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Home / Analysis / Vizag gas leak: India must overhaul its compensatory regime

Vizag gas leak: India must overhaul its compensatory regime

With industrialisation and a growing number of industries using hazardous substances, our legislative framework is no longer in sync with the changing times

analysis Updated: May 15, 2020, 17:13 IST
Amit Anand Tiwari
Amit Anand Tiwari
The Vizag case has brought back into limelight the gross inadequacies in the country’s legislative and regulatory framework that deals with compensation for industrial disasters
The Vizag case has brought back into limelight the gross inadequacies in the country’s legislative and regulatory framework that deals with compensation for industrial disasters(PTI)

The May 7 gas leak in the LG polymers plant in Vizag killed a dozen and injured over 1,000. With the situation now under control, the fear of crisis of the magnitude of the Bhopal gas tragedy repeating itself has ebbed. But the accident reminds us of India’s inadequate legislative framework for dealing with industrial accidents.

In the aftermath of the Bhopal gas leak, various legislations dealing with industrial accidents were passed – for example, the Environment Protection Act 1986; the Hazardous Waste (Management and Handling) Rules for Management; Storage and Import of Hazardous Chemicals in 1985, and the Factory Act, 1948 was amended in 1987. But big gaps still remain.

The Public Liability Insurance Act, 1991 (PLI Act) was brought about to ensure that the victims of such accidents are adequately compensated – and immediately. In fact, in the Bhopal tragedy, the Union of India (UoI) took over the litigation from the individual victims, and also enacted the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985. The dispute was eventually settled with the Union Carbide being ordered to pay $470 million. This settlement, without consulting the victims, was challenged by a Public Interest Litigation (PIL) in the case of Charan Lal Sahu. But the court rejected the PIL, and proceeded on to uphold the compensation under the Claims Act, 1985.

With the settlement money being inadequate, and inconsistencies in the number of victims of the tragedy, the compensation amount is under debate even now, some 36 years after the incident. A curative petition is pending before the Supreme Court (SC).

The inadequacy of the compensation under the PLI Act, which is the only legislation we have for compensating victims of tragedies such as Bhopal and Vizag, is best highlighted by the amount offered. In case of death or permanent disability, the compensation offered is Rs 25,000— along with a maximum of Rs 12,500 towards medical expenses, and, Rs 6000 in case of property damage. In case of loss of wages, the victim gets Rs 1,000 per month for three months.

To meet such liabilities, factory owners must take an insurance cover, but it is capped at Rs 50 crore, irrespective of the size of the unit. These limits were set in 1992. Three decades later, the compensation amount remains the same.

In the common law of torts (developed through judgments in England, and followed in India in the absence of any statutory law), there are two general principles of liability.

One, strict liability, which makes the owner of the industry dealing with hazardous substances accountable for any injury to the full extent, subject to certain exceptions like an act of god.

Two, absolute liability, which recognises no exceptions and, irrespective of faults, makes the owner liable for any injury to the full extent. The principle of absolute liability was adopted by the SC in the MC Mehta case in 1987.

By prescribing a limit on liability and curtailing the extent of the general legal principle of damage quantification under absolute liability, the PLI Act acts as a statutory regime that helps industry owners rather than victims.

In 1992, an Environment Relief Fund was established by amending the PLI Act. However, the notification of the fund, and framing of its rules, took 16 years. So far, the government has not announced any steps to utilise the fund.

Victims can also approach the National Green Tribunal (NGT) for compensation and under Section 15 of the NGT Act, 2010, it can award compensation in addition to PLI Act.

On May 8, the NGT proceeded to take suo motu cognisance of the Vizag leak, and imposed an interim penalty of Rs 50 crore on the company. The order read: “… Leakage of hazardous gas at such a scale adversely affecting public health and environment, clearly attracts the principle of ‘Strict Liability’ against the enterprise engaged in a hazardous or inherently dangerous industry. Such an entity is liable to restore the damage caused under the Environment Law, apart from other statutory liability.”

But NGT appears to have proceeded on a diluted principle of liability i.e Strict Liability and not Absolute Liability.

Clearly, with industrialisation and a growing number of industries using hazardous substances, our legislative framework has not been able to keep pace with the changing times. It is also mired in the old-fashioned, one-dimensional outlook that considers compensation only in monetary terms, disregarding all other facets like mental and physical well-being and rehabilitation of victims, their medical care, and suitable employment. But with a meagre compensation and inadequate insurance provisions, the system fails even in its monetary aspects.

It is time the policymakers overhaul the current rehabilitation laws to ensure the protection, dignity, and well-being of citizens.

Amit Anand Tiwari is an Advocate on Record in the Supreme Court

The views expressed are personal

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