden without his permission and consumes some toxic fruits, which caused damage to his health.

D. Artificial work maintained for the common benefit of both plaintiff and defendant: The defendant cannot be held responsible for damage caused by a source which was equally beneficial to the plaintiff or either consented by the plaintiff such as sharing the same building or a common water resource.

E. Acts of statutory authority: No one can be held liable for doing acts, which the legislature has authorised, provided it is done without any negligence on their part such as a municipal corporation.

In principle, the concept of strict liability contemplates the accountability of a person/industry carrying out hazardous activity in cases where some sort of negligence is attributable to them

Code of ‘Absolute Liability’: LAWgically Explained.

Strikingly, the principle of Strict liability was overturned by the Supreme Court of India in the distinguished decision of MC Mehta v. Union of India, 1987 SCR (1) 819, whereby the Apex Court evolved the concept of no-fault liability, formally known as the principle of ‘Absolute Liability’to remedy the undeserved suffering of thousands of Indian citizens.

The rule of absolute liability, in simple words, can be defined as the rule of strict liability minus the exceptions. In India, the rule of absolute liability evolved in the case of MC Mehta v Union of India. This is one of the most landmark judgment, which relates to the concept of absolute liability.

Under this principle, an enterprise, which is engaged in the hazardous or inherently dangerous industry which poses a potential threat to the health and safety of the persons working in a factory and residing in the surrounding areas owes an Absolute and non-delegable duty to the community to ensure that no harm results to anyone on account of hazardous or inherently dangerous activity which it has undertaken.

The principle of absolute liability offers no exception to the Industry involved in hazardous activities and they are liable for the damage so caused, despite observance of due diligence.

Finding the principle of strict liability woefully inadequate to protect citizens’ right in an industrialized economy like India, the Apex Court formulated the principle of absolute liability.

The decision was passed by a Constitutional bench of the Supreme Court in the aftermath of the Oleum gas leakfrom one of the units of Shriram Foods & Fertilizers Industries in Delhi in the year 1985, causing significant detrimental health effects to the local population.

Therefore, the use of words “strict liability’ under the NGT order opens up a convenient window for the company, LG polymers to escape liability on showing that there was no negligence on their part.

Strict Liability Vs. Absolute Liability

Apart from the availability of various exemptions under the principle of strict liability, the rule is also at variance from the principle of Absolute liability when it comes to the extent of the damages to be paid.

Under Strict Liability, compensation is payable as per the nature and quantum of damages caused but in cases of absolute liability, damages to be paid are exemplary and depend upon the magnitude and financial capability of the enterprise.

The element of escape is not essential under the doctrine of Absolute liability. This means that even if the hazardous substance does not leak from the premises of the industry but causes harm to the workers inside, the enterprise may be held liable.

Inter alia, the courts even in those cases where a single death is reported and there is no mass destruction of property or pollution of the environment can uphold Absolute Liability.

Another Remedy- Public Liability Insurance Act, 1991

Over and above the compensation that may be awarded by the Courts, the victims are also entitled to compensation under the company’s Public Liability Insurance, available in terms of the Public Liability Insurance Act, 1991.

The Act came into being in the aftermath of the Bhopal gas tragedy. This law requires all enterprises that own or have control over handling of any hazardous substance, to subscribe to a public liability insurance policy cover whereby they are insured against the claims from third parties for death or injury or property damage caused by hazardous substances handled in their enterprise.

The compensation payable under this Act is also irrespective of the company’s neglect. The victims who are exposed to the hazardous substance used by industry may file a claim with the collector within 5 years of the accident.

On receipt of an application, the Collector, after giving notice to the owner and after giving the parties an opportunity of being heard, will hold an inquiry into the claim and may make an award determining the amount of relief, which appears to him to be just.

(i) Reimbursement of medical expenses incurred up to a maximum of Rs. 12,500 in each case.

(ii) For fatal accidents, the relief will be Rs. 25,000 per person in addition to reimbursement of medical expenses if any, incurred on the victim up to a maximum of Rs. 12,500.

(iii) For permanent total or permanent partial disability or other injury or sickness, the relief will be (a) reimbursement of medical expenses incurred, if any, up to a maximum of Rs. 12,500 in each case and (b) cash relief based on percentage of disablement as certified by an authorized physician. The relief for total permanent disability will be Rs. 25,000.

(iv) For loss of wages due to temporary partial disability, which reduces the earning capacity of the victim, there will be a fixed monthly relief not exceeding Rs. 1,000 per month up to a maximum of 3 months: provided the victim has been hospitalized for a period exceeding 3 days and is above 16 years of age.

(v) Up to Rs. 6,000 depending on the actual damage, for any damage to private property.

Concluding Remarks

The rule of strict liability and absolute liability can be seen as exceptions. A person is made liable only when he is at fault. But the principle governing these two rules is that a person can be made liable even without his fault. This is known as the principle of “no-fault liability.” Under these rules, the liable person may not have done the act, but he’ll still be responsible for the damage caused due to the acts. In the case of strict liability, there are some exceptions where the defendant wouldn’t be made liable. But in the case of absolute liability, no exceptions are provided to the defendant. The defendant will be made liable under the strict liability rule no matter what.

Though National Green Tribunal has timely slapped the interim penalty of Rs. 50 crore in LG polymers, it also questions the applicability of the impugned principles and thereby leaves controversial statements and paves way for Company to prove their excuse as per rules of exception to the strict liability. Many lawyers are of the view that NGT should have used the term Absolute Liability instead of strict liability while giving reference to the principle in its order in the case of Vizag Gas Leak.

Disclaimer:The contents of this publication are for general information only and should not be relied upon as a substitute for professional legal advice, which should always be sought concerning any specific matter before acting or reliance upon any such information. The opinions, estimates, and information given herein are made for best judgment, utmost good faith, and as far as possible based on data or sources, which are, believed to be reliable. Notwithstanding we disclaim any liability in respect of any claim, which may arise from any error or omissions or from providing such advice, opinion, judgment, or information.

 Author: CS Nikhil Arora, Legal & Secretarial Consultant, LAWgically Yours. 

Author Bio

Qualification: CS
Company: LAWgically Yours
Location: New Delhi, New Delhi, IN
Member Since: 04 May 2020 | Total Posts: 4
Mr. Arora is a qualified member of the Institute of Company Secretaries of India (‘ICSI’) and a Law graduate. He qualified his CS course in the year 2015 and has sound experience of 5 years of thorough and rigorous work culture of LAW firm, Corporate and Independent Practice. During his pre-memb View Full Profile

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2 Comments

  1. pcsnikhil0701 says:

    Hello Sir, Thanks for your appreciation. Since you are so close to the proximity, I hope you are safe and doing well. Its a pleasure connecting with seniors like you via tech-platform. Please do let me know if i can be of any help to you. I am from New Delhi.

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