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PETITIONER: UNION CARBIDE CORPORATION ETC. ETC.

       Vs.

RESPONDENT: UNION OF INDIA ETC. ETC.

DATE OF JUDGMENT03/10/1991

BENCH: VENKATACHALLIAH, M.N. (J) BENCH: VENKATACHALLIAH, M.N. (J) MISRA, RANGNATH (CJ) SINGH, K.N. (J) AHMADI, A.M. (J) OJHA, N.D. (J)

CITATION:  1992 AIR  248            1991 SCR  Supl. (1) 251  1991 SCC  (4) 584        JT 1991 (6)     8  1991 SCALE  (2)675  CITATOR INFO :  D          1992 SC2084  (28)

ACT: Bhopal Gas Disaster (Processing of Claims) Act 1985:     Sections  3, 4, 9: Settlement of claims before the  Apex Court--Not  affording ’Fairness Hearing’-  Non-incorporation of  re-opener  clause  - Whether  vitiates  the  settlement- Review of settlement---If set aside by Court-- Whether Court has  inherent jurisdiction to order restitution of the  fund to the company-Review proceedings-Court would not refuse  to afford opportunity to parties on rigid technical grounds--In case  funds  found inadequate in  future--Whether  Union  of India  as Welfare State to make good the  deficiency-Whether settlement  could  be  set aside on  mere  possibility  that medical  documentation  and categorisation were  faulty  and figures  of various kinds of injuries and  disablement  were undependable--Liability  of tortfeasor--Award  of  compensa- tion--To  be  proportionate to economic superiority  of  the offender. Constitution of India, 1950:     Article 136, 137, 139-A, 142, 145: Inherent jurisdiction under  Articles  136  and 142 to withdraw  or  transfer  and finally  dispose  of  the main suits  and  pending  Criminal proceedings in the course of hearing of appeals arising  out of  interlocutory  orders in suits--Whether  taken  away  by Article  139A--Words ’Cause or matter’ appearing in  Article 142---Meaning  and  scope  of-Apex Court’s  power  to  quash criminal  proceedings---Court’s order  recording  settlement between parties---Such agreement if opposed to public  poli- cy-  Whether void and order of settlement liable to  be  set aside-Special leave jurisdiction--Nature and scope  of--Main object--To meet ends of justice--Even specific provision for appeal under the Constitution of other laws not to limit the jurisdiction--’Stifling  of prosecution doctrine’  --Whether attracted where the motive is to drop Criminal as also Civil proceedings----Doctrine of restitution---Whether  applicable to  appeals under Article 136--Conferment of  immunity  from criminal proceedings--Whether legislative  function--Whether amounts  to  preferential treatment---Settlement  of  claims recorded-Review  of---Whether settlement could be set  aside

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on 252 ground  of insufficiency of settlement fund-In the event  of funds  being  found insufficient to  meet  the  compensation determined  Whether Union of India as Welfare State to  make good the deficiency.    Civil Procedure Code, 1908:     Order  XXIII, Rule 3B; Sections 112 and 114:  Settlement recorded  by  Court--Principles of  natural  justice-Persons whose  interests affected not made  co-nomine  parties-Order recording   settlement  not  preceded  by  notice  to   such persons--Whether  renders the proceedings void--Doctrine  of restitution  --Applicability of Law of Torts: Mass  tort action--Court assisted  settlement--Non-affording of  pre-settlement ’Fairness Hearing’ and  non-incorporation of ’reopener’ clause in the settlement---Whether vitiate the settlement---Assessment  of  once  and for  all  damages  in personal  injury  actions---Unforeseen  but  likely   future manifestation of the injury-- An important factor to be kept in mind.       Admnistrative Law:       Principles  of  Natural Justice-Audi  alteram  pattern rule-Non-compliance with the rule-Effect of--To be viewed in circumstantial flexibility. Practice & Procedure:       Plea of invalidity based on public policy--Not  barred by rule of estoppel.       Procedural   technicalities--To  yield  to   paramount considerations of justice and fairness where matter involves moral and humanitarian considerations.

HEADNOTE:     The Union Carbide (India) Ltd.. (UCIL), a sister concern of  Union  Carbide Corporation (UCC) owned and  operated  in Bhopal,  a chemical plant manufacturing pesticides,  one  of the  ingredients in the composition being Methyl  Isocyanate (MIC), considered to be the most toxic chemical in industri- al use.     On the 2nd December, 1984 night there was escape of  MIC from  the tanks in which it was stored. And the  fumes  blew into the hutments abutting the plant premises affecting  the residents  as  also the flora and fauna. About  4000  people lost  their  lives and the health of tens  of  thousands  of people was affected in various degrees of seriousness. The  Bhopal  Gas Leak Disaster (Processing of  Claims)  Act, 1985 was 253 passed on 29.3.1985 authorising the Government of India,  as parent patriae exclusively to represent the victims so  that the  interests  of victims of the disaster  could  be  fully protected and that the claims for compensation were  pursued speedily,  effectively  and  to the best  advantage  of  the claimants. In exercise of the power conferred under the Act, the  Union  of India instituted an action on behalf  of  the victims  against Union Carbide Corporation before  the  U.S. District  Court, Southern District of New York for award  of compensation for the damage caused by the disaster. A  large number of fatal accidents and personal injury actions  filed by  and  on behalf of about 1,86,000  victims  were  already pending  in  courts in U.S.A. All these claims  came  to  be consolidated by the Judicial Panel on Multi District Litiga- tion and assigned to U.S. District Court, Southern  District

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of New York presided over by Judge Keenan. The claim brought by the Union of India was also consolidated with them.     However,  the  UCC resisted the choice of  the  American Forum  on  the plea of  forum-non-conveniens.  Judge  Keenan allowed  the  plea of UCC and the Union of  India  was  con- strained  to  alter its choice of forum and  to  pursue  the remedy  in  the District Court at Bhopal by  filing  a  suit seeking  a compensation of 3.3 Billion Dollars  against  the UCC  and UCIL. Efforts for a settlement were  not  fruitful. The  District Court made an order directing payment  of  Rs. 350 cores as interim compensation. UCC challenged this award before  the High Court and the quantum of interim  compensa- tion  came  to be reduced to Rs. 250 cores.  Both  Union  of India and UCC preferred appeals by special leave against the High Court’s order.     On  14th February, 1989 this Court recorded  an  overall settlement  of the claims in the suit for 470  million  U.S. Dollars  and  the  consequential termination  of  Civil  and Criminal  proceedings. On 15th February, 1989 the  terms  of the settlement signed by the Attorney General for the  Union of India and the Counsel for UCC was filed and on the  basis of the settlement, this Court passed an order recording  the terms of settlement and issuing directions as to the mode of payment  of the sum of 470 million U.S. Dollars pursuant  to and in terms of the settlement. The said settlement was assailed in the present Petitions on various grounds. 254     The petitioners contended that this Court had no  juris- diction  to withdraw and dispose of the main suits  and  the Criminal  proceedings  in the course of hearing  of  appeals arising  out of an interlocutory order in the suits. It  was further contended that the settlement recorded by this Court was  void  under Order XXIII Rule 3B of the  Code  of  Civil Procedure  as  the order was not preceded by notice  to  the persons  whose interests would be affected and who were  not Co-nomine parties to the proceedings. It was also  contended that the orders quashing the criminal proceedings which were serious non-compoundable offences would not amount to  with- drawal of the prosecution even under the inherent powers  of this Court either under Section 482 Cr. P.C. or under  Arti- cle 142 of the Constitution of India.      Conferment of criminal immunity, by this Court, it  was contended, was without jurisdiction, since it was essential- ly a legislative function and grant of Immunity to a partic- ular  person or persons may amount to a preferential  treat- ment  violative of the equality clause. The  settlement  was also assailed on the ground that the stipulation for absten- tion  from future criminal proceedings amounted to  stifling of  the  prosecution  and, therefore, it  was  unlawful  and opposed  to public policy. The settlement was also  assailed on  the  ground that ’Fairness Hearing’  procedure  was  not followed that the quantum was inadequate and that there  was no  ’re-opener’ clause which was very essential in  view  of the  fact that the latency period for the  manifestation  of the effects of the toxic injuries was unpredictable.     It  was contended that even if the settlement was to  be set aside, the funds should not be allowed to be repatriated as that would embroil the victims in endless litigations  to realise  the fruits of the decree that might be made in  the suit  and to realise the order for interim payment.  It  was also  contended that since notices to and opportunities  for hearing  of the victims represented by the Union  of  India, were  imperative before the settlement was recorded and  the denial  of  the same amounted to violation of the  rules  of

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natural justice.     It was further contended that a large number of  genuine claims stood excluded on the ground that despite notices the claimants  did not     appear for medical documentation  and so the medical documentation   done was not reliable. 255     Through  the Union of India did not assail  the  settle- ment, it sought to support the petitioners’ challenge to the validity  of the settlement. It was contended on  behalf  of the  Union of India that though it did not dispute the  set- tlement, it was not precluded from pointing out the  circum- stances  in the case which, if accepted, would detract  from the legal validity of the settlement. Disposing of the petitions, this Court, HELD: (By The Court)     1. Under Article 142(1) of the Constitution, this  Court did have the jurisdiction to withdraw to itself the original suits pending in the District Court at Bhopal and dispose of the same in terms of the settlement. So also this Court  has the  jurisdiction  to  withdraw  the  criminal  proceedings. However,  in  the particular facts  and  circumstances,  the quashing of the criminal proceedings was not justified. [372 B-C & F]     2. The settlement ordered by this Court is not void  for noncompliance  with the requirements of Order XXIII Rule  3B of the Code of Civil Procedure. [372-E]     3.  The  orders recording time settlement in so  far  as they  seek  to prohibit future criminal proceedings  do  not amount to conferment of criminal immunity; but merely conse- quential.  to  the  quashing of  the  criminal  proceedings. [372-G]     4. The orders recording the settlement are not void,  as they  are not opposed to public policy and do not amount  to stifling of criminal proceedings. [373-A]     5.  Having regard to the scheme of the Bhopal  Gas  Leak Disaster  (Processing of Claims) Act, 1985, ’Fairness  Hear- ing’  procedure  is not strictly attracted  to  the  Court’s sanctioning  of  a settlement. Likewise, the  absence  of  a ’Re-opener’ clause does not, ipso-facto, vitiate the settle- ment. [373-B-C]     6. If the settlement is set aside, UCC shall be entitled to  the restitution of the amount brought in by it  pursuant to  the orders of this Court, subject to its complying  with the  terms  of the order dated 30th Nov., 1986 made  by  the Bhopal District Court. [373 C-D] 256     7. The settlement is not vitiated for not affording  the victims  and  victim-groups an opportunity of  being  heard. [373-E]     8.  If the settlement fund is found to be  insufficient, the  deficiency  is to be made good by the Union  of  India. [373 E]     9. For expeditious disposal of the claims, a  time-bound consideration and determination of the claims are necessary. [373-F] Per  Majority: (Venkatachaliah, J. for himself,  K.N.  Singh and N.D. Ojja, jj);:     1.  Article 139-A of the Constitution in terms does  not apply to the facts of the ease. The appeals were by  special leave  under  Article  136 of the  Constitution  against  an interlocutory order. Article 136 vests in the Supreme  Court a  plenary  Jurisdiction in the matter of  entertaining  and hearing  of  appeals by granting special leave  against  any kind of judgment or order made by a Court or Tribunal in any

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cause  or matter and the powers can be exercised inspite  of the  limitations  under the specific provisions  for  appeal contained  In  the Constitution or other  laws.  The  powers given by Article 136 are, however, in the nature of  special or  residuary powers which are exercisable outside the  pur- view  of the ordinary laws In cases where the needs of  jus- tice demand Interference by the Supreme Court. [303-A-C]     Durga  Shankar Mehta v. Thakur Raghuraj Singh &  Others, [1955] SCR 267, relied on.     2.  Any limited interpretation of the expression  ’cause or  matter’  having regard to the wide and  sweeping  powers under Article 136 which Article 142(2) seeks to  effectuate, limiting it only to the short compass of the actual  dispute before  the  Court  and not to what  might  necessarily  and reasonably  be connected with or related to such  matter  in such  a  way that their withdrawal to the Apex  Court  would enable  the court to do ’complete justice’,  would  stultify the very wide constitutional powers. Situations may  present themselves before the court where the court with the aid  of the powers under Article 142(1) could bring about a finality to   the   matters,  and  it  is  common   experience   that day-in-and-day-out such matters are taken up and decided  in this  Court.  It is true that mere practice,  however  long, will  not legitimise issues of jurisdiction. But  the  argu- ment, pushed 257 to  its logical conclusions, would mean that when an  inter- locutory appeal comes up before this Court by special leave, even with the consent of the parties, the main matter cannot be  finally disposed of by this Court as such a  step  would imply  an  impermissible transfer of the main  matter.  Such technicalities do not belong to the content and  interpreta- tion of constitutional powers. [304 B-G]     Halsbury’s  Laws  of England, Fourth Edition,  Vol.  37, para 22, referred to.     3.  To  the extent power of withdrawal and  transfer  of cases  to the Apex Court is, in tile opinion of  the  Court, necessary  for the purpose of effectuating the high  purpose of  Articles  136 and 142(1), the power under  Article  139A does  not to exhaust the power of withdrawal  and  transfer. Article  139A, was introduced as part of the scheme  of  the 42nd  Constitutional Amendment. That amendment  proposed  to invest the Supreme Court exclusive jurisdiction to determine the  constitutional  validity of central laws  by  inserting Articles  131A,  139A and 144A. But Articles 131A  and  144A were omitted by the 43rd Amendment Act 1977, leaving Article 1’39A  In  tact. That Article enables the litigants  to  ap- proach  the  Apex Court for transfer of proceedings  if  the conditions envisaged In that Article are satisfied.  Article 139A was not intended, nor does it operate, to whittle  down the  existing wide powers under Articles 136 and     142  of the  Constitution. The purposed constitutional plenitude  of the powers of the Apex Court to ensure due and proper admin- istration of Justice is Intended to be co-extensive in  each case with the needs of justice of a given case and to  meet- ing any exigency. [304-H: 305 A-C] Harbans Singh v. U.P. State, [1982] 3 SCR 235, relied on.     4.  In  relation  to the proceedings  and  decisions  of superior  Courts  of unlimited Jurisdiction,  imputation  of nullity is not quite appropriate. They decide all  questions of their own jurisdiction. [309-F] Isaacs v. Robertson, 1984(3) AER 140, relied on.     5.  Under Order 32 of Supreme Court Rules,  Order  XXIII Rule  3B CPC is not one of the rules expressly  invoked  and made  applicable. Even if the principle of  natural  justice

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underlying  Order  XXIII Rule 3B CPC is made to  apply,  the consequences of non-compliance should not be 258 different  from the consequences of the breach of  rules  of natural justice implicit in Section 4 of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985. Having regard  to the  circumstances of the case, this Court, in  Sahu’s  case declined to push the effect of non-compliance to its logical conclusion  and declare the settlement void. In  that  case, this  Court considered it appropriate to suggest the  remedy and  curative of at opportunity of being heard in  the  pro- ceedings  for  review. Even assuming that the right  of  the affected persons of being heard is also available at a stage where  a settlement is placed before the Court for  its  ac- ceptance,  such  a right Is not referable to, and  does  not stem from, Rule 3B of Order XXIII CPC. The pronouncement  in Sahu’s  case as to what the consequences  of  non-compliance are conclusive. [309 A-D] Charan Lal Sahu v. Union of India, [1990] 1 SCC 613,  relied on.     6. The proposition that a provision in any ordinary  law irrespective of the importance of the public policy on which it  is  founded, operates to limit the powers  of  the  Apex Court  under  Article 142(1) is unsound and  erroneous.  The power  of the court under Article 142 in so far as  quashing of  criminal proceedings are concerned is not  exhausted  by Sections  320 on 321 or 482 Cr.P.C. or all of them  put  to- gether.  The power under Article 142 is at an entirely  dif- ferent  level  and of a different quality.  Prohibitions  on limitations on provisions contained in ordinary laws cannot, ipso-facto,  act as prohibitions or limitations on the  con- stitutional  powers under Article 142. Such prohibitions  or limitations  in  the statutes might embody and  reflect  the scheme  of a particular law, taking into account the  nature and status of the authority or the court on which conferment of  powers-limited in some appropriate way is  contemplated. The  limitations may not necessarily reflect or be based  on any fundamental considerations of public policy. It will  be wholly  incorrect to say that powers under Article  142  are subject to express statutory prohibitions. That would convey the idea that statutory provisions override a  constitution- al. In exercising powers under Article 142 and in  assessing the  needs  of ’complete justice of a cause or  matter,  the Apex Court will take note of the express prohibitions in any substantive  statutory provisions based on some  fundamental principles of public policy and regulate the exercise of its power  and discretion accordingly. The proposition does  not relate  to  the powers of the Court under Article  142,  but only  to what is or is no ’complete justice’ of a  cause  or matter and in the ultimate analysis of the 259 propriety of the exercise of the power. No question of  lack of  jurisdiction or of nullity can arise. [313 H,  314  B-C, E-G]     Prem Chand Garg v. Excise Commissioner, U.P., Allahabad, [1963] Suppl. 1 SCR 885;A.R. Antulay v. R.S. Nayak and Anr., [1988] 2 SCC 602, referred to.     7.1  The proposition that State is the Dominus Litis  in criminal cases, Is not an absolute one.  The Society for its orderly  and peaceful development Is Interested In the  pun- ishment  of  the offender. The power under  Article  142  is exercised with the aid of the principles of Section 321  CPC which enables withdrawal of prosecutions. But whether on the merits there were justifiable grounds to quash the  criminal proceedings is a different matter. There must be grounds  to

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permit  withdrawal of the prosecution. It Is really  not  so much  a  question of the existence of the power  as  one  of justificatlon for its exercise. A prosecution is not quashed for no other reason than that the Court has the power to  do so. The withdrawal must be justified on grounds and  princi- ples recognised as proper and relevant. There is no  indica- tion as to the grounds and criteria justifying the withdraw- al  of  the prosecution. The considerations that  guide  the exercise  of power of withdrawal by Government could be  and are  many  and varied. Government must indicate  what  those considerations are. [315 E, H, 316 B-C]     72 In the instant case, the offences relate to and arise out  of a terrible and ghastly tragedy. Nearly  4,000  lives were  lost and tens of thousands of citizens  have  suffered injuries  in  various degrees of severity. At one  point  of time  UCC itself recognised the possibility of the  accident having  been the result of acts of sabotage. It is a  matter of  importance  that offences alleged in the  context  of  a disaster  of  such gravity and magnitude should  not  remain uninvestigated.  The  shifting stand of the Union  of  India on the point should not by itself lead to any miscarriage of justice. Since there is no specific ground for withdrawal of the prosecutions set out at that stage, the quashing of  the prosecutions requires to be set aside. [317 B-D]     State  of  Punjab v. Union of India, [1986] 4  SCC  335; M.N.  Sankarayarayanan  Nair v. P.V.  Balakrishnan  &  Ors., [1972] 2 SCR 599, relied on. 260     Sankar  Rangayya v. Sankar Ramayya, AIR 1916  Mad.  463; Biswabahan  v.  Gopen  Chandra, [1967] 1  SCR  447;  Majibar Rahman  v. Muktashed Hossein, ILR 40 Cal. 113; A.R.  Antulay v. R.S. Nayak & Anr., [1984] 2 SCC 500; Sheonandan Paswan v. State of Bihar& On., [1987] 1 SCC 289, referred to.     8. Grant of blanket immunity is a legislative  function. Then is no power or jurisdiction vested in courts to  confer immunity  for criminal prosecution and punishment. Grant  of such immunity to a particular person or persons would amount to  a  preferential treatment. However, the  direction  that future  criminal  proceedings  shall not  be  instituted  or proceeded  with  must be understood as a concomitant  and  a logical consequence of the decision to withdraw the  pending prosecutions.  In  that  context, the  stipulation  that  no future  prosecution shall be entertained may not  amount  to conferment of any immunity but only to a reiteration of  the consequences  of such termination of  pending  prosecutions. Thus understood any appeal to the principal as to the  power to confer criminal Immunity becomes inapposite In this case. However,  In view of this Court’s finding that the  quashing of  criminal  proceedings  was not Justified  and  that  the orders dated 14th and 15th of February, 1989 In that  behalf require to be reviewed and set aside, as a logical corollary and consequence thereof it is directed that all portions  In the orders of this Court which relate to the incompetence of any  future prosecutions be deleted. However, in so  far  as the  dropping  of the proceedings In contempt  envisaged  by clause (b) of para 4 of the order dated I5th February,  1989 is concerned, the same is left undisturbed. [321 B-F]     Apodaca  v. Virmonies, 13 ALR 1427; Doyle v.  Hafstader, 257 NY 244; Richard Nixon v. Ernest Fitzgerald, 457 US  731, referred to.     Jurisprudence  by Wortley, p. 297; Commentaries  in  the Constitution  of  United States by Justice Storey,  p.  363, referred to.     9.1. The validity and durability of a consent order  are wholly  dependent on the legal validity of the agreement  on

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which it rests. Such an order is amenable to be set aside on any  ground  which would justify the setting  aside  of  the agreement itself. Though the Union of India was a consenting party to the settlement recorded by this Court, it cannot be precluded from urging a plea as to invalidity or nullity  of the settlement On the ground of public policy. [323 D-E]. 261     9.2. A contract whose object is opposed to public policy is invalid and it is not any the less so by reason alone  of the  fact that unlawful terms are embodied in  a  consensual decree. [324-E].     State  of  Kerala  & ,Anr., v. The  Gwalior  Rayon  Silk Manufacturing (Wvg.) Co. Ltd. etc.,  [1974] 1 SCR 671; State of Punjab v. Amar Singh, [1974] 2SCC 70, relied on.   A  Bankruptcy Notice, 1924(2) Ch.D. 76; Maritime  Electric Co. Ltd. v. General Dairies Ltd., AIR 1937 PC 114;  Hudders- field  Banking  Company  Ltd. v. Henry Lister  &  Son  Ltd., 1895(2) Ch. 273; Great North-West Central Railway Co. & Ors. v. Charlebois and Ors., 1899 AC 114, referred to. Corpus Juris Secondurn, Vol. 1, p.473, referred to.     10. The essence of the doctrine of stifling  prosecution is  that  no private person should be allowed  to  take  the administration  of criminal justice out of the hands of  the Judges and place it in his own hands. A private party is not taking administration of law in its own hands in this  case. It  is the Union of India, as the Dominus Litis,  that  con- sented to the quashing of the proceedings. What was purport- ed  to  be done was not a compounding of  the  offence.  The arrangement which purported to terminate the criminal  cases was  one of a purported withdrawal not forbidden by any  law but one which was clearly enabled. Whether valid grounds  to permit  such  withdrawal existed or not is  another  matter. [328-A; 329 A, D]     V. Narasimha Raju v. V. Gurumurthy Raju & Ors., [1963] 3 SCR  687; Rameshwar v. Upendranath, AIR 1926  Calcutta  451; Ouseph  Pouto  & Ors. v. Catholic Union Bank  Ltd.  &  Ors., [1964] 7 SCR 745, relied on.     Fry  L.  J. in Windill, Local Board of Health  v.  Vist, [1890]  45 Ch.D. 351; Keir v. Leeman, 6 Queen’s  Bench  308; Majibar  Rahman v. Muktashed Hossein, ILR 40  Calcutta  page 113, referred to.     11.1  The distinction between the ’motive’ for  entering into  agreement  and the ’consideration’ for  the  agreement must  be kept clearly distinguished. Where dropping  of  the criminal  proceedings  is  a motive for  entering  into  the agreement---and  not its consideration the doctrine of  sti- fling of prosecution is not attracted. Where there is also a pre-existing  civil  liability,  the  dropping  of  criminal proceedings need not necessarily be 262 a consideration for the agreement to satisfy that liability. [329 G-H; 330-A]     11.2  The  doctrine of stifling of  prosecution  is  not attracted  in  the present case. It  is  inconceivable  that Union  of  India would, under the threat of  a  prosecution, coerce UCC to pay 470 million US dollars or any part thereof as consideration for stifling of the prosecution. [331-D]     Adhikanda  Sahu  & Ors. v. Jogi Sahu &  Ors.,  AIR  1922 Patna  502; Deb Kumar Ray Choudhury v. Anath Bandhu Sen  and Ors.,  AIR  1931 Cal. 421; Babu Hamarain Kapur v.  Babu  Ram Swarup  Nigam  & Ant., AIR 1941. Oudh 593;  Ouseph  Poulo  & Ors., v. Catholic Union Bank Ltd. & Ors., [1964] 7 SCR  745; relied on.     12.1  On  the basis of the medical  research  literature placed  on  record, it can reasonably be  posited  that  the

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exposure in such concentrations of MIC might involve delayed manifestations of toxic morbidity, though the exposed  popu- lation  may  not have manifested any  immediate  symptomatic medical  status.  But the long latency period of  toxic  in- juries renders the medical surveillance costs a  permissible claim  even  though ultimately the exposed persons  may  not actually develop the apprehended complications. [334 B-C]     12.2.  It  is not the reasonable  probability  that  the persons  put at risk will actually suffer toxic  injury.  in future  that determines whether the medical surveillance  is necessary.  But what determines it is whether, on the  basis of medical opinion, a person who has been exposed to a toxic substance  known  to cause long time serious  injury  should undergo periodical medical tests in order to look for timely warning  signs  of the on-set of  the  feared  consequences. These  costs  constitute a relevant and admissible  head  of compensation and may have to he borne in mind in forming  an opinion  whether a proposed settlement---even as  a  settle- ment--is just, fair and adequate. [336 B-D] Ayers v. Jackson, TP, 525 A 2d 287 (N.J. 1987), referred to.     "Law  of Toxic Torts" by Michael Dore; "Health  Problems of Bhopal Gas Victims", ICMR Report - April, 1986,  referred to.     13.  In  personal injury actions the possibilty  of  the future aggravation of the condition are of consequent aggra- vation  of damages are taken into account in the  assessment of damages. The estimate of damages 263 in that sense is a very delicate exercise requiring  evalua- tion of many criteria some of which may border on the impon- derable. Generally speaking actions for damages are  limited by  the  general doctrine of remoteness  and  mitigation  of damages.  But the hazards of assessment of once and for  all damages in personal injury actions lie in many yet  inchoate factors  requiring to be assessed. The likelihood of  future complications though they may mean mere assessment or evalu- ation  of  mere  chances--are also put into  the  scales  in quantifying  damages. This principle may, take care  of  the victims who have manifest symptoms. But there must be provi- sion  in the settlement for medical surveillance  costs  and compensation for those who are presently wholly asymptomatic and  have  no material to support a present claim,  but  may become symptomatic after a drawn-out of latency period. Even if  the award is an "Once and for       all"  determination, these aspects must be taken into account. [337 F-H; 338 A-B]    14.  The right of the victims read into Section 4 of  the Act to express their views on a proposed settlement does not contribute to a position analogous to that in United  States in which fairness hearings are imperative. Section 4 of  the ’Act’ to which the right is traceable merely enjoins Govern- ment of India to have ’due-regard’ to the views expressed by victims.  The power of the Union of India under the  Act  to enter  into a  compromise is not necessarily confined  to  a situation  where  suit has come to be instituted  by  it  on behalf of the victims. Statute enables the Union of India to enter  into a compromise even without such a suit. Right  of being  heard  read into Section 4-and subject to  which  its constitutionality  has been upheld in  Sahu’s  case-subjects the  Union of India to a corresponding obligation. But  that obligation  does  not envisage or compel        a  procedure like  a  ’Fairness Hearing’ as a condition  precedent  to  a compromise  that Union of India may reach, as the  situation in  which  it may do so are not necessarily  confined  to  a suit. [340 G-H; 341 A-B].    Charan  Lal  Sahu v. Union of India, [1990]  1  SCC  613,

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referred to.    Agent   Orange   Litigation,   597   Federal   Supplement 740(1984);  Florida Trailer and Equipment Co. v.. Deal,  284 F.2d 567 (1960), referred to.     15.  The settlement is not vitiated by reason  alone  of want  of a Fairness Hearing’ procedure preceding  it.  Like- wise,  the settlement is not vitiated by reason of  the  ab- sence of a ’re- opener’ clause built into it [341 C] 264     16.1 Strictly speaking no restitution in the sense  that any  funds  obtained and appropriate by the Union  of  India requiring  to be paid back, arises. The funds brought in  by the  UCC  are  deposited in the Reserve Bank  of  India  and remain under this Court’s control and jurisdiction. Restitu- tion is an equitable principle and is subject to the discre- tion  of  the Court. Section 144, Code of  Civil  Procedure, embodying  the doctrine of restitution does not  confer  any new  substantive  right to the party not  already  obtaining under  the  general law. The section  merely  regulates  the power of the court in that behalf. But, in the present case, Section 144 CPC does not in terms apply. There is always  an inherent  jurisdiction  to order  restitution  a  fortiorari where  a  party has acted on the faith of an  order  of  the court.  A  litigant should not go back with  the  impression that  the  judicial-process  so operated as  to  weaken  his position  and  whatever it did on the faith of  the  court’s order  operated to its disadvantage. it is the duty  of  the court  to ensure that no litigant goes back with  a  feeling that  he was prejudiced by an act which he did on the  faith of  the  court  order. Both on principle  and  authority  it becomes  the  duty of the court to-as much moral  as  it  is legal  to order refund and restitution of the amount to  the UCC---if the settlement is set aside. [342 H; 343 A-D]     16.2. In the instant case, the UCC transported the funds to  India and deposited the foreign currency in the  Reserve Bank  of  India on the faith of the Court’s  order.  If  the settlement is set aside they shall be entitled to have their funds  remitted to them back in the United  States  together with  such interest as has accrued thereon. A  direction  to the UCC to prove and establish compliance with the  District Court’s  order dated 30th November, 1986, should  be  suffi- cient safeguard and should meet the ends of justice. Accord- ingly,  in the event of the settlement being set  aside  the UCC shall be entitled to have 420 million US Dollars brought in  by it. It will be remitted to UCC by the Union of  India at the United States along with such interest as has accrued on it in the account. But this right to have the restitution shall  be  strictly subject to the condition  that  the  UCC shall  restore  its undertaking dated 27.11.1986  which  was recorded  on 30.11.1986 by the District Court at Bhopal  and on  the  strength of which the court vacated  the  order  of injunction earlier granted against the UCC. Pursuant to  the orders  recording  the  settlement,  the  said  order  dated 30.11.1986  of  the  District Court was set  aside  by  this Court. If the settlement goes, the order dated 30.11.1986 of the District Court will automatically stand restored and the UCC would be required to comply with that order to keep and 265 maintain  unencumbered assets of the value of 3  billion  US dollars  during the pendency of the suit. The right  of  the UCC to obtain the refund of and to repatriate the funds shad be subject to the performance and effectuation of its  obli- gations  under the said order of 30.11.1986 of the  District Court at Bhopal. Till then the funds shall remain within the jurisdiction of this Court and shall not be amenable to  any

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other legal process. [344 G-H; 34S A-D]      Binayak v. Ramesh, [1966] 3 SCR 24; jai Berham and Ors. v. Kedar Nath Marwari and Ors. [1922] P.C.269;L. Guran Ditta v.  T.R.  Ditta, [1935] PC 12; Jagendra Nath Singh  v.  Hira Sahu and Ors., AIR 1948 All. 252 F.B; referred to.      17.1  Omission  to comply with the requirement  of  the rule  of audi alteram partem, as a general rule, vitiates  a decision.  Where  there is violation of natural  justice  no resultant  or  independent prejudice need be shown,  as  the denial  of natural justice is, in itself, sufficient  preju- dice and it is no answer to say that even with observance of natural justice the same conclusion would have been reached. But the effects and consequences of non-compliance may alter with situational variations and particularities. [349 C-D].      17.2  In  Sahu case this Court held that there  was  no compliance  with the principles of natural justice but  also held  that the result of the non-compliance should not be  a mechanical invalidation. The Court suggested curatives.  The Court  was not only sitting in judicial review  of  legisla- tion, but was a court of construction also, for, it is  upon proper construction of the provisions, questions of  consti- tutionality  come to be decided. The Court  was  considering the scope and content of the obligations to afford a hearing implicit in Section 4 of the Act. It cannot be said to  have gone  beyond the pale of the enquiry when it considered  the further  question  as to the different ways  in  which  that obligation could be complied with or satisfied. It cannot be said  that the observations in this regard were made by  the way and had no binding force. [349 F-H] Charan Lal Sahu v. Union of India, [1990] 1 SCC 613,  relied on.      National  Textile  Workers Union v.  P.R.  Ramakrishnan [1983] 1 SCC 228; Institute of Chartered Accountants v. L.K. Ratna,  [1986] 4 SCC 537; K.I. Shephard v. Union  of  India, [1987] 4 SCC 431; R.B. Shreeram Durga 266 Prasad  v.  Settlement Commission, [1989] 1  SCC  628;  H.L. Trehan’ v. Union of India, [1989] 1 SCC 764, referred to.     Wiseman  v.  Borneman, 1971 AC 297;  Leary  v.  National Union of Vehicle Builders, 1971 Ch.34; Calvin v. Cart,  1980 AC 576; Llyod v. Memahan, 1987 AC 625, referred to. ’Administrative Law’ by Prof. Wade, referred to.     18.  The question in the instant case is not so much  as to the consequences of the omission on the part of the Union of India to have ’due regard’ to the views of the victims on the  settlement or the omission on the part of the Court  to afford  an opportunity to the victim of being  heard  before recording  a  settlement  as it is one of  the  effects  and implications of the pronouncement in Sahu case. In that case the  Court expressly held that the non-compliance  with  the obligation  to issue notices did not, by such reason  alone, in  the circumstances of the case, vitiate  the  settlement, and  that  the affected persons may avail themselves  of  an opportunity  of  being  heard in the course  of  the  review petitions. It is not proper to isolate and render apart  the two  implications and hold the suggested curative as a  mere obiter. Also, the petitioners who were litigating the matter did  not represent all the victims and  victim-groups.  [351 C-E,F] Charan Lal Sahu v. Union of India, [1990] 1 SCC 613,  relied on.     19.  What  was transacted with  the  court’s  assistance between  the Union of India on one side and the UCC  on  the other is now sought to be made binding on the tens of  thou- sands of innocent victims who, as the law has now  declared,

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had  a  right  to be heard before the  settlement  could  be reached or approved. The implications of the settlement  and its  effect  on the lakhs of citizens of this  country  are, indeed,  crucial in their grim struggle to reshape and  give meaning to their torn lives. Any paternalistic candescension that  what has been done is after all for their own good  is out  of place. Either they should have been heard  before  a settlement was approved in accordance with the law  declared by  this Court or at least it must become demonstrable in  a process in which they have a reasonable sense of  participa- tion that the settlement has been to their evident advantage or,  at  least,  the adverse  consequences  are  effectively neutralised. It is of utmost importance that in an endeavour of such great magnitude where the court is trusted with  the moral responsibility of 267 ensuring justice to these tens of thousand innocent victims, the  issues  of  human suffering do not  become  obscure  in procedural  thickets.  In  a situation of  this  nature  and magnitude,  the  Review-proceeding  should  not  be  strict, orthodox and conventional but one whose scope would accommo- date the great needs of justice. That apart, quite  obvious- ly, the individual petitioners and the  petitioner-organisa- tions which have sought review cannot, be held to  represent and  exhaust the interest of all the victims. [352 F-H;  353 A-C]       The  scope  of the review in the present  case  is  to ensure that no miscarriage of justice occurs in a matter  of such great moment. This is, perhaps, the last opportunity to verify  our doubts and to undo injustice, if any, which  may have occurred. The fate and fortunes of tens of thousands of persons  depend on the effectiveness and fairness  of  these proceedings. The legal and procedural technicalities  should yield  to the paramount considerations of justice and  fair- ness. The considerations go beyond legalism and are  largely humanitarian.  It is of utmost importance that great  issues of human suffering are not subordinated to legal technicali- ties. [354 F-G]     Shivdeo Singh & Ors. v. State of Punjab & Ors. AIR  1963 SC 1909, relied on.     21.  The  whole controversy about the  adequacy  of  the settlementfund arises on account of the possibility that the totality of the awards made on all the claims may exceed the settlement-fund  in which event the settlement-fund will  be insufficient  to  satisfy all the awards. This is  the  main concern  of the victims and victim-groups. There is,  as  it now  stands,  a fund of one thousand two hundred  crores  of rupees  for  the  benefit of the victims.  The  charge  that medical documentation was faulty and was calculated to  play down the iII-effects of the exposure to MIC is not  substan- tiated. [360 G-H; 361 A-B]     22. In bestowing a second thought whether the settlement is  just, fair and adequate, one should not proceed  on  the premise  that  the liability of UCC has been  firmly  estab- lished. It is yet to be decided if the matter goes to trial. It  is true that even to the extent a settlement  goes,  the idea of its fairness and adequacy must necessarily be relat- ed  to the magnitude of the problem and the question of  its reasonableness must be assessed putting many  considerations into the scales. It may be hazardous to belittle the  advan- tages  of  the settlement in a matter  of  such  complexity. Every effort should be made to protect the victims from  the prospects of a protracted, 268 exhausting and uncertain litigation. [361 C-D]

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   Sterling  v.  Versicol  Chemical Corp., 855  F  2d  1188 (1988); Florance B. Bigelow v. RKO Radio Pictures Inc.,  327 US  251, (1946); Story Parchment Company v. Paterson  Parch- ment  Papper Co., 282 US 555; Frederick Thomas  Kingsley  v. The  Secretary  of State for India, AIR  1923  Calcutta  49, referred tO.     ’Scientific and Legal Standards of Statistical  Evidence is  Toxic and Ton and Discrimination Suits’ by  Carl  Cranor and  Kurt  Nutting  in  Law and  Philosophy,  Vol.  9,  No.2 May,1990, referred to.     23.  Indeed, in many tort actions the world-over  speedy adjudications and expeditious reliefs are not easily  accom- plished  and many of them have ended in settlements. In  the context of the problems presented by the issues of liability in  cases  of certain corporate torts beyond  the  corporate veil there is an impressive body of academic opinion amongst the  schoolmen that the very theories of  limited  corporate liability  which initially served as incentives for  commer- cial  risk--taking  needs re-thinking in  certain  areas  of tortious  liability  of  Corporations.  Some  scholars  have advocated abolition of limited liability for ’knowable  tort risks’.  This,  of course, has the limitation  of  one  more shade of an academician’s point of view for radical  changes in law. [364 G-H; 365B]     An Economic Analysis of Limited Liability in Corporation Law, 30 U. Toronto L. J. 117 (1980); The Place of Enterprise Liability  in the Control of Corporate Conduct, 90 Yale  Law Journal;  Should Shareholders be personally liable  for  the torts  of  their  Corporations, 76  Yale  Law  Journal  1190 (1967), referred to.     24.  While it may not be wise or proper to  deprive  the victims  of the benefit of the settlement, it  is,  however, necessary  to ensure that in the-perhaps unlikely--event  of the  settlement--fund  being found inadequate  to  meet  the compensation determined in respect of all the present claim- ants,  those  persons who may have their  claims  determined after the fund is exhausted are not left to fend themselves. But,  such a contingency may not arise having regard to  the size of the settlement-fund. If it should arise, the reason- able way to protect the interests of the victims is to  hold that  the  Union  of India, as a Welfare State  and  in  the circumstances  in which the settlement was made, should  not be found wanting in making good the deficiency, if any. [365 G-H; 366-A] 269     25.  The  settlement was arrived at and is  left  undis- turbed  on  an over-all view. The settlement cannot  be  as- sailed  as  violative of Mehta principle  which  might  have arisen  for consideration in a strict adjudication.  In  the matter  of  determination  of compensation  also  under  the Bhopal  Gas Leak Disaster (Processing of Claims) Act,  1985, and  the  Scheme framed thereunder, there is  no  scope  for applying the said principle inasmuch as the tort-feasor,  in terms  of  the  settlement--for  all  practical  purposes--- stands  notionally substituted by the settlement-fund  which now  represents  and exhausts the liability of  the  alleged hazardous entrepreneurs viz., UCC and UCIL. The Mehta  prin- ciple  can have no application against Union of india  inas- much  as requiring it to make good the deficiency,  if  any, this  Court  does not impute to it the position of  a  Joint tort-feasor but only of a welfare State. [366-H; 367 A-C] M.C. Mehta v. Union of India, [1987] 1 SCC 395, referred to.     26.  At least for a period of eight years from  now  the population of Bhopal exposed to the hazards of MIC  toxicity

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should  have provision for medical surveillance by  periodic medical  check-up  for gas related afflictions.  This  shall have  to be ensured by setting up long-term medical  facili- ties  in  the form of a permanent  specialised  medical  and research establishment with the best of expertise. An appro- priate  action  plan should be drawn up. it will  be  proper that  expert medical facility In the form of the  establish- ment of a full-fledged hospital of at least 500 bed strength with  the  best of equipment for treatment  of  MIC  related affliction  should be provided for medical surveillance  and for  expert medical treatment. The State of  Madhya  Pradesh shall provide suitable land free of cost. The allocation  of the  land shall be made within two months and  the  hospital shall be constructed equipped and made functional within  18 months.  It shall be equipped as a Specialist  Hospital  for treatment  and research of MIC related afflictions  and  for medical surveillance of the exposed population. [367D-F]     27.  The Capital outlays on the hospital and its  opera- tion  expenses for providing free treatment and services  to the victims should, both on humanitarian considerations  and in fulfilment of the offer made before the Bhopal Court,  be borne by the UCC and UCIL. It is not part of the function of this  Court  to reshape the settlement  or  restructure  its terms.  This aspect of the further liability is also  not  a matter  on which the UCC and the UCIL had an opportunity  to express their views. However, from the tenor of the  written submissions made before the District Court at 270 Bhopal,  both the UCC and UCIL had offered to fund and  pro- vide a hospital for the gas victims. The UCC had  reiterated that in January, 1986, it had offered to fund the  construc- tion of hospital for the treatment of gas victims the amount being  contributed by the UCC and the UCIL in equal  propor- tions.  It is, no doubt, true that the offer was made  in  a different context and before an overall settlement. But that should  not  detract the UCC and the  UCIL  from  fulfilling these  obligations, as, indeed, the moral  sensibilities  to the  immense  need for relief in all forms and  ways  should make both the UCC and UCIL forthcoming in this behalf.  Such a  hospital should be a fully equipped hospital with  provi- sion  for maintenance for a period of eight years which  may involve  the financial outlay of around Rs. 50 crores.  Con- tingencies  such as payment of compensation to  the  persons who  were  exposed to the Bhopal gas  disaster,  who  though presently  asymptomatic and filed no claim for  compensation but  might become symptomatic in future and the  yet  unborn children of mothers exposed to MIC toxicity, who may develop congenital  defects, shall be taken care of by obtaining  an appropriate  medical group insurance cover from the  General Insurance Corporation of India or the Life Insurance  Corpo- ration of India. There shall be no individual upper monetary limit  for the insurance liability. The period of  insurance cover  should be a period of eight years in the future.  The number  of  persons to be covered by  this  Group  Insurance Scheme  should be about and not less than one lakh  of  per- sons.  Having  regard  to the population  of  the  seriously affected  wards of Bhopal city at the time of  the  disaster and  having regard to the addition to the population by  the subsequent  births  extrapolated on the  basis  of  national average  of birth rates over the past years and  the  future period of surveillance, this figure broadly accords with the percentage of population of the affected wards bears to  the number of persons found to be affected by medical  categori- sation. This insurance cover will virtually serve to  render the  settlement an open ended one so far as  the  contingent

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class  of  future victims both existing and  after-born  are concerned. The possible claimants fail into two  categories; those  who  were in existence at the time of  exposure;  and those  who were not yet unborn and whose congenital  defects are traceable to MIC toxicity inherited or derived  congeni- tally.  The  premia for the insurance shall be paid  by  the Union  of  India out of the settlement  fund.  The  eligible claimants  shall be entitled to be paid by the insurer  com- pensation  on such principles and upon establishment of  the nature  of the gas related toxic morbidity by  such  medical standards as are applicable to the other claimants under the Bhopal  Gas Leak Disaster (Processing of Claims)  Act,  1985 and  the scheme framed thereunder. The individual  claimants shall be entitled to have their claims adjudicated under the statutory scheme. [367 G-H; 368 A-H; 369A-B; 370 B-C] U.K. Law Commission Report on "Injuries to Unborn Children". 271 referred to.     29.  There  is  need for  expeditious  adjudication  and disposal  of the claims. Even the available funds would  not admit of utilisation unless the claims are adjudicated  upon and  the quantum of compensation determined. Both the  Union of  India  and the State Government shall  take  expeditious steps  and  set-up adequate machinery  for  adjudication  of claims   and   determination  of   the   compensation.   The appointment  of the Claim Commissioners shall  be  completed expeditiously  and  the adjudicative process  must  commence within  four months. In the first instance, there  shall  at least  be 40 Claim Commissioners with necessary  secretarial assistance to start the adjudication of the claims under the Scheme. [370 C-E]     30.  In  the matter of disbursement of  the  amounts  so adjudicated and determined it will be proper for the author- ities  administering the funds to ensure that the  compensa- tion-amounts, wherever the beneficiaries are illiterate  and are  susceptible to exploitation, are properly invested  for the benefit of the beneficiaries so that while they  receive the  income therefrom they do not owing to their  illiteracy and ignorance, deprive themselves of what may turn out to be the  sole  source  of their living and  sustenance  for  the future.  This  Court approves and  endorses  the  guidelines formulated by the Gujarat High Court in Muljibhai Ajarambhai Harijan’s  case and the same could be usefully adopted  with appropriate  modifications. Government might  also  consider such investments being handled by promulgating an  appropri- ate scheme under the Unit Trust of India Act so as to afford to  the  beneficiaries not only adequate  returns  but  also appropriate capital appreciation to neutralise the effect of denudation by inflation. [370 E-G; 371-H, 372-A]     Muljibhai  Ajarambhai  Harijan & Ant.  v.  United  India Insurance Co. Ltd. & Ors., 1982(1) Gujarat Law Reporter 756, referred to.     Per Ranganath Misra, J. (concurring): 1. It is interest- ing  to note that there has been no final adjudication in  a mass tort action anywhere. The several instances which  were placed  before this Court were cases where compensation  had been paid by consent or where settlement was reached  either directly or through a circuitous process. Such an  alternate procedure has been adopted over the years on account of  the fact  that trial in a case of this type would be  protracted and may not yield any social benefit. Assessment of  compen- sation  in cases of this type has generally been by a  rough and ready process. In fact, every assessment of compensation to  some extent is by such process and the concept  of  just compensation  is an attempt to approximate  compensation  to

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the loss suffered. [279 F-H, 280-A] 2.  This  Court did take into account  while  accepting  the settlement 272 the  fact  that  though a substantial  period  of  time  had elapsed the victims were without relief. For quite some time the  number  of claims in courts or before  the  authorities under  the Act were not very appreciable. Perhaps an  infer- ence  was drawn from the figures that the  subsequent  addi- tions  were to be viewed differently. It is not to  indicate that  the claims filed later are frivolous  particularly  on account of the fact that there are some prima facie  materi- als  to show that the iII-effects of exposure to  MIC  could manifest late. The nature of injuries suffered or the effect of exposure are not the same or similar. Therefore, from the mere  number  no final opinion could be  reached  about  the sufficiency of the quantum. The Act provides for a Fund into which  the  decretal  sum has to be  credited.  The  statute contemplates of a procedure for quantification of individual entitlement  of  compensation and as and  when  compensation becomes  payable it is to be met out of the Fund.  The  fact that  the Union of India has taken over the right to sue  on behalf  of  all  the victims indicates that if  there  is  a shortfall  in the Fund perhaps it would be the liability  of Union of India to meet the same. The genuine claimants  thus have no legitimate grievance to make as long as compensation statutorily  quantified  is available to  them  because  the source  from which the compensation comes into the  Fund  is not of significant relevance to the claimant. [280 B-E] Charan Lal Sahu v. Union of India, [1990] 1 SCC 613,  relied on.     3.  If the litigation was to go on merits in the  Bhopal Court it would have perhaps taken at least 8 to 10 years; an appeal to the High Court and a further appeal to this  Court would  have  taken in all around another spell of  10  years with steps for expedition taken. It could be fairly  assumed that litigation in India would have taken around 20 years to reach  finality, and then steps would have to be  taken  for its execution in the United States. On the basis that it was a foreign judgment, the law applicable to the New York Court should  have  been applicable and the ’due  process’  clause would  have become relevant. That litigation in the  minimum would  have  taken some 8-10 years to  be  finalised.  Thus, relief  would  have  been available to the  victims  at  the earliest around 2010. In the event of U.S. Courts taking the view  that  strict  liability was foreign  to  the  American jurisprudence and contrary to U.S. public policy, the decree would not have been executed in the United States and  apart from  the  Indian assets of UCIL, there would have  been  no scope for satisfaction of the decree. [284 C-F]     Municipal Council, Ratlam v. Vardichand & Ors., [1981] 1 SCR 97, relied on.     4.  When  dealing with this case this Court  has  always taken a pragmatic approach. Under the constitutional  disci- pline determination of disputes has been left to the hierar- chical system of Courts and this Court at 273 its apex has the highest concern to ensure that Rule of  Law works  effectively and the cause of justice in no  way  suf- fers.  To have a decree after struggling for a quarter of  a century  with the apprehension that the decree may be  ulti- mately  found not to be executable would certainly not  have been  a situation which this Court could  countenance.  [285 A-C]     5.  In  the  order of May 4, 1989,  this  Court  clearly

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indicated that it is the obligation of this Court to  uphold the  rights of the citizens and to bring to them a  judicial fitment as available in accordance with the laws. There have been several instances where this Court has gone out of  its way     to evolve principles and make directions which would meet  the  demands of justice in a  given  situation.  This, however,  is  not an occasion when  such      an  experiment could have been undertaken to formulate principle of  strict liability  at  the eventual risk of  ultimately  losing  the legal batfie. [285 C-D]     M.C.  Mehta v. Union of India, [1987]1 SCC 395;  Rylends v. Fletcher L,R., 1868(3) House of Lords 330, referred to.     6.  This  Court  is entitled  under  the  constitutional scheme to certain freedom of operation. It would be wrong to assume that there is an element of judicial arrogance in the act of the Court when it proceeds to act in a pragmatic  way to  protect the victims. It must be conceded that the  citi- zens  are  equally  entitled to speak in  support  of  their rights. Public activists should also be permitted to espouse the cause of the poor citizens out there must be a limit set to  such activity and nothing perhaps should be  done  which would  affect  the dignity of the Court and bring  down  the serviceability  of the institution to the people  at  large. [285 F-H] reffred to. v. Director of Public Prosecutions, [1961] 2 All E.R. 447, Per Ahmadi, J. (partly Dissenting): 1.1 It is agreed that the settlement is not vitiated for not affording  the  victims or victim-groups an  opportunity  of being beard. But it is difficult to accept the view that  if the settlement fund is found to be sufficient the  shortfall mast be made good by the Union of India. The union of  India cannot be directed to suffer the burden of the shortfall, if by without finding it liable in damages on any count. [375     12  In  view of the observations in  Sahu’s   case,  the scope of the inquiry of the present petitions can be said to be  a  narrow one. Supposing a  pre-decisional  hearing  was afforded to the victims, the Court’s option obviously  would have been either to approve the terms of the compromise, 274 or  to  refuse to superadd its seal to  the  settlement  and leave  the parties to go to trial. The Court could not  have altered,  varied  or modified the terms  of  the  settlement without  the express consent of the contracting parties.  If it  were to find the compensation amount payable  under  the settlement inadequate, the only option left to it would have been to refuse to approve the settlement and turn it into  a decree of the Court. It could not have unilaterally  imposed any additional liability on any of the contracting  parties. [378 C-E]       According  to the interpretation given in Sahu’s  case on the scope of sections 3 and 4 of the Act, a pre-decision- al  hearing  ought to have been given but failure to  do  so cannot  vitiate the settlement as according to the  majority the  lapse could be cured by a post-decisional hearing.  The scope of the review petitions cannot be any different at the post-decisional stage also. [378 E-F]     1.4  On a mere possibilty of there being a shortfall,  a possibility not  supported by any realistic appraisal of the material  on record but on a mere apprehension, quia  timet, it would not be proper to saddle the Union of India with the liability  to make good the shortfall by imposing  an  addi- tional  term in the settlement without its consent in  exer- cise  of power under Article 142 of the Constitution or  any statute  or on the premises on its duty as a Welfare  State.

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Therefore,  it is impermissible in law to impose the  burden of  making  good  the shortfall on the Union  of  India  and thereby  saddle the Indian tax-payer with the  tort-feasor’s liability. If the Settlement Fund was found inadequate,  the only logical thing was to review the settlement leaving  the parties to work out a fresh settlement or go to trial in the pending  suit. In Sahu’s case the victims had not been  able to show any material which would vitiate the settlement. The voluminous documentary evidence placed on the record of  the present proceedings also does not make out a case of  inade- quacy of the amount, necessitating the review of the settle- ment.  In  the circumstances the Union of  India  cannot  be saddled with the liability to make good the deficit, if any, particularly  when it is not found to be a tort-feasor.  Its liability as a tort-feasor, if at all would have to be  gone into  in a separate proceeding and not in the present  peti- tions. [379 C-F] Charan  Lal  Sahu v. Union of India, [1990] 1 SCC  613,  re- ferred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Miscellaneous Petition 275 Nos.29377-A/88,   7942-43/89,  16093/89,  17965/89,   Review Petition Nos. 229 and 623-24 of 2989. IN Civil Appeal Nos. 3187-88 of 1988.     From the Judgment and Order dated 4.4.1988 of the Madhya Pradesh High Court in Civil Revision No. 26 of 1988.     (With  W.P. Nos. 257, 297, 354, 379, 293,  399,  420/89, 231,  300, 378, 382/89 (In C.A.Nos. 3187-88/88 &  I.A.  ’NO. 1/90 (In W.P. Nos. 281/89) and W.P. Nos. 741/90, 3461/89).     Soli J. Sorabjee, Attorney General, Shanti Bhushan,  Ms. Indira  Jaising,  R.K. Garg, Danial Latif,  B.R.L.  lyengar, P.P. Rao, Ashwani Kumar, D.N.M. Ghatate, F.S. Nariman,  Anil B.  Dewan,  Rajinder  Singh, Prashant  Bhushan,  Ms.  Kamini Jaiswal, C.L. Sahu, Anil Nauriya, Vibhuti Jha, Mrs.     A. Mathur, Mrs. A. Mariarputham, R.P. Saxena, R.  Venka- taramani,  P.K. Manohar, Madan Lokur, A.L. Trehan, Ms.  C.S. Lalitha,  Harish  Uppal in person, Mrs. K.  Hingorani,  R.B. Mehrotra, Ms. Lalitha Kaushik, D.K. Garg, Raju Ramachandran, Mukul  Mudgal,  S.R. Bhat, M.S. Ganesh,  V.B.  Mishra,  A.N. Khanwilkar, Ms. Madhu Khatri, P. Parmeswaran, Sakesh  Kumar, Satish  K.  Agnihotri, K. Kachwaha, Mrs. A.K.  Verma,  Ashok Sagar,  Dadachanji,  Vijay Gupta, Ms.  A.  Subhashini,  C.S. Vaidyanathan and Ashok Singh for the appearing Parties. The Judgment of the Court was delivered by     RANGANATH MISRA, CJ. I entirely agree with my noble  and learned  Brother Venkatachaliah and hope and trust that  the judgment he as produced is the epitaph on the litigation.  I usually  avoid  multiple judgments but this seems  to  be  a matter  where  something more than what is and in  the  main judgment perhaps should be said.     Early  in  the morning of December 3, 1984, one  of  the greatest industrial tragedies that history has recorded  got clamped down on the otherwise quiet township of Bhopal,  the capital of Madhya Pradesh. The incident was large in  magni- tude  - 2,600 people died instantaneously and suite  a  good number of the inhabitants of the town suffered from  several ailments. In some cases the reaction manifested  contempora- neously and in others the effect was to manifest itself much later. 276

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   Union  Carbide Corporation (’UCC’ for short),  a  multi- national one, has diverse and extensive international opera- tions  in countries like India, Canada, West Asia,  the  Far East, African countries, Latin America and Europe. It has  a sister concern known as Union Carbide India Limited  (’UCIL’ for short). In the early hours of the 3rd of December, 1984, there was a massive escape of lethal gas from the MIC  Stor- age  Tank of the plant into the atmosphere which led to  the calamity.     Several suits were filed in the United States of America for damages by the local representatives of the deceased and by  many of the affected persons. The Union of  India  under the  Bhopal Gas Leak Disaster (Processing of Claims) Act  of 1985  took upon itself the right to sue for compensation  on behalf of the affected parties and filed a suit for realisa- tion of compensation. The suits were consolidated and  Judge Keenan by his order dated/.2th May, 1988, dismissed them  on the  ground of forum non conveniens subject, inter alia,  to the following conditions:               1.  Union Carbide shall consent to  submit  to               the  jurisdiction of the Courts of  India  and               shall continue to waive defences based on  the               statute of limitations, and               2.  Union Carbide shall agree to  satisfy  any               judgment  rendered  against it  in  an  Indian               Court, and if appealable, upheld by any appel-               late  court  in  that  country,  whether  such               judgment  and  affirmance  comport  with   the               minimal requirements of due process.     The  United States Court of Appeals for the Second  Cir- cuit  by its decision of January 14, 1987, upheld the  first condition and in respect of the second one stated:               "In requiring that UCC consent to enforceabil-               ity  of  an Indian judgment  against  it,  the               district  court proceeded at least in part  on               the  erroneous assumption that, absent such  a               requirement,  the plaintiffs, if  they  should               succeed   in  obtaining  an  Indian   judgment               against  UCC, might not be able to enforce  it               against  UCC  in the United States.  The  law,               however,  is to the contrary, Under  New  York               law, which governs actions brought in New York               to    enforce   foreign   judgments     ......               foreign-country  judgment that is final,  con-               clusive and enforceable where rendered must be               recognised and will be enforced as "conclusive               between  the  parties to the  extent  that  it               grants  or denies recovery of a sum of  money"               except that it is not deemed to be  conclusive               if:               277               "1.  The judgment was rendered under a  system               which does not provide impartial tribunals  or               procedures,  compatible with the  requirements               of due process of law;               2.  The  foreign court did not  have  personal               jurisdiction over the defendant".                    Art.  53. Recognition of Foreign  Country               Money  Judgments.      Although  5304  further               provides   that   under   certain    specified               conditions a foreign country judgment need not               be  recognized,      none of these  conditions               would  apply to the present cases  except  for               the possibility of failure to provide UCC with               sufficient notice of procedings or the  exist-

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             ence  of  fraud in   obtaining  the  judgment,               which  do not presently exist but  conceivably               could occur in the future."     The Court rejected the plea advanced by UCC of breach of due process by non-observance of proper standards and  ulti- mately stated:               "Any denial by the Indian Courts of due  proc-               ess  can be raised by UCC as a defence to  the               plaintiffs’ later attempt to enforce a result-               ing judgment against UCC in this country."     After Judge Keenan made the order of 12th of May,  1986, in September of that year Union of India in exercise of  its power  under the Act filed a suit in the District  Court  at Bhopal.  In  the plaint it was stated that death  toll  upto then  was  2,660 and serious injuries had been  suffered  by several thousand persons and in all more than 5 lakh persons had  sought damages upto then. But the extent and nature  of the injuries or the aftereffect thereof suffered by  victims of  the disaster had not yet been fully  ascertained  though survey  and scientific and medical studies had already  been undertaken. The suit asked for a decree for damages for such amount as may be appropriate under the facts and the law and as may be determined by the Court so as to fully, fairly and finally  compensate  all  persons and  authorities  who  had suffered as a result of the disaster and were having  claims against  the UCC. It also asked for a decree  for  effective damages      on an amount sufficient to deter the  defendant and  other multi-national corporations involved in  business activities  from committing wilful and malicious and  wanton disregard of the rights and safety of the citizens of India. While the litigations were pending in the US Courts an offer of  350 million dollars had been made for settlement of  the claim. When the dispute arising out of interim  compensation ordered by the District Court of Bhopal came before the High Court, efforts for settlement were continued. When the  High Court reduced the quantum of interim compensation from 278 Rs.  350  crores to a sum of Rs. 250 crores,  both  UCC  and Union of India challenged the decision of the High Court  by filing  special leave petitions. It is in these  cases  that the matter was settled by two orders dated 14th and 15th  of February, 1989. On May 4, 1989, the Constitution Bench which had  recorded  the  settlement proceeded to  set  out  brief reasons on three aspects               "(a)  How did this Court arrive at the sum  of               470 million US dollars for an over-all settle-               ment?               (b) Why did the Court consider this sum of 470               million  US  dollars as ’just,  equitable  and               reasonable?                       (c) Why did the Court not pronounce on               certain  important         legal questions  of               far-reaching  importance said to arise in  the               appeals  as to the principles of liability  of               monolithics,  economically  entrenched  multi-               national  companies operating with  inherently               dangerous   technologies  in  the   developing               countries  of        the third world  -  ques-               tions   said  to  be  of  great   contemporary               relevance  to  the democracies of  the  third-               world?"       The Court indicated that considerations of  excellence and  niceties of legal principles were greatly  overshadowed by the pressing problems of very survival of a large  number of  victims.  The  Court also took into  account  the  law’s

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proverbial delays. In paragraph 31 of its order the  Consti- tution Bench said:                          As  to the remaining  question,  it               has been said that many vital juristic princi-               ples  of great contemporary relevance  to  the               Third World generally, and to India in partic-               ular,  touching  problems  emerging  from  the               pursuit  of  such dangerous  technologies  for               economic  gains  by multi-nationals  arose  in               this case. It is said that this is an instance               of lost opportunity to this apex Court to give               the law the new direction of new vital  issues               emerging from the increasing dimensions of the               economic exploitation of developing  countries               by economic forces of the rich ones. This case               also, it is said, concerns the legal limits to               be  envisaged  by the vital interests  of  the               protection of the constitutional right of  the               citizenry,  and  of the  environment,  on  the               permissibilities of such ultra-hazardous tech-               nologies and to prescribe absolute and  deter-               rent standards of liability if harm is  caused               by such enterprises. The prospects of  exploi-               tation of cheap labour and of captive-markets,               it  is said, induces multi-nationals to  enter               into the developing countries for such econom-               ic-exploitation and that this was eminently an               appropriate  case for a careful assessment  of               the legal and Constitutional safeguards stem-               279               ming from these vital issues of great  contem-               porary relevance."     The Bhopal gas leak matter has been heard in this  Court by  four  different Constitution Benches.  The  first  Bench consisted of Pathak, CJ, Venkataramiah, Misra, Venkatachali- ah  and  Ojha, JJ. The hearing continued for  24  days.  The challenge to the validity of the Act was heard by a  differ- ent  Bench consisting of Mukharji, C J, Singh,  Ranganathan, Ahmadi  and Saikia, JJ. where the hearing continued  for  27 days.  The review proceedings wherein challenge was  to  the settlement were then taken up for hearing by a  Constitution Bench  presided  over  by Mukharji, CJ  with  Misra,  Singh, Venkatachaliah  and  Ojha, JJ. as the  other  members.  This continued for 18 days. It is unfortunate that Mukharji,  CJ. passed  away soon after the judgment had been  reserved  and that necessitated a rehearing. The matters were re-heard  at the  earliest opportunity and this further hearing  took  19 days. Perhaps this litigation is unique from several  angles and  this feature is an added one to be particularly  noted. The  validity of the Act has been upheld and three  separate but  concurring judgments have been delivered. At the  final hearing of these matters long arguments founded upon certain varying observations of the learned Judges constituting  the vires Bench in their respective decisions were advanced  and some of them have been noticed in the judgment of my learned brother.     In the main judgment now being delivered special  atten- tion  has been devoted to the conduct of Union of  India  in sponsoring the settlement in February, 1989, and then asking for  a  review of the decision based upon  certain  develop- ments. Union of India as rightly indicated is a legal entity and has been given by the Constitution the right to sue  and the  liability  of  being sued. Under  our  jurisprudence  a litigating party is not entitled to withdraw from a  settle- ment by choice. Union of India has not filed a petition  for

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review but has supported the stand of others who have  asked for  review.  The technical limitations of review  have  not been invoked in this case by the Court and all aspects  have been permitted to be placed before the Court for its consid- eration.     It  is interesting to note that there has been no  final adjudication  in  a mass tort action anywhere.  The  several instances  which  counsel for the parties placed  before  us were  cases where compensation had been paid by  consent  or where  settlement was reached either directly or  through  a circuitous  process.  Such an alternate procedure  has  been adopted over the years on account of the fact that trial  in a  case of this type would be protracted and may  not  yield any  social benefit. Assessment of compensation in cases  of this  type has generally been by a rough and ready  process. In fact, every assessment of compensation to some extent  is by  such process and the concept of just compensation is  an attempt to ap- 280 proximate compensation to the loss suffered. We have pointed out  in our order of May 4, 1989, that the estimate  in  the very nature of things cannot share the accuracy of an  adju- dication’.  I  would humbly add that  even  an  adjudication would only be an attempt at approximation.     This  Court  did take into account while  accepting  the settlement the fact that though a substantial period of time had  elapsed the victim were without relief. For quite  some time  the number of claim. In courts or before the  authori- ties  under  the Act was not very  appreciable.  Perhaps  an inference  was  drawn from the figures that  the  subsequent additions were to be viewed differently. I do not intend  to indicate that the claims filed later are frivolous  particu- larly on account of the fact that there are contentions  and some  prima facie materials to show that the iII-effects  of exposure to MIC could manifest late. The nature of  injuries suffered  or  the  effect of exposure are not  the  same  or similar;  therefore, from the mere number no  final  opinion could  be reached about the sufficiency of the quantum.  The Act  provides for a Fund into which the decretal sum has  to be  credited.  The statute contemplates of a  procedure  for quantification of individual entitlement of compensation and as and when compensation becomes payable it is to be met out of the Fund. The fact that the Union of India has taken over the right to sue on behalf of all the victims indicates that if there is a shortfall in the Fund perhaps it would be  the liability  of Union of India to meet the same. Some  of  the observations  of  the  vires Bench support  this  view.  The genuine claimants thus have no legitimate grievance to  make as long as compensation statutorily quantified is  available to them because the source from which the compensation comes into the Fund is not of significant relevance to the  claim- ant.     When the settlement was reached a group of social activ- ists,  the Press and even others claiming to be trustees  of society  came  forward to question it. For  some  time  what appeared to be a tirade was carried on by the media  against the  Court. Some people claiming to speak on behalf  of  the social Think Tank in meetings disparaged the Court. Some  of the innocent victims were even brought into the Court  prem- ises to shout slogans at the apex institution. Some  respon- sible  citizens  oblivious of their own role in  the  matter carried on mud-slinging.               The main foundation of the challenge was  two-               fold:               (i)  The  criminal cases could not  have  been

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             compounded  or  quashed and  immunity  against               criminal action could not be granted; and               (ii)  the quantum of compensation settled  was               grossly low. 281     So far as the first aspect is concerned. the main  judg- ment squarely deals with it and nothing  more need be  said. As far as the second aspect goes, the argument has been that the principle enunciated by this Court in M.C Mehta v. Union of  India,  [1987] 1 SCC 395 should have been  adopted.  The rule in Rylands v. Fletcher [1868] 3 House of Lords 330  has been  the  universally accepted authority in the  matter  of determining compensation in tort cases of this type.  Ameri- can  jurisprudence writers have approved the ratio  of  that decision and American Courts too have followed the ’decision as  a  precedent. This Court in paragraph 31  of  the  Mehta judgment said: "The  Rule  of Rylands v. Fletcher was evolved in  the  year 1866 and it provides that a person who for his own  purposes brings on to his land and collects and keeps there  anything likely  to  do mischief if it escapes must keep  it  at  his peril  and, if he fails to do so, is prima facie liable  for the  damage which is the natural consequence of its  escape. The liability under this rule is strict and it is no defence that  the  thing escaped without that person’s  wilful  act, default  or neglect or even that he had no knowledge of  its existence. This rule laid down a principle of liability that 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.  Of course, this rule applies only  to  non- natural  user  of the land and it does not apply  to  things naturally  on the land or where the escape is due to an  act of God and an act of a stranger or the default of the person injured  or where the thing which escapes is present by  the consent  of  the person injured or in  certain  cases  where there  is statutory authority. Vide Halsbury’s Laws of  Eng- land,  vol.  45, para 1305. Considerable case  law  has  de- veloped  in England as to what is natural and what  is  non- natural use of land and what are precisely the circumstances in which this rule may be displaced. But it is not necessary for  us to consider these decisions laying down the  parame- ters  of  this rule because in a modern  industrial  society with  highly developed scientific knowledge  and  technology where  hazardous  or  inherently  dangerous  industries  are necessary  to carry as part of the developmental  programme, this  rule  evolved in the 19th century at a time  when  all these  developments of science and technology had not  taken place cannot afford any guidance in evolving any standard of liability  consistent with the conStitutional norms and  the needs  of the present day economy and social  structure.  We need  not feel inhibited by this rule which was  evolved  in the context of a totally different kind of rule 282         which  was evolved in the context of a totally  dif- ferent kind of         economy. Law has to grow in order  to satisfy  the needs of the         fast changing society  and keep  abreast with the economic         developments  taking place  in the country. As new situations          arise  the law  has  to  be  evolved in order  to  meet  the  challenge of such new situations. Law cannot afford to remain  static. We  have  to evolve new principles and lay  down  new  norms which  would  adequately deal with the  new  problems  which arise  in a highly industrialised economy. We  cannot  allow our judicial  thinking to be constricted by reference to the

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law as it prevails   in England or for the matter of that in any  other foreign  country. We no longer need the  crutches of  a  foreign legal order.   We are certainly  prepared  to receive light from whatever   source it comes but we have to build  our own jurisprudence  and we cannot  countenance  an argument  that merely because  the law in England  does  not recognise  the  rule of strict and   absolute  liability  in cases  of hazardous or inherently dangerous   activities  or the  rule laid down in Rylands v. Fletcher as  developed  in England    recognises   certain   limitations   and    excep tions, we in India must hold back our hands and not  venture to  evolve a new principle of liability since English courts have not   done so. We have to develop our own law and if we find that it   is necessary to construct a new principle  of liability to deal with an unusual situation which has arisen and which is likely to arise in future on account of hazard- ous  or inherently dangerous industries which are  concommi- tant  to an industrial  economy, there is no reason  why  we should hesitate to evolve         such principle of liabili- ty merely because it has not been so done in England. We are of  the view that an enterprise which  is engaged in a  haz- ardous  or  inherently  dangerous industry   which  poses  a potential  threat to the health and safety of  the   persons working  in  the  factory and residing  in  the  surrounding areas owes an absolute and non-delegable duty to the  commu- nity to ensure that no harm results to anyone on account  of hazardous  or  inherently dangerous nature of  the  activity which  it has undertaken. The enterprise must be held to  be under  an    obligation  to provide that  the  hazardous  or inherently    dangerous  activity, the  enterprise  must  be absolutely  liable  to    compensate for such  harm  and  it should  be no answer to the   enterprise to say that it  had taken  all  reasonable care and that     the  harm  occurred without  any  negligence on its part.  Since  the    persons harmed   on   account  of  the   hazardous   or   inherently dangerous activity carried on by the enterprise would not be in 283 a  position  to isolate the process of  operation  from  the hazardous  preparation  of substance or  any  other  related element  that caused the harm the enterprise  held  strictly liable for causing such harm as a part of the social cost of carrying on the hazardous or inherently dangerous  activity. If  the enterprise is permitted to carry on a  hazardous  or inherently  dangerous activity for its profit the  law  must presume  that such permission is conditional on  the  enter- prise 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  inher- ently dangerous activity for private profit can be tolerated only  on condition that the enterprise engaged in such  haz- ardous  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. This principle is also sustainable on the ground that the enterprise alone has the  resource to discover and guard against hazards or  dan- gers  and to provide warning against potential  hazards.  We would there fore hold that where an enterprise is engaged in a  hazardous or inherently dangerous activity and  harm  re- sults  to anyone on account of an accident in the  operation of  such hazardous or inherently dangerous activity  result- ing,  for example, in escape of toxic gas the enterprise  is strictly  and absolutely liable to compensate all those  who are  affected  by  the accident and such  liability  is  not

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subject to any of the exceptions which operate vis-a-vis the tortious  principle  of strict liability under the  rule  of Rylands v. Fletcher."     In M.C. Mehta’s case no compensation was awarded as this Court  could  not  reach the conclusion  that  Shriram  (the delinquent  company) came within the meaning of  "State"  in Article  12 so as to be liable to the discipline of  Article 21  and to be subjected to a proceeding under Article 32  of the Constitution. Thus what was said essentially obiter.     The extracted part of the conservation from M.C. Mehta’s case  perhaps is a good guideline for working out  compensa- tion  in the cases to which the ratio is intended to  apply. The statement of the law ex-facie makes a departure from the accepted legal position in Rylands v. Fletcher. We have  not been  shown any binding precedent from the American  Supreme Court where the ratio of M. C. Mehta’s decision has in terms been applied. In fact Bhagwati, CJ clearly indicates in  the judgment that his view is a departure from the law  applica- ble to the western countries. 284      We are not concerned in the present case as to  whether the  ratio of M.C. Mehta should be applied to cases  of  the type referred to in it in India. We have to remain cognizant of  the fact that the Indian assets of UCC through UCIL  are around Rs.100 crores or so. For any decree in excess of that amount,  execution has to be taken in the United States  and one  has  to remember the observation of the U.S.  Court  of Appeals  that the defence of due process would be  available to be raised in the execution proceedings. The decree to  be obtained  in the Bhopal suit would have been a money  decree and it would have been subject to the law referred to in the judgment  of the U.S. Court of Appeals. If the  compensation is determined on the basis of strict liability--a foundation different  from the accepted basis in the United  States  -- the  decree would be open to attack and may not be  executa- ble.      If the litigation was to go on on merits in the  Bhopal Court it would have perhaps taken at least 8 to 10 years; an appeal to the High Court and a further appeal to this  Court would  have  taken in all around another spell of  10  years with  steps for expedition taken. We can, therefore,  fairly assume  that litigation in India would have taken around  20 years  to reach finality. From 1986, the year when the  suit was instituted, that would have taken us to the beginning of the next century and then steps would have been made for its execution  in the United States. On the basis that it was  a foreign  judgment, the law applicable to the New York  Court should  have  been applicable and the ’due  process’  clause would  have become relevant. That litigation in the  minimum would  have  taken some 8-10 years to  be  finalised.  Thus, relief  would  have  been available to the  victims  at  the earliest  around  2010. In the event the U.S.  Courts  would have  been of the view that strict liability was foreign  to the  American  jurisprudence  and contrary  to  U.S.  public policy,  the  decree  would not have been  executed  in  the United  States  and apart from the Indian  assets  of  UCIL, there  would  have  been no scope for  satisfaction  of  the decree.  What was said by this Court in  Municipal  Council, Ratlam v. Vardichand & Ors., [1981] 1 SCR 97 may be usefully recalled:               "Admirable  though  it may be, it is  at  once               slow  and costly. It is a finished product  of               great beauty, but entails an immense sacrifice               of time, money and talent.               This  "beautiful" system is frequently a  lux-

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             ury;  it tends to give a high quality of  jus-               tice  only  when, for one reason  or  another,               parties can surmount the substantial  barriers               which  it  erects to most people and  to  many               types of claims."      We had then thought that the Bhopal dispute came within the last category and now we endorse it. 285     When dealing with this case this Court has always  taken a  pragmatic  approach. The oft-quoted saying of  the  great American  Judge that ’life is not logic but experience’  has been  remembered.  Judges of this Court are  men  and  their hearts  also bleed when calamities like the Bhopal gas  leak incident occur. Under the constitutional discipline determi- nation of disputes has been left to the hierarchical  system of Courts and this Court at its apex has the highest concern to  ensure that Rule of Law works effectively and the  cause of justice in no way suffers. To have a decree after  strug- gling for a quarter of a century with the apprehension  that the  decree  may be ultimately found. not to  be  executable would  certainly not have been a situation which this  Court could countenance.     In  the  order of May 4, 1989, this  Court  had  clearly indicated that it is our obligation to uphold the rights  of the  citizens  and to bring to them a  judicial  fitment  as available  in  accordance  with the laws.  There  have  been several  instances where this Court has gone out of its  way to  evolve principles and make directions which  would  meet the demands of justice in a given situation. This,  however, is  not an occasion when such an experiment could have  been undertaken  to formulate the Mehta principle of  strict  li- ability at the eventual risk of ultimately losing the  legal battle.     Those  who have clamoured for a judgment on  merit  were perhaps not alive to this aspect of the matter. If they were and  yet so clamoured, they are not true representatives  of the  cause  of the victims, and if they are not,  they  were certainly misleading the poor victims. It may be right  that some people challenging the settlement who have come  before the  Court  are  the real victims. I assume  that  they  are innocent and unaware of the rigmarole of the legal  process. They  have  been led into a situation  without  appreciating their  own  interest. This would not be the  first  instance where people with nothing as stake have traded in the misery of others.     This  Court is entitled under the constitutional  scheme to certain freedom of operation. It would be wrong to assume that there is an element of judicial arrogance in the act of the  Court  when it proceeds to act in a  pragmatic  way  to protect  the victims. It must be conceded that the  citizens are equally entitled to speak in support of their rights.  I am  prepared to assume, nay, concede, that public  activists should  also be permitted to espouse the cause of  the  poor citizens but there must be a limit set to such activity  and nothing perhaps should be done which would affect the digni- ty  of  the Court and bring down the serviceability  of  the institution to the people at large. Those who are acquainted with jurisprudence and enjoy social privilege as men educat- ed in law owe an obligation to the community of educating it properly and allowing the judicial process to continue un- 286 soiled. Lord Simonds in Shaw v. Director of Public  Prosecu- tions, (1981) 2 All E.R. 447 said:               "I  entertain no doubt that there  remains  in               the courts of law a residual power to  enforce

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             the  supreme  and fundamental purpose  of  the               law, to conserve not only the safety and order               but also the moral welfare of the State." Let  us  remember  what had once been said  in  a  different context:               "It depends upon the present age whether  this               great  national institution shall  descend  to               our  children  in  its  masculine  majesty  to               protect  the  people and  fulfil  their  great               expectations."     Let  us  also  remember what Prof. Harry  Jones  in  the Efficacy of Law has said:               "There  are  many  mansions in  the  house  of               Jurisprudence,  and I would not be little  any               one’s perspective on law in society,  provided               only. that he does not insist that his is  the               only  perspective that gives a true and  mean-               ingful view of ultimate legal reality."     In  the  facts and circumstances indicated and  for  the reasons adopted by my noble brother in the judgment. I am of the  view  that  the decree obtained on  consent  terms  for compensation does not call for review. I agree with the majority view.     VENKATACHALIAH, J. - These Review Petitions under  Arti- cle 137 and Writ Petitions under Article 32 of the Constitu- tion  of  India raise certain fundamental issues as  to  the constitutionality,  legal-validity, propriety  and  fairness and  conscionability of the settlement of the claims of  the victims  in a mass-tort-action relating to what is known  as the "Bhopal Gas Leak Disaster"considered world’s  industrial disaster, unprecedented as to its nature and magnitude.  The tragedy, in human terms, was a terrible one. It has taken  a toll  of  4000  innocent human lives and has  left  tens  of thousands  of  citizens  of Bhopal  physically  affected  in various  degrees. The action was brought up by the Union  of India as parens-patriae before the District Court Bhopal  in Original  Suit  No. 1113 of 1986 pursuant to  the  statutory enablement in that behalf under the Bhopal Gas Leak Disaster (Processing  of Claims) Act 1985 (’Act for short’)  claiming 3.3 Billion Dollars as compensation. When an  inter-locutory matter pertaining to the in- 287 terim-compensation  came  up for hearing there was  a  Court assisted  settlement  of the main suit claim itself  at  470 Million  U.S.  Dollars recorded by he orders of  this  Court dated  14th  and 15th of February 1989. The  petitions  also raise  questions  as to the jurisdiction and powers  of  the Court  to sanction and record such settlement  when  appeals brought  up  against  an inter-locutory  order,  were  alone before this court.     The  Union Carbide (India) Limited (for short the  UCIL) owned  and  operated, in the northern sector  of  Bhopal,  a chemical plant manufacturing pesticides commercially market- ed under the trade-names "Sevin" and "Temik". Methyl  Isocy- anate  (MIC)  is an ingredient in the composition  of  these pesticides. The leak and escape of the poisonous fumes  from the  ranks  in which they were stored occurred late  in  the night  on the 2nd of December 1984 as a result of  what  has been  stated  to  be a ’run-away’ reaction  owing  to  water entering into the storage tanks. Owing to the then  prevail- ing  wind conditions the fumes blew into the hutments  abut- ting  the  premises of the plant and the residents  of  that area  had  to bear the burnt of the fury  of  the  vitriolic fumes. Besides large areas of the city were also exposed  to the gas.

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   2.  Referring to this industrial accident this Court  in the course of its order dated 4th May, 1989 had occasion  to say:               "The Bhopal Gas Leak tragedy that occurred  at               midnight on 2nd December, 1984, by the  escape               of deadly chemical fumes form the  appellant’s               pesticide-factory was a horrendous  industrial               mass  disaster, unparalleled in its  magnitude               and devastation and remaining a ghastly  monu-               ment to the de-humanising influence of  inher-               ently dangerous technologies. The tragedy took               an  immediate  toll of  2,660  innocent  human               lives  and left tens of thousands of  innocent               citizens  of  Bhopal  physically  impaired  or               affected  in various degrees. What added  grim               poignance  to the tragedy was that the  indus-               trial-enterprise was using Methyl Iso-cyanate,               a lethal toxic poison, whose potentiality  for               destruction  of  life  and  biotic-communities               was, apparently, matched only by the lack of a               prepackage of relief procedures for management               of  any accident based on adequate  scientific               knowledge  as  to  the  ameliorative   medical               procedures for immediate neutralisation of its               effects."     The toll of life has since gone up to around four  thou- sand  and  the health of tens of thousands  of  citizens  of Bhopal City has come to be 288 affected and impaired in various degrees of seriousness. The effect  of the exposure of the victims to Methyl  Isocyanate (MIC)  which was stored in considerably large quantities  in tanks in the chemical plant of the UCIL which escaped on the night of the 2nd of December 1984 both in terms of acute and chronic  episodes  has been much discussed. There  has  been growing body of medical literature evaluating the  magnitude and intensity of the health hazards which the exposed  popu- lation of Bhopal suffered as immediate effects and to  which it was potentially put at risk.     It is stated that the MIC is the most toxic chemical  in industrial use. The petitioners relied upon certain  studies on  the  subject carried out by the  Toxicology  Laboratory, Department  of  Industrial  Environmental  Health  Sciences, Graduate  School of Public Health, University  of  Pittsburg [reported  in  Environmental Health Perspective  Volume  72, pages 159 to 167]. Though it was initially assumed that  MIC caused merely simple and short-term injuries by scalding the surface tissues owing to its highly exothermic reaction with water it has now been found by medical research that  injury caused by MIC is not to the mere surface tissues of the eyes and the lungs but is to the entire system including  nephro- logical  lymph, immune, circulatory system, etc. It is  even urged  that exposure to MIC has mutagenic effects  and  that the  injury  caused by exposure to MIC is  progressive.  The hazards of exposure to this lethal poison are yet an unknown quanta.     Certain studies undertaken by the Central Water and  Air Pollution  Control Board, speak of the high toxicity of  the chemical.     The estimates of the concentration of MIC at Bhopal that fateful night by the Board inculcate a concentration of  26- 70 parts per million as against the ’OSHA’ standard for work environment  of 0.02 P.P.M. which is said to  represent  the threshold  of  tolerance. This has led to what can  only  be described  as a grim and grisly tragedy. Indeed the  effects

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of exposure of the human system to this toxic chemical  have not  been  fully grasped. Research studies seem  to  suggest that  exposure  to  this chemical fumes  renders  the  human physiology susceptible to long term pathology and the  toxin is  suspected to lodge itself in the tissues and cause  long term  damage to the vital systems, apart from  damaging  the exposed  parts  such as the eyes, lung membrane ere.  It  is also  alleged that the ’latency-period’ for the  symptomatic manifestation of the effects of the exposure is such that  a vast  section of the exposed population is put at  risk  and the potential risk of long term effects is presently  unpre- dictable. It is said that even in cases of victims presently manifesting  symptoms, the prospects of aggravation  of  the condition and manifestation of other effects of exposure are 289 statable possibilities.     Immediately symptomatic cases showed ocular  inflamation affecting  visual acuity and respiratory distress  owing  to pulmonary edema and a marked tending towards general morbid- ity. It is argued that analysis of     the case histories of persons  manifesting  general morbidity  trends  at  various intervals from 3rd December, 1989 upto April, 1990  indicate that      in all the severely affected, moderately  affected and  mildly  affected areas the  morbidity  trend  initially showed  a  decline compared with the acute  phase.  But  the analysis  for  the later periods, it is  alleged,  showed  a significant trend towards increase of respiratory, opthalmic and  general  morbidity in all the three areas. It  is  also sought to be pointed out that the fatal miscarriages in  the exposed  group was disturbingly higher than in  the  control group  as  indicated by the studies carried out  by  medical researchers. One of the points urged is that the likely long term effects of exposure have not been taken into account in approving the settlement and that the only way the  victims’ interests could have been protected against future  aggrava- tion of their gas related health hazards was by the incorpo- ration of an appropriate "re-opener" clause.     3.  On 29th of March, 1985 the Bhopal Gas Leak  Disaster (Processing of Claims) Act, 1985 (Act) was passed  authoris- ing  the Government of India, as parens patriae  exclusively to represent the victims so that interests of the victims of the  disaster are fully protected, and that claims for  com- pensation were pursued speedily, effectively, equitably  and to  the  best advantage of the claimants. On 8th  of  April, 1985 Union of India, in exercise of the powers conferred  on it under the Act, instituted before the U.S.District  Court, Southern  District of New York, an action on behalf  of  the victims  against  the Union Carbide  Corporation  (UCC)  for award of compensation for the damage caused by the disaster.     A  large number of fatal-accidents  and  personal-injury actions  had earlier also come to be filed in Courts in  the United States of America by and on behalf of about  1,86,000 victims. All these earlier claims instituted in the  various Courts  in United States of America had come to be  consoli- dated  by the "Judicial Panel on Multi District  Litigation" by  its  direction dated 6th February 1985 and  assigned  to United  States District Court, Southern District of the  New York, presided over by a Judge Keenan. The claim brought  by the Union of India was also consolidated with them.      The  UCC  held  50.9% of the shares in  the  UCIL.  The latter  was its subsidiary. UCC’s liability was asserted  on the averments that UCC, apart from being the holding  compa- ny, had retained and exercised powers of 290 effective control over its Indian subsidiary in terms of its

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Corporate Policy and the establishment of the Bhopal  Chemi- cal  Plant- with defective and inadequate  safety  standards which,  compared  with  designs of  UCC’s  American  plants, manifested.  an indifference and disregard for  humansafety- was  the result of a conscious and deliberate action of  the UCC.  It  was  averred that UCC had,  on  considerations  of economic  advantages,  consciously  settled  and  opted  for standards  of safety for its plant in a  developing  country much  lower’ than what it did for its own American  counter- parts.The  claim was partly based on ’Design  liability’  on the part of UCC. The liability was also said to arise out of the use of ultra-hazardous chemical poisons said to engender not merely strict liability on Rylands v. Fletcher principal but an absolute liability on the principals of M.C.  Mehta’s case.     The defences of the UCC, inter-alia, were that UCC was a legal entity distinct in law from the UCIl that factually it never  exercised any direct and effective control over  UCIL and  that  its corporate policy itself recognised,  and  was subject to, the over-riding effect of the municipal laws  of the  country and therefore subject to the statutes in  India which  prohibit any such control by a foreign  company  over its  Indian  subsidiary, except the exercise  of  rights  as share-holder permitted by-law.     The  UCC also resisted the choice of the American  Forum on  the plea of Forum-Non-Conveniens. Union of India  sought to  demonstrate that the suggested alternative forum  before the judiciary in India was not an ’adequate’ forum  pointing out  the  essential  distinction between  the  American  and Indian  systems of Tort Law both substantive and  procedural available under and a comparison of the rights, remedies and procedure  the competing alternative forums. The nature  and scope of a defendant’s plea of Forum Non-Conveniens and  the scope  of  an enquiry on such plea  have  received  judicial considerations before the Supreme Court of United States  of America in Gulf Oil Corp. v. Gilbert [330 U.S. 501],  Koster v.  Lumbermens Mutual Casualty Co. 1330 U.S. 518] and  Piper Aircraft Co. v. Reyno [454 U.S. 235].     The comparison of rights, remedies and procedures avail- able in the two proposed forums though not a "major-factor", nevertheless, were relevant tests to examine the adequacy of the suggested alternative forum. System of American Tort Law has many features which make it a distinctive system.  Judge Keenan  adopting the suggested approach in Piper’s  decision that  doctrine of forum non conveniens was desinged in  part to help courts in avoiding complex exercises in  comparative laws and that the decision should not hinge on an  unfavour- able change in law which was 291 lot a major factor in the analysis was persuaded to the view that differences in the system did not establish  inadequacy of  the alternative forum in India. Accordingly on  12th  of May, 1986, Judge Keenan allowed UCC’s plea and held that the Indian  judiciary  must have the "opportunity to  stand  all before the world and to pass judgment on  behalf of its  own people".     4.  Thereafter  the Union of India  was  constrained  to alter  its  choice  of the forum and to  pursue  the  remedy against the UCC in the District Court at Bhopal. That is how Original  Suit No. 1113 of 1986 seeking a compensation of  3 Billion Dollars against the UCC and UCIL came to be field at Bhopal.     Efforts  were  made by the District Court at  Bhopal  to explore the possibilities of a settlement. But they were not fruitful.  Zahreeli  Gas Kand Sangharsh Morcha  one  of  the

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victim-organisations  appears  to have moved the  Court  for award  of  interim-compensation.  On  13th  December   1987, The District Court made an order directing payment of Rupees 350  crores   as interim compensation. UCC  challenged  this award’  before  the High Court of Madhya Pradesh.  The  High Court by its order dated 4th of April,     1988 reduced  the quantum  of  interim compensation to Rs.  250  crores.  both Union  of India and UCC brought up appeals by Special  Leave before  this  Court  against the order of  the  High  Court- Government of India asailing the reduction made by the  High Court  in the quantum of interim compensation from  Rs.  350 crores  to  Rs. 250 crores and the UCC  assailing  the  very jurisdiction  and permissibility to grant interim  compensa- tion  in  a part-action where the very  basis  of  liability itself had been disputed. The contention of the UCC was that in  a suit for damages where the basis of the liability  was disputed  the  Court  had  no power  to  make  an  award  of interim-compensation.  It was urged that in  common  law-and that  the  law of India too-in a suit for damages  no  court could award interim-compensation.     Prior to 1980 when the Rules of Supreme Court in England were amended (Amendment No. 2/1980) Courts in United Kingdom refused interim-payments in actions for damages. In Moore v. Assignment Courier 1977 (2) All ER 842 (CA)], it was  recog- nised  that  there was no such power in common law.  It  was thereafter that the rules of the Supreme   Court were amend- ed by inserting Rules 10 and 11 of Order 29 Rules of Supreme Court specifically empowering the High Court to grant inter- im  relief  in tort injury actions.  The  amended  provision stipulated certain preconditions for the invokability of its enabling provision. But in England Lord Denning in the Court of  Appeal  thought that even under the  common      by  the court could make an interim award for damages [(See Lim  Poh too  v. Camden Islington Area Health Authority, (1979 1  AER 332). But his 292 view was disapproved by the House of Lords (See 1979  (2)AER 910 at pages 913, 914). Lord Scarman said:               "Lord  Denning  MR  in the  Court  of  Appeals               declared that a radical reappraisal of the law               is  needed. I agree. But I part  company  with               him  on  ways and means. Lord Denning  MR  be-               lieves it can be done by the Judges, whereas I               would  suggest to your Lordships that  such  a               reappraisal   calls  for  social,   financial,               economic  and administrative  decisions  which               only  the legislature can take.  The  perplex-               ities  of the present case, following  on  the               publication of the report of Royal  Commission               of  Civil Liability and Compensation for  Per-               sonal  Injury (the Pearson report),  emphasise               the need for reform of the law.               Lord  Denning MR appeared, however, to  think,               or at least to hope, that there exists machin-               ery  in the rules of the Supreme  Court  which               may  be adopted to enable an award of  damages               in  a case such as this to be ’regarded as  an               interim award’.               It  is  an attractive,  ingenious  suggestion,               but, in my judgment, unsound. For so radical a               reform  can be made neither by judges  nor  by               modification  of  rules of  court.  It  raises               issues of social economic and financial policy               not  amenable to judicial reform,  which  will               almost certainly prove to be controversial and

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             can be resolved by the legislature only  after               full consideration of factors which cannot  be               brought  into  clear focus or be  weighed  and               assessed, in the course of the forensic  proc-               ess.  The Judge, however, wise, creative,  and               imaginative  he may be, is  cabined,  cribbed,               confined, bound in not as was Macbeth, to  his               saucy  doubts and fears’ but the evidence  and               arguments of the litigants. It is this limita-               tion, inherent in the forensic process,  which               sets  bounds  to  the scope  of  judicial  law               reform."     But in cases governed by common law and not affected  by the  statutory  changes  in the Rules of  Supreme  Court  in U .K., the Privy Council said:               "Their Lordships cannot leave this case  with-               out commenting on two unsatisfactory features.               First, there is the inordinate length of  time               which has elapsed between service of the  writ               in  February  1977 and final disposal  of  the               case  in the early months of 1984. The  second               is that, as their Lordships, under-               293               stand the position, no power exists in a  case               where  liability  is admitted for  an  interim               payment to be ordered pending a final decision               on  quantum of damages. These are  matters  to               which consideration should be given. They are,               of course, linked; though the remedy for delay               may be a matter of judicial administration, it               would  be  seen legislation may be  needed  to               enable an interim award to be made." [See: Jamil Bin Harun v. Young Kamstah: 1984 (1)AC 529, 5381     The  District Court sought to sustain the interim  award on the inherent powers of the court preserved in Section 151 CPC.  But  the  High Court of Madhya  Pradesh  thought  that appeal to and reliance on Section 151 was not appropriate It invoked Section 9 CPC read with the principle underlying the English  Amendment, without its strict  pre-conditions.  The correctness of this view was assailed by the UCC before this Court in the appeal.     On  14th February, 1989 this Court recorded an  over-all settlement  of the claims in the suit for 470  million  U.S. Dollars  and the consequential termination of all civil  and criminal proceedings. The relevant portions of the order  of this Court dated 14th February, 1989 provide:               (1) The Union Carbide Corporation shall pay  a               sum of U.S. Dollars 470 millions (Four hundred               and seventy Millions) to the Union of India in               full  settlement  of all  claims,  rights  and               liabilities related to and arising out of  the               Bhopal Gas disaster.               (2)  The  aforesaid sum shall be paid  by  the               Union  Carbide  Corporation to  the  Union  of               India on or before 31st March, 1989.               (3) To enable the effectuation of the  settle-               ment,  all  civil proceedings related  to  and               arising  out of the Bhopal Gas disaster  shall               hereby  stand  transferred to this  Court  and               shall stand concluded in terms of the  settle-               ment, and all criminal proceedings related  to               and  arising out of the disaster  shall  stand               quashed wherever these may be pending.               294                       A  memorandum of settlement  shall  be

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             filed before us tomorrow setting forth all the               details   of   the   settlement   to    enable               consequential directions, if any, to issue."      On  15th February, 1989 the terms of settlement  signed by  learned Attorney General for the Union of India and  the Counsel for the UCC was   filed. That memorandum provides:               1.  "The  parties acknowledge that  the  order               dated February 14 1989 as supplemented by  the               order  dated February 15, 1989 disposes of  in               its  entirety all proceedings in Suit  No.1113               of 1986. This settlement shall finally dispose               of all past, present and future claims, causes               of  action and civil and criminal  proceedings               (of any nature whatsoever wherever pending) by               all Indian citizens and all public and private               entities with respect to all past, present and               future  deaths, personal injuries  health  ef-               fects compensation, losses, damages and  civil               and criminal complaints of any nature  whatso-               ever against UCC, Union Carbide India Limited,               Union  Carbide Eastern, and all of their  sub-               sidiaries  and affiliates as well as  each  of               their present and former directors,  officers,               employees, agents representatives,  attorneys,               advocates  and  solicitors  arising  out   of,               relating  to or concerned with the Bhopal  gas               leak  disaster,  including past,  present  and               future  claims, causes of action and  proceed-               ings  against each other. All such claims  and               causes  of  action whether within  or  outside               India  of  Indian citizens public  or  private               entities  are hereby  extinguished,  including               without limitation each of the claims filed or               to be filed under the Bhopal Gas Leak Disaster               (Registration  and Processing  Claims)  Scheme               1985, and all such civil proceedings in  India               are  hereby transferred to this court and  are               dismissed with prejudice, and all such  crimi-               nal proceedings including contempt proceedings               stand quashed and accused deemed to be acquit-               ted.               2.  Upon full payment in accordance  with  the               Court’s  directions the undertaking  given  by               UCC  pursuant to the order dated November  30,               1986  in  the District  Court,  Bhopal  stands               discharged, and all orders passed in Suit  No.               1113 of 1986 and or in any Revision therefrom,               also stand discharged." A  further  order was made by this Court on  15th  February, 1989 295 which,  apart from issuing directions in paragraphs 1 and  2 thereof  as  to the mode of payment of the said sum  of  470 million U.S. Dollars pursuant to and in terms of the settle- ment, also provided the following:                        "3.  Upon  full payment  of  the  sum               referred to in paragraph 2 above:               (a) The Union of India and the State of Madhya               Pradesh  shall  take all steps  which  may  in               future become necessary in order to  implement               and  give effect to this order  including  but               not limited to ensuring that any suits, claims               or  civil or criminal complaints which may  be               filed  in  future  against  any   Corporation,               Company or person referred to in this  settle-

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             ment  are defended by them and disposed of  in               terms of this order               (b) Any such suits, claims or civil or  crimi-               nal  proceedings filed or to be  filed  before               any court or authority are hereby enjoined and               shall not be proceeded with before such  court               or authority except for dismissal of  quashing               in terms of this order.               4.  Upon full payment in accordance  with  the               Court’s directions:               (a)  The  undertaking given by  Union  Carbide               Corporation  pursuant  to the order  dated  30               November,  1986 in the District  Court  Bhopal               shall stand discharged, and all orders  passed               in  Suit No. 1113 of 1986 and/or  in  revision               therefrom shall also stand discharged.               (b) Any action for contempt initiated  against               counsel  or parties relating to this case  and               arising out of proceedings in the courts below               shall be treated as dropped."     5. The settlement is assailed in these Review  Petitions and Writ Petitions on various grounds. The arguments of  the petitioners  in the case have covered a wide range and  have invoked every persuasion--jurisdictional, legal,  humanitar- ian  and those based on considerations of public-policy.  It is urged that the Union of India had surrendered the  inter- ests  of the victims before the might of multinational  car- tels  and that what are in issue in the case are matters  of great  moment  to developing countries in general.  Some  of these exhortations were noticed by this Court in the  course of its order of 4th May, 1989 in the following words:               "31. As to the remaining question, it has been               said  that many vital juristic  principles  of               great contemporary relevance to the               296               Third World generally, and to India in partic-               ular,  touching  problems  emerging  from  the               pursuit  of  such dangerous  technologies  for               economic  gains  by multi-nationals  arose  in               this case. It is said that this is an instance               of lost opportunity to this apex Court to give               the  law  the new direction  on  vital  issues               emerging from the increasing dimensions of the               economic exploitation of developing  countries               by economic forces of the rich ones. This case               also, it is said, concerns the legal limits to               be  envisaged  in the vital interests  of  the               protection of the constitutional rights of the               citizenry,  and  of the  environment,  on  the               permissibility  of such ultra-hazardous  tech-               nologies and to prescribe absolute and  deter-               rent standards of liability if harm is  caused               by such enterprises. The prospect of exploita-               tion  of cheap labour and of  captive-markets,               it  is said, induces multinationals  to  enter               into the developing countries for such econom-               ic-exploitation and that this was eminently an               appropriate  case for a careful assessment  of               the legal and Constitutional safeguards  stem-               ming from these vital issues of great  contem-               porary relevance. On  the  importance and relevance of  these  considerations, this Court said:                       32.  These issues and certain  cognate               areas  of  even  wider  significance  and  the

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             limits of the adjudicative disposition of some               of  their  aspects  are  indeed  questions  of               seminal  importance.   The culture  of  modern               industrial technologies, which is sustained on               processes  of such pernicious  potentialities,               in  the   ultimate analysis, has  thrown  open               vital and fundamental issues     of technology               options.  Associated problems of the  adequacy               of    legal protection against such  exploita-               tive and hazardous industrial adventurism, and               whether   the   citizens   of   the    country               are  assured the protection of a legal  system               which could be         said to be adequate  in               a comprehensive sense in such contexts  arise.               These,  indeed are issues of vital  importance               and  this         tragedy, and the  conditions               that  enabled  it happen,  are  of  particular               concern.                      33. The chemical pesticide industry  is               a  concomitant, and indeed, an integral  part,               of the Technology of Chemical Farming.               297               Some experts think, that it is time to  return               from  the high-risk, resource-intensive,  high               input,  anti-ecological,  monopolistic  ’hard’               technology  which  feeds, and is fed  on,  its               self-assertive attribute, to a more human  and               humane   flexible:   eco-conformable,   "soft"               technology with its systemic-wisdom and oppor-               tunities    for    human    creativity     and               initiative.’Wisdom demands" says Schumacher "a               new  orientation  of  science  and  technology               towards  the organic, the gentle the  non-vio-               lent,  the elegant and beautiful".  The  other               view  stressing  the  spectacular  success  of               agricultural  production  in the  new  era  of               chemical  farming with high-yielding  strains,               points  to the break-through achieved  by  the               Green  Revolution with its effective  response               to,  and  successful management of  the  great               challenges  of  feeding  the  millions.   This               technology  in  agriculture has  given  a  big               impetus to enterprises of chemical fertilizers               and  pesticides.  This, say its  critics,  has               brought in its trail its own serious problems.               The  technology-options before scientists  and               planners have been difficult."     6.  Before  we examine the grounds of challenge  to  the settlement  we  might, perhaps, refer to three  events.  The first  is that the Central Bureau of Investigation,  Govern- ment of India, brought criminal charges under Sections  304, 324, 326, 429 read with Section 35 of the Indian Penal  Code against Mr.Warren Anderson, the then Chairman of the UCC and several  other  persons including some of the  officers  in- charge  of  the affairs of the UCIL. On 7th  December,  1984 Mr.Warren  Anderson  came to India to see  for  himself  the situation  at Bhopal. He was arrested and later released  on bail.  One of the points seriously urged in these  petitions is  the  validity of the effect of the order of  this  Court which terminated those criminal proceedings.     The  second event is that on 17th of November, 1986  the District  Court at Bhopal, on the motion of  the  plaintiff- Union  of  India, made an order restraining the  UCC  by  an interlocutory  injunction, from selling its  assets,  paying dividends,  buying back debts, etc. during the  pendency  of

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the  suit.  On  30th of November, 1986  the  District  Court vacated that injunction on the written assurance and  under- taking dated 27th November 1986 filed by the UCC to maintain unencumbered  assets of three billion U.S. Dollars.  One  of the  points  argued in the course of the  hearing  of  these petitions  is whether, in the event the order recording  the settlement is reviewed and the settlement set aside, the UCC and  UCIL  would become entitled to the restitution  of  the funds that they deposited in Court pursuant to and in 298 performance  of their obligations under the settlement.  The UCC  deposited  420 million U.S. Dollars and  the  UCIL  the rupee equivalent of 45 million U.S. Dollars. 5 million  U.S. Dollars directed by Judge Keenan to be paid to the  Interna- tional  Red Cross was given credit to. The petitioners  urge that even after setting aside of the settlement, there is no compulsion  or obligation to restore to the UCC the  amounts brought into Court by it as such a step would  prejudicially affect  the  interests  of the victims.  The  other  cognate question is whether, if UCC is held entitled to such  resti- tution,  should  it not, as a pre-condition, be held  to  be under  a corresponding obligation to restore and  effectuate its  prior undertaking dated 27th November 1987 to  maintain unencumbered assets of three billion U.S.Dollars,  accepting which  the order dated 30th November, 1987 of  the  District Court Bhopal came to be made.     The  third event is that subsequent to the recording  of the settlement a Constitution Bench of this Court dealt with and disposed of writ-petitions challenging the constitution- ality  of the ’Act’ on various grounds in what is  known  as Charanlal  Sahu’s case and connected matters. The  Constitu- tion Bench upheld its constitutionality and in the course of the  Court’s  opinion Chief Justice  Mukharji  made  certain observations  as to the validity of the settlement  and  the effect  of the denial of a right of being heard to the  vic- tims  before the settlement, a right held to be implicit  in Section  4  of the Act. Both sides have  heavily  relied  on certain observations in that pronouncement in support of the rival submissions.     7. We have heard learned Attorney General for the  Union of  India;  Sri Shanti Bhushan, Sri  R.K.  Garg,  Smt.Indira Jaising, Sri Danial Latif, Sri Trehan learned senior counsel and  Shri Prashant Bhushan, learned counsel for  petitioners and  Sri F.S. Nariman, learned senior counsel for  the  UCC, Sri Rajinder Singh, learned senior counsel for the UCIL  and Dr;N.M. Ghatate and Sri Ashwini Kumar, learned senior  coun- sel for the State of Madhya Pradesh and its authorities.     At  the outset, it requires to be noticed that Union  of India which was a party to the settlement has not  bestirred itself  to assail the settlement on any motion of  its  own. However,  Union of India while not assailing the  factum  of settlement has sought to support the petitioners’  challenge to the validity of the settlement. Learned Attorney  General submitted  that the factum of compromise or  settlement  re- corded in the orders dated 14th & 15th of February, 1989  is not disputed by the Union of India. Learned Attorney-General also made it clear that the Union of India does not  dispute the authority of the then Attorney General and the  Advocate on 299 record  for the Union of India in the case to enter  into  a settlement. But, he submitted that this should not  preclude the  Union of India from pointing out circumstances  in  the case which, if accepted, would detract from the legal valid- ity of the settlement.

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   8.  The contentions urged at the hearing in  support  of these petitions admit of the following formulations: Contention (A):               The proceedings before this Court were  merely               in the nature of appeals against an interlocu-               tory order pertaining to the interim-compensa-               tion.  Consistent with the limited  scope  and               subject-matter of the appeals, the main  suits               themselves could not be finally disposed of by               the settlement. The Jurisdiction of this Court               to  withdraw or transfer a suit or  proceeding               to itself is exhausted by Article 139 A of the               Constitution.  Such transfer implicit  in  the               final disposal of the suits having been imper-               missible suits were not before the Court so as               to be amenable to final disposal by  recording               a  settlement. The settlement  is,  therefore,               without jurisdiction Contention (B):               Likewise the pending criminal prosecution  was               a separate and distinct proceeding unconnected               with the suit from the interlocutory order  in               which the appeals before this Court arose. The               criminal proceedings were not under or relata-               ble  to the ’Act’. The Court had no  power  to               withdraw to itself those criminal  proceedings               and quash them. The orders of the Court  dated               14th  and 15th of February 1989, in so far  as               they  pertain  to  the  quashing  of  criminal               proceedings are without jurisdiction. Contention (C):               The  ’Court-assisted-settlement’  was  as  be-               tween, and confined to, the Union of India  on               the one hand and UCC & UCIL on the other.  The               Original Suit No. 1113 of 1986 was really  and               in  substance a representative suit  for  pur-               poses  and within the meaning of  Order  XXIII               Rule  3B  C.P.C. inasmuch as  any  order  made               therein  would  affect persons  not  eo-nomine               parties  to the suit. Any  settlement  reached               without notice to the               300               persons so affected without complying with the               procedural  drill of Order XXIII Rule 3B is  a               nullity.               That the present suit is such a representative               suit;  that the order under review did  affect               the  interests of third parties and  that  the               legal   effects  and  consequences   of   non-               compliance with Rule 3B are attracted to  case               are  concluded  by the  pronouncement  of  the               Constitution Bench in Charanlal Sahu’s case. Contention (D):          The termination of the pending criminal proceedings brought    about by the orders dated 14th and 15th of Febru- ary, 1989 is    bad in law and would require to be  reviewed and  set aside on  grounds that (i) if the orders  are  con- strued  as permitting a   compounding of offences, they  run in  the teeth of the statutory    prohibition  contained  in Section 320 (9) of the Code of   Criminal Procedure; (ii) if the  orders are construed as permitting a withdrawal of  the prosecution under Section 321 Cr.P.C.  they would, again, be bad as violative of settled principles guiding withdrawal of prosecutions; and (iii) if the orders   amounted to a quash- ing  of  the proceedings under Section 482  of the  Code  of

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Criminal  Procedure,  grounds  for such  quashing   did  not obtain in the case. Contention (E):               The  effect of the orders under review  inter-               dicting  and prohibiting future criminal  pro-               ceedings against any person or persons whatso-               ever  in  relation to or arising  out  of  the               Bhopal  Gas Leak Disaster, in effect and  sub-               stance,  amounts to conferment of an  immunity               from  criminal proceedings. Grant of  immunity               is  essentially  a  legislative  function  and               cannot be made by a judicial act.               At  all  events, grant  of  such  immunity  is               opposed  to  public policy  and  prevents  the               investigation of serious offences in  relation               to  this horrendous industrial disaster  where               UCC  had inter-alia alleged sabotage as  cause               of  the disaster. Criminal  investigation  was               necessary  in  public  interest  not  only  to               punish  the guilty but to prevent  any  recur-               rence of such calamitious events in future. 301 Contention (F):               The memorandum of settlement and the orders of               the  Court thereon, properly  construed,  make               the  inference inescapable that a part of  the               consideration  for the payment of 470  million               U.S. Dollars was the stifling of the  criminal               prosecutions which is opposed to  public-poli-               cy.  This vitiates the agreement on which  the               settlement  is based for unlawfulness  of  the               consideration. The consent order has no higher               sanctity than the legality and validity of the               agreement on which it rests. Contention ( G ):               The  process  of  settlement of  a  mass  tort               action  has  its own complexities and  that  a               "Fairness-Hearing"  must precede the  approval               of  any  settlement  by  the  court  as  fair,               reasonable  and adequate. In  concluding  that               the  settlement  was just and  reasonable  the               Court omitted to take into account and provide               for  certain important heads  of  compensation               such as the need for and the costs of  medical               surveillance of a large section of population,               which though asymptomatic for the present  was               likely  to  become  symptomatic  later  having               regard  to the character and the  potentiality               of the risks of exposure and the likely future               damages  resulting from long-term effects  and               to build-in a ’re-opener’ clause.               The  settlement  is bad for  not  affording  a               fairness-hearing  and for not incorporating  a               "re-opener" clause. The settlement is bad  for               not  indicating appropriate break-down of  the               amount amongst the various classes of  victim-               groups. There were no criteria to go by at all               to decide the fairness and adequacy of     the               settlement. Contention (H):                     Even  if the settlement is reviewed  and               set  aside there is no  compulsion or  obliga-               tion  to  refund and restore to  the  UCC  the               funds brought in by it, as such restitution is               discretionary and  in exercising this  discre-

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             tion  the interests of the victims be kept  in               mind and restitution denied.                At  all events, if restitution is to  be  al-               lowed,  whether UCC would not be  required  to               act upon and effectuate its undertak-               302               ing dated 27th November, 1986 on the basis  of               which  order dated 30th November, 1986 of  the               Bhopal District Court Vacating the  injunction               against it was made. Contention (I):               Notice  to  the  affected-person  implicit  in               section  4  of the Act was  imperative  before               reaching  a settlement and that as  admittedly               no   such   opportunity  was  given   to   the               affected-person  either by the Union of  India               before entering into the settlement or by               the Court before approving it, the  settlement               is  void  as  violative  of  natural  justice.               Sufficiency  of natural justice at  any  later               stage  cannot  cure  the  effects  of  earlier               insufficiency and does not bring life back  to               a purported settlement which was in its incep-               tion void.               The observations of the constitution Bench  in               Charanlal Sahu’s case suggesting that a  hear-               ing  was  available at the  review  stage  and               should  be sufficient compliance with  natural               justice,  are  mere obiter-dicta  and  do  not               alter the true legal position. Point (j):               Does  the settlement require to be  set  aside               and the Original Suit No. 1113 of 1986 direct-               ed to be proceeded with on the merits? If not,               what  other reliefs require to be granted  and               what other directions require to be issued? Re.:Contentions (A) and (B)     9.  The contention articulated with strong  emphasis  is that  the court had no jurisdiction to withdraw and  dispose of the main suits and the criminal proceedings in the course of hearing of appeals arising out of an interlocutory  order in  the suits. The disposal of the suits would  require  and imply their transfer and withdrawal to this court for which, it  is  contended, the Court had no power under law.  It  is urged  that there is no power to withdraw the suits or  pro- ceedings  dehors. Article 139-A and the conditions  enabling the application of Article 139-A do not, admittedly,  exist. It  is,  therefore,  contended that the  withdrawal  of  the suits, implicit in the order of their final disposal  pursu- ant to the settlement, is a nullity. It is urged that  Arti- cle  139A is exhaustive of the powers of the Court to  with- draw suits or other proceedings to itself. 303     It  is not disputed that Article 139A in terms does  not apply  in the acts of the case. The appeals were by  special leave  under  Article  136 of the  Constitution  against  an interlocutory  order. If Article 139A exhausts the power  of transfer  or withdrawal of proceedings, then the  contention as substance. But is that so? This  Court  had occasion to point out that Article  136  is worded in the widest terms possible. It vests in the Supreme Court  a plenary jurisdiction in the matter of  entertaining and hearing of appeals by granting special save against  any kind of judgment or order made by a Court or Tribunal in  by cause of matter and the powers can be exercised in spite  of

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the  limitations  under the specific provisions  for  appeal contained  in the Constitution other laws. The powers  given by Article 136 are, however, in the nature special or resid- uary powers which are exercisable outside the purview of the ordinary  laws  in cases where the needs of  justice  demand interference     the Supreme Court. (See Durga Shankar Mehta v. Thaiair Raghuraj singh & Others [1955] S.C.R. 267]. Article 142 (1) of the Constitution provides:               "142 (1) The Supreme Court in exercise of  its               jurisdiction may pass such decree or make such               order  as  is  necessary  for  doing  complete               justice in any cause or matter pending  before               it, and any decree so passed or order so  made               shall be enforceable throughout the  territory               of  India in such manner as may be  prescribed               by  or under any law made by  Parliament  and,               until provision in that behalf is so made,  in               such  manner  as the President  may  by  order               prescribe."               [Emphasis added] The expression "cause or matter" in Article 142 (1) is  very wide  overing almost every kind of proceedings in Court.  In Halsbury’s  Laws of England-Fourth Edition [vol 37] para  22 referring to the plenitude of that expression it is stated:               "Cause or matter-The words "cause and "matter"               are often used in juxtaposition, but they have               different  meanings. "Cause" means any  action               or any criminal proceedings and "matter" means               any proceedings in court not in a cause.  When               used  together,  the words "cause  or  matter"               cover almost every kind of               304               proceeding  in court, whether civil or  crimi-               nal,  whether  interlocutory  or  final,   and               whether before Or after judgment."               [emphasis added]     Any  limited interpretation of the expression "cause  or matter’ having regard to the wide and sweeping powers  under Article  136  which  Article 142 (1)  seeks  to  effectuate, limiting it only to the short compass of the actual  dispute before  the  Court  and not to what  might  necessarily  and reasonably  be connected with or related to such  matter  in such  a  way that their withdrawal to the Apex  Court  would enable  the court to do "complete justice",  would  stultify the  very wide constitutional powers. Take, for instance,  a case  where  an interlocutory order in a  matrimonial  cause pending  in the trial court comes up before the apex  court. The  parties  agree to have the main  matter  itself  either decided on the merits or disposed of by a compromise. If the argument  is correct this court would be powerless to  with- draw the main matter and dispose it of finally even if it be on  consent  of both sides. Take also  a  similar  situation where some criminal proceedings are also pending between the litigating  spouses.  If all disputes are settled,  can  the court  not call up to itself the connected criminal  litiga- tion  for  a final disposal? If matters are disposed  of  by consent  of  the  parties, can any one of  them  later  turn around and say that the apex court’s order was a nullity  as one  without  jurisdiction  and that the  consent  does  not confer jurisdiction? This is not the way in which  jurisdic- tion  with  such wide constitutional powers is  to  be  con- strued.  While it is neither possible nor advisable to  enu- merate  exhaustively the multitudinous ways ill  which  such situations may present themselves before the court where the court with the aid of the powers under Article 142 (1) could

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bring about a finality to the matters, it is common  experi- ence  that day-in-and-day-out such matters are taken up  and decided in this court. It is true that mere practice, howev- er long, will not legitimize issues of jurisdiction. But the argument, pushed to its logical conclusions, would mean that when  an interlocutory appeal comes up before this Court  by special  leave,  even with the consent of the  parties,  the main  matter cannot be finally disposed of by this court  as such  a  step would imply an impermissible transfer  of  the main  matter. Such technicalities do not belong to the  con- tent and interpretation of constitutional powers.     To the extent power of withdrawal and transfer of  cases to the apex court is, in the opinion of the Court, necessary for the purpose of effectuating the high purpose of Articles 136 and 142 (1), the power under Article 139A, must be  held not to exhaust the power of withdrawal and transfer. 305 Article 139A it is relevant to mention here, was  introduced as part of the scheme of the 42nd Constitutional  Amendment. That  amendment  proposed to invest the Supreme  Court  with exclusive  jurisdiction  to  determine  the   constitutional validity  of central laws by inserting Articles 131 A,  139A and  144A. But Articles 131A, and 144A were omitted  by  the 43rd Amendment Act 1977, leaving Article 139A in tact.  That article enables the litigants to approach the Apex Court for transfer of proceedings if the conditions envisaged in  that Article  are satisfied. Article 139A was not  intended,  nor does  it operate, to whittle down the existing  wide  powers under Article 1.36 and 142 of the Constitution.     The  purposed constitutional plenitude of the powers  of the  Apex Court to ensure due and proper  administration  of justice is intended to be co-extensive in each case with the needs of justice of a given case and to meeting any  exigen- cy. Indeed, in Harbans Singh v. U.P. State [1982] 3 SCR  235 the Court said:     "Very wide powers have been conferred on this Court  for due  and  proper administration of justice. Apart  from  the jurisdiction and powers conferred on this Court under  Arts. 32 and 136 of the Constitution I am of the opinion that this Court retains and must retain, an inherent power and  juris- diction for dealing with any extra-ordinary situation in the larger  interests of administration of justice and for  pre- venting  manifest  injustice  being done.  This  power  must necessarily  bc sparingly used only in  exceptional  circum- stances for furthering the ends of justice. Having regard to the facts and circumstances of this case, I am of the  opin- ion  that this is a fit case where this Court should  enter- tain  the present petition of Harbans Singh and  this  Court should interfere."     We  find  absolutely  no merit  in  this  hypertechnical submission  of the petitioners’ learned counsel.  We  reject the argument as unsound.     A  similar ground is urged in support of contention  [B] in  relation to such withdrawal implicit in the quashing  of the  criminal proceedings. On the merits of  the  contention whether such quashing of the proceedings was, in the circum- stances  of  the case, justified or not we  have  reached  a decision on Contentions IDI and [E]. But on the power of the court to withdraw the proceedings, the contention must fail. We. accordingly, reject both Contentions [At and IB]. 306 Re: Contention (C)       10.  Shri Shanti Bhushan contends that the  settlement recorded  on  the 14th and 15th of February, 1989,  is  void under  Order XXIII Rule 3B, Code of Civil Procedure, as  the

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orders affect the interests of persons not eo-nomine parties to the proceedings, and, therefore, the proceedings be-   come representative-proceedings for the purpose and within the meaning of Order XXIII Rule 3-B C.P.C. The order record- ing  the settlement, not having been preceded by  notice  to such persons who may appear to the Court to be interested in the suit, would, it is contended, be void.                   Order XXIII Rule 3-B CPC provides:  "Order               XXIII Rule 3B.               No agreement or compromise to be entered in  a               representative suit without leave of Court.                      (1)  No  agreement or compromise  in  a               representative  suit shall  be  entered   into               without   the  leave of  the  Court  expressly               recorded  in  the proceedings;  and  any  such               agreement  or compromise entered into  without               the  leave of the Court so  recorded shall  be               void.                      (2)  Before  granting such  leave,  the               Court  shall give notice in such manner as  it               may think fit to such persons as may appear to               it to be interested in the suit.                     Explanation-In  this rule,  "representa-               tive suit" means,-                     (a)  a suit under Section 91 or  Section               92.               (b) a suit under rule 8 of Order 1,                       (c) a suit in which the manager of  an               undivided  Hindu  family  sues or is  sued  as               representing the other members of the family,               (d) any other suit in which the decree  passed               may, by virtue of the provisions of this  Code               or of any other law for time being in               307               force  bind  any person who is  not  named  as               party to the suit."     Shri Shanti Bhushan says that the present proceedings by virtue of clause (d) of the Explanation should be deemed  to be  a representative suit and that the pronouncement of  the Constitution  Bench in Sahu case which has held  that  Order XXIII  Rule 3-B CPC is attracted to the present  proceedings should conclude the controversy. The observations in  Sahu’s case relied in this behalf are these:               ’However,  Order XX111 Rule 3B of the Code  is               an  important and significant pointer and  the               principles  behind  the said  provision  would               apply to this case. the said rule 3B  provides               that no agreement or compromise in a represen-               tative suit shall be entered into without  the               leave  of the Court expressly recorded in  the               proceedings;  and  sub-rule  (2)  of  rule  3B               enjoins  that before granting such  leave  the               Court  shall give notice in such manner as  it               may  think  fit in  a  representative  action.               Representative  suit, again, has been  defined               under Explanation to the said rule vide clause               (d)  as  any other suit in which  the’  decree               passed  may,  by virtue of the  provisions  of               this  Code  or of any other law for  the  time               being  in  force, bind any person who  is  not               named  as  party to the suit.  In  this  case,               indubitably the victims would be bound by  the               settlement though not named in the suit.  This               is a position conceded by all. If that is  so,               it would be a representative suit in terms  of

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             and for the purpose of Rule 3B of Order  XXIII               of  the Code. If the principles of  this  rule               are the principles of natural justice then  we               are of the opinion that the principles  behind               it would be applicable, and also that  section               be applicable, and also that section 4  should               be  so construed in spite of the  difficulties               of  the process of notice and other  difficul-               ties  of  making  "informed  decision   making               process  cumbersome",  as  canvassed  by   the               learned Attorney General"’.               "The Learned Attorney General, however, sought               to canvas the view that the victims had notice               and  some  of  them had  participated  in  the               proceedings. We are, however, unable to accept               the  position that the victims had  notice  of               the nature               contemplated under the Act upon the underlying               principle of Order XXIII Rule 3B of the  Code.               It is not enough to say that the victims  must               keep       vigil      and      watch       the               proceeding   .....................    In   the               aforesaid view of the matter, in our  opinion,               notice was necessary. The victims at large did               not have the notice.               [Emphasis added]      11.  We  have given our careful consideration  to  this submission. The question is whether Rule 3-B of Order XXIII, proprio-vigore, is attracted to the proceedings in the  suit or whether the general principles of natural justice  under- lying  the provision apply. If it is the latter, as  indeed, the  Sahu case has held, the contention in substance is  not different  from  the one based on  non-compliance  with  the right of being heard which has been read into Section 4. The Sahu  case did not lay down that provisions of  Order  XXIII Rule 3-B CPC, proprio-vigore, apply. It held that the  prin- ciples  of  natural justice underlying the  said  provisions were  not  excluded. It is implicit in that  reasoning  that Order XXIII Rule 3B in terms did not apply. The Court there- after considered the further sequential question whether the obligation  to hear had been complied with or not  and  what were the consequences of failure to comply. The Court in the Sahu case after noticing that the principle underlying  Rule 3-B  had not been satisfied, yet, did not say that the  set- tlement  was, for that reason, void. If as Shri Shanti  Bhu- shan  says the Sahu case had concluded the matter, it  would have as a logical consequence declared the settlement  void. On the contrary, the discussion of the effect of failure  of compliance would indicate that the court declined to  recog- nise any such fatal consequences. The Court said:                       "Though  entering  into  a  settlement               without  the required notice is wrong. In  the               facts  and circumstances of this case,  there-               fore,    we are of the opinion, to direct that               notice should be given  now, would not  result               in  doing  justice in the  situation.  In  the               premises,  no further consequential  order  is               necessary by the  Court. Had it been necessary               for  this Bench to have passed  such a  conse-               quential  order, we would not have passed  any               such         consequential order in respect of               the same." 309     12. 1 .The finding on this contention cannot be  differ- ent  from the one urged under Contention (I) infra.  If  the

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principle of natural justice underlying Order XXIII Rule 3-B CPC  is  held to apply, the consequences  of  non-compliance should not be different from the consequences of the  breach of  rules of natural justice implicit in Section 4.  Dealing with that, the Sahu case, having regard to the circumstances of  the case, declined to push the effect of  non-compliance to  its logical conclusion and declare the settlement  void. On  the  contrary, the Court in Sahu’s  case  considered  it appropriate to suggest the remedy and curative of an  oppor- tunity of being heard in the proceedings for review. In sahu decision  the obligation under Section 4 to give  notice  is primarily  on  the Union of India.  Incidentally  there  are certain observations implying an opportunity of being  heard also  before the Court. Even assuming that the right of  the affected persons of being heard is also available at a stage where  a settlement is placed before the Court for  its  ac- ceptance,  such  a right is not referable to, and  does  not stem from, Rule 3-B of Order XXIII CPC. The pronouncement in Sahu case as to what the consequences of non-compliance  are in  conclusive as the law of the case. It is not open to  us to  say whether such a conclusion is right or  wrong.  These findings cannot be put aside as mere obiter.     Section 112 CPC, biter-alia, says that nothing contained in  that  Code shall be deemed to affect the powers  of  the Supreme  Court under Article 136 or any other  provision  of the Constitution or to interfere with any rules made by  the Supreme  Court. The Supreme Court Rules are framed and  pro- mulgated under Article 145 of the ConstitutiOn. Under  Order 32  of the Supreme Court Rules, Order XXIII Rule 3-B CPC  is not one of the rules expressly invoked and made applicable.     In relation to the proceedings and decisions of superior Courts  of unlimited jurisdiction, imputation of nullity  is not  quite appropriate. They decide all questions  of  their own jurisdiction. In Isaacs v. Robertson,1984 (3) AER 140 at 143 the Privy Council said:               "The  ........  legal concepts of voidness and               voidability  form part of the English  law  of               contract. They are inapplicable to orders made               by  a court of unlimited jurisdiction  in  the               course  of  contentious  litigation.  Such  an               order is either irregular or regular. If it is               irregular  it  can be set aside by  the  court               that made it on application to that court;  if               it  is regular it can only be set aside by  an               appellate  court on appeal if there is one  to               which appeal lies." 310 With  reference  to the "void" cases the Privy  Council  ob- served:                The cases that are referred to in these dicta               do  not support the proposition that there  is               any category or orders of a court of unlimited               jurisdiction  of this kind; what they do  sup-               port  is the quite different proposition  that               there is a category of orders of such a  court               which a person affected by the order is  enti-               tled  to  apply to have set  aside  ex  debito               justitiae  in  the exercise  of  the  inherent               jurisdiction of the court without his  needing               to  have recourse to the rules that  deal  ex-               pressly  with proceedings to set aside  orders               for  irregularity  and  give to  the  judge  a               discretion  as to the order he will make.  The               judges  in the cases that have drawn the  dis-               tinction between the two types of orders  have

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             cautiously refrained from seeking to lay  down               a  comprehensive  definition of  defects  that               bring an order into the category that attracts               ex  debito justitiae the right to have it  set               aside,  save  that  specifically  it  includes               orders  that have been obtained in  breach  of               rules of natural justice."     This should conclude the present Contention under C also against the petitioners. Re: Contention (D)     13.    This  concerns the validity of that part  of  the orders  of the 14th and 15th of February, 1989 quashing  and terminating  the criminal proceedings.  In the  order  dated 14th February 1989 Clause (3) of the order provides:                        ".  ....  and all criminal   proceed-               ings related to and arising out of the  disas-               ter shall stand quashed wherever these may  be               pending."               Para 3 of the order dated 15th February,  1989               reads:               "Upon  full payment of the sum referred to  in               paragraph 2 above:               (a) The Union of India and the State of Madhya               Pradesh  shall  take all steps  which  may  in               future become necessary in order to  implement               and  give effect to this order  including  but               not limited to ensuring that any suits, claims               or  civil or criminal complaints which may  be               filed  in  future  against  any   Corporation,               Company or person referred to in this  settle-               ment  are defended by them and disposed of  in               terms of this order.               311               (b) Any such suits, claims or civil or  crimi-               nal  proceedings filed or to be  filed  before               any court or authority are hereby enjoined and               shall not be proceeded with before such  court               or authority except for dismissal or  quashing               in terms of this order."     The  signed memorandum filed by the Union of  India  and the UCC includes the following statements:               "This settlement shall finally dispose of  all               past,  present  and future claims,  causes  of               action and civil and criminal proceedings  (of               any nature whatsoever wherever pending) by all               Indian  citizens  and all public  and  private               entitles with respect to all past, present and               future   deaths,  personal  injuries,   health               effects,  compensation,  losses,  damages  and               civil  and criminal complaints of  any  nature               whatsoever  against UCC, Union  Carbide  India               Limited,  Union  Carbide Eastern. and  all  of               their  subsidiaries and affiliates as well  as               each  of their present and  former  directors,               officers,  employees, agents  representatives,               attorneys,  advocates and  solicitors  arising               out of, relating or concerned with the  Bhopal               gas leak disaster, including past, present and               future  claims, causes of action and  proceed-               ings against each other.                and  all such criminal proceedings  including               contempt proceedings stand quashed and accused               deemed to be acquitted."     The  order of 15th February, 1989 refers to the  written memorandum filed by the learned counsel on both sides.

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  14.  The  two contentions of the petitioners,  first,  in regard  to the legality and validity of the  termination  of the  criminal proceedings and secondly, the validity of  the protection  or  immunity from future proceedings,  are  dis- tinct.  They  are dealt with also separately. The  first  -- which  is considered here -- is in relation to the  termina- tion of pending criminal proceedings.     15.  Petitioners’  learned counsel  strenuously  contend that the orders of 14th and 15th of February, 1989, quashing the  pending  criminal proceedings which were  serious  non- compoundable  offences under Sections 304, 324, 326 etc.  of the Indian Penal Code are not supportable either as  amount- ing to withdrawal of the prosecution under Section 321  Code of Criminal Procedure, the legal tests of permissibility  of which are well set- 312 tied or as amounting to a compounding of the offences  under section 320 Criminal Procedure Code as, indeed,  sub-section (9)  of  section 320 Cr.P.C. imposes a prohibition  on  such compounding.  It is also urged that the inherent  powers  of the Court preserved under Section 482 Cr. P.C. could not  be pressed into service as the principles guiding the  adminis- tration of the inherent power could, by no stretch of imagi- nation,  be said to accommodate the present case. So far  as Article  142  (1) of the Constitution is  concerned,  it  is urged,  that  the power to do "complete  justice"  does  not enable  any order "inconsistent with the  express  statutory provisions of substantive law, much less, inconsistent  with any constitutional provisions" as observed by this Court  in Prem    Chand   Garg   v.   Excise    Commissioner,    U.P., Allahabad,[1963] Suppl. 1 SCR 885 at 899-900].     16.  Shri Nariman, however, sought to point out that  in Prem Chand Garg’s case the words of limitation of the  power under Article 142 (1) with reference to the "express  statu- tory  provisions of substantive law" were a mere obiter  and were  not.  necessary for the decision of  that  case.  Shri Nariman  contended  that neither in Garg’s case nor  in  the subsequent  decision  in  A.R. Antulay  v.  R.S.  Nayak  and Anr.,[1988]  2  S.C.C. 602 where the above  observations  in Garg’s  case  were approved, any question  of  inconsistency with  the  express statutory provisions of  substantive  law arose  and in both the cases the challenge had been  on  the ground of violation of fundamental rights. Shri Nariman said that the powers under Articles 136 and 142 (1) are  overrid- ing constitutional powers and that while it is quite  under- standable  that the exercise of these powers, however  wide, should  not violate any other constitutional  provision,  it would, however, be denying the wide sweep of these constitu- tional  powers  if their legitimate plentitude  is  whittled down  by statutory provisions.  Shri Nariman said  that  the very constitutional purpose of Article 142 is to empower the Apex Court to do complete justice and that if in that  proc- ess the compelling needs of justice in a particular case and provisions of some law are not on speaking terms, it was the constitutional  intendment that the needs of justice  should prevail over a provision of law. Shri Nariman submitted that if the statement in Garg’s case to the contrary passes  into law it would wrongly alter the constitutional scheme.   Shri Nariman  referred to a number of decisions of this Court  to indicate that in all of them the operative result would  not strictly  square  with  the provisions of some  law  or  the other. Shri Nariman referred to the decisions of this  court where  even non-compoundable offences were permitted  to  be compounded in the interests of complete justice; where  even after  conviction under Section 302 sentence was reduced  to

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one  which was less than that statutorily prescribed;  where even after declaring certain taxation laws  unconstitutional for lack of legislative competence this court directed that 313 the  tax  already collected under the void law need  not  be refunded  etc. Shri Nariman also referred to  the  Sanchaita case where this Court, having regard to the large issues  of public interest involved in the matter, conferred the  power of adjudication of claims exclusively on one forum irrespec- tive of jurisdictional prescriptions.    17.  Learned Attorney General submitted that  the  matter had  been   placed beyond doubt in Antulay’s case where  the court had invoked and applied the dictum in Garg’s case to a situation  where  the  invalidity  of  a  judicial-direction which,  ’was  contrary to the  statutory  provision,  namely section  7(2) of the Criminal Law (Amendment) Act, 1952  and as  such  violative of Article 21 of the  Constitution"  was raised and the court held that such a direction was invalid. Learned  Attorney General said that the power under  Article 142 (1) could not be exercised if it was against an  express substantive  statutory  provision containing  a  prohibition against  such  exercise. This, he said, is as it  should  be because  justice dispensed by the Apex Court also should  be according to law.    The order terminating the pending criminal proceedings is not  supportable on the strict terms of Sections 320 or  321 or  482 Cr. P.C. Conscious of this, Shri  Nariman  submitted that if the Union of India as the Dominus Litis through  its Attorney-General  invited  the court to quash  the  criminal proceedings  and  the court accepting  the  request  quashed them,  the power to do so was clearly referable  to  Article 142(1) read with the principle of Section 321 Cr.P.C.  which enables  the  Government through  its  public-prosecutor  to withdraw  a  prosecution. Shri Nariman suggested  that  what this  Court did on the invitation of the Union of  India  as Dominus  Litis was a mere procedural departure adopting  the expedient  of "quashing" as an alternative to or  substitute for "withdrawal". There were only procedural and terminolog- ical  departures and the Union of India as a party  inviting the  order could not, according to Shri  Nariman,  challenge the  jurisdiction to make it.  Shri Nariman  submitted  that the State as the Dominus Litis may seek leave to withdraw as long  as such a course was not an attempt to interfere  with the normal course of justice for illegal reasons.    18. It is necessary to set at rest certain misconceptions in  the arguments touching the scope of the powers  of  this Court under Article 142(1) of the Constitution. These issues are  matters of serious public importance.  The  proposition that  a  provision in any ordinary law irrespective  of  the importance  of  the public policy on which  it  is  founded, operates to limit the powers of the Apex Court under Article 142(1)  is unsound and erroneous. In both Garg’s as well  as Antulay’s case the point was one of 314 violation  of constitutional provisions  and  constitutional rights.  The observations as to the effect of  inconsistency with  statutory provisions were really unnecessary in  those cases  as the decisions in the ultimate analysis  turned  on the  breach  of constitutional rights. We  agree  with  Shri Nariman that the power of the Court under Article 142 in  so far as quashing of criminal proceedings are concerned is not exhausted  by Sections 320 or 321 or 482 Cr.P.C. or  all  of them  put  together. The power under Article 142  is  at  an entirely different level and of a different quality.  Prohi- bitions  or limitations or provisions contained in  ordinary

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laws cannot, ipso-facto, act as prohibitions or  limitations on the constitutional powers under Article 142. Such  prohi- bitions  or  limitations in the statutes  might  embody  and reflect the, scheme of a particular law, taking into account the nature and status of the authority or the court on which conferment of powers - limited in some appropriate way -  is contemplated. The limitations may not necessarily reflect or be based on any fundamental considerations of public policy. Sri  Sorabjee, learned Attorney-General, refering to  Garg’s case,  said that limitation on the powers under Article  142 arising  from "inconsistency with express  statutory  provi- sions of substantive law" must really mean and be understood as  some  express prohibition contained in  any  substantive statutory law.  He suggested that if the expression  ’prohi- bition’  is read in place of ’provision’ that would  perhaps convey the appropriate idea. But we think that such prohibi- tion  should  also be shown to be based on  some  underlying fundamental  and  general  issues of  publicpolicy  and  not merely  incidental to a particular statutory scheme or  pat- tern.  It will again be wholly incorrect to say that  powers under  Article  142 arc subject to  such  express  statutory prohibitions.  That  would convey the  idea  that  statutory provisions override a constitutional provision. Perhaps, the proper  way  of expressing the idea is  that  in  exercising powers  under  Article  142 and in assessing  the  needs  of "complete justice" of a cause or matter, the apex court will take  note  of the express prohibitions in  any  substantive statutory provision based on some fundamental principles  of public-policy  and  regulate the exercise of its  power  and discretion  accordingly. The proposition does not relate  to the powers of the court under Article 142, but only to  what is or is not ’complete justice’ of a cause or matter and  in the  ultimate analysis of the propriety of the  exercise  of the power. No question of lack of jurisdiction or of nullity can arise.     Learned Attorney General said that Section 320  Criminal Procedure  Code  is  "exhaustive of  the  circumstances  and conditions  under which composition can be  effected."  [See Sankar Rangavva v. Sankar Ramayya (AIR 1916 Mad. 463 at 485] and  that "the courts cannot go beyond a test laid  down  by the  Legislature for determining the class of offences  that are compoundable and substitute one of their own."   Learned Attorney 315 General also referred to the following passage in Biswabahan v. Gopen   Chandra [1967] SCR 447 at 451:               "If a person is charged with an offence,  then               unless there is some provision for composition               of  it  the law must take its course  and  the               charge  enquired  into  resulting  either   in               conviction or acquittal."     He said that "if a criminal case is declared to be  non- compoundable,  then it is against public policy to  compound it,  and any agreement to that end is wholly void  in  law." (See  ILR 40 Cal.113 at 117-118); and submitted  that  court "cannot  make that legal which the law  condemns".  Learned’ Attorney-General  stressed  that the criminal  case  was  an independent matter and of great public concern and could not be the subject matter of any compromise or settlement. There is  some  justification to say  that  statutory  prohibition against compounding of certain class of serious offences, in which  larger social interests and social security  are  in- volved,  is based on broader and fundamental  considerations of  public policy. But all statutory prohibitions  need  not necessarily partake of this quality. The attack on the power

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of  the  apex court to quash the crucial  proceedings  under Article 142(1 ) is iII-conceived. But the justification  for its exercise is another matter.     19.  The proposition that State is the dominus Litis  in criminal cases, is not an absolute one. The society for  its orderly  and peaceful development is interested in the  pun- ishment  of the offender. [See A.R. Antulay v. R.S. Nayak  & Anr.  [1984] 2 SCC 500 at 508, 509 and "If the  offence  for which a prosecution is being launched is an offence  against the  society and not merely an individual wrong, any  member of the society must have locus to initiate a prosecution  as also   to   resist  withdrawal  of  such   prosecution,   if initiated."] See Sheonandan Paswan v. State of Bihar &  Ors. [1987] 1 SCC 289 at 316].     But Shri Nariman put it effectively when he said that if the position in relation to the criminal cases was that  the court was invited by the Union of India to permit the termi- nation of the prosecution and the court consented to it  and quashed the criminal cases, it could not be said that  there was  some  prohibition  in some law for  such  powers  being exercised  under  Article 142. The mere fact that  the  word ’quashing’  was used did not matter. Essentially, it  was  a matter of mere form and procedure and not of substance,  The power  under  Article 142 is exercised with the aid  of  the principles  of Section 321 Cr.P.C. which enables  withdrawal of prosecutions. We cannot accept the position urged by  the learned Attor- 316 ney-General  and  learned counsel for the  petitioners  that court had no power or jurisdiction to make that order. We do not appreciate Union of India which filed the memorandum  of 15th  February, 1989 raising the plea of want  of  jurisdic- tion.     But whether on the merits there were justifiable grounds to  quash  is a different matter. There must be  grounds  to permit a withdrawal of the Prosecution. It is really not  so much  a  question of the existence of the power  as  one  of justification for its exercise. A prosecution is not quashed for no other reason than that the Court has the power to  do so. The withdrawal must be justified on grounds and  princi- ples recognised as proper and relevent. There is no  indica- tion as to the grounds and criteria justifying the withdraw- al  of  the prosecution. The considerations that  guide  the exercise  of power of withdrawal by Government could be  and are  many  and varied. Government must indicate  what  those considerations  are. This Court in State of Punjab v.  Union of India, [1986] 4 SCC 335 said that in the matter of  power to  withdraw prosecution the "broad ends of  public  justice may well include appropriate social, economic and  political purposes". In the present case, no such endeavour was  made. Indeed,  the stand of the UCC in these review  petitions  is not  specific as to the court to permit a  withdrawal.  Even the stand of the Union of India has not been consistent.  On the question whether Union of India itself invited the order quashing  the criminal cases, its subsequents stand  in  the course of the arguments in Sahu case as noticed by the court appears to have been this:               "... The Government as such had nothing to  do               with the quashing of the criminal  proceedings               and  it  was not representing the  victims  in               respect  of the criminal liability of the  UCC               or  UCIL to the victims. He further  submitted               that quashing of criminal proceedings was done               by  the  Court in exercise of  plenary  powers               under  Articles 136 and 142 of  the  Constitu-

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             tion...."     The guiding principle in according permission for  with- drawal  of a prosecution were stated by this Court  in  M.N. Sankarayanan  Nair v.P.V. Balakrishnan & Ors. [1972]  2  SCC 599:               "...Nevertheless  it is the duty of the  Court               also to see in furtherance of justice that the               permission is not sought on grounds extraneous               to  the interest of justice or  that  offences               which are offences against the State go unpun-               ished  merely  because  the  Government  as  a               matter of general policy or expediency  uncon-               nected  with its duty to  prosecute  offenders               under  the law, directs the public  prosecutor               to  withdraw  from  the  prosecution  and  the               Public Prosecutor merely does so at               317               the behest."     Learned  counsel for the petitioners submitted that  the case  involved the allegation of commission of  serious  of- fences in the investigation of which the society was vitally interested  and  that  considerations  of  public  interest, instead of supporting a withdrawal, indicate the very  oppo- site.     The  offences relate to and arise out of a terrible  and ghastly  tragedy. Nearly 4,000 lives were lost and  tens  of thousands  of  citizens have suffered  injuries  in  various degrees of severity. Indeed at one point of time UCC  itself recoginsed  the possibility of the accident having been  the result  of  acts of sabotage. It is a matter  of  importance that  offences alleged in the context of a disaster of  such gravity and magnitude should not remain uninvestigated.  The shifting stand of the Union of India on the point should not by itself lead to any miscarriage of justice.     We hold that no specific ground or grounds for withdraw- al of the prosecutions having been set out at that stage the quashing of the prosecutions requires to be set aside.     20.  There  is, however, one aspect on which  we  should pronounce.  Learned Attorney-General showed us  some  corre- spondence  pertaining to a letter Rogatory in  the  criminal investigation  for  discovery and inspection  of  the  UCC’s plant in the United States for purposes of comparison of the safety standards. The inspection was to be conducted  during the  middle  of February. 1989. The settlement,  which  took place  on  The 14th of February, 1989, it  is  alleged,  was intended to circumvent that inspection we have gone  through the  correspondence on the point. The documents relied  upon do  not  support  such an allegation. That  apart,  we  must confess  our inability to appreciate this suggestion  coming as it does from the Government of India which was a party to the settlement.      However,  on Contention (D) we hold that  the  quashing and termination of the criminal proceedings brought about by the orders dated 14th and 15th February, 1989 require to be, and are, hereby reviewed and set aside,. Re: Contention (E)     22. The written memorandum setting out the terms of  the settlement  filed by the Union of India and the U.C.C.  con- tains certain terms which are susceptible of being construed as  conferring a general future immunity  from  prosecution. The order dated 15th February, 1989 provides in clause  3[a] and 3[b]: 318               "....that any suits, claims or civil or crimi-               nal  complaints which may be filed  in  future

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             against  any  Corporation, Company  or  person               referred to in this settlement are defended by               them and disposed of in terms of this order".                       "Any  such suits, claims or  civil  or               criminal  proceedings  filed  or to  be  filed               before  any court or authority or  hereby  en-               joined  and shall not be proceeded with before               such court or Authority  except for  dismissed               or quashing in terms of this order."       These  provisions, learned Attorney General  contends, amount  to conferment of immunity from the operation of  the criminal  law in the  future respecting matters not  already the  subject matter of pending cases and therefore,  partake of  the  character of a blanket criminal immunity  which  is essentially  a  legislative function. There is no  power  or jurisdiction  in the courts, says learned  Attorney-General, to confer immunity for criminal prosecution and  punishment. Learned Attorney General also contends that grant of immuni- ty  to  a  particular person or persons may amount  )  to  a preferential treatment violative of the equality clause.       This  position  seems  to be correct.  In  Apodaca  v. Viramontes 13 ALR 1427, it was observed:               "   ............  The grant of an immunity  is               in very truth the assumption of a  legislative               power....". (P.1433)               "  ..........  The decisive question, then, is               whether the district attorney and the district               court  in  New Mexico,  absent  constitutional               provision  or enabling statute conferring  the               power,  are authorized to grant immunity  from               prosecution  for an offense to which  incrimi-               nating  answers  provoked by  questions  asked               will expose the witness.               We are compelled to give a negative answer  to               this inquiry. Indeed, sound reason and  logic,               as  well as the great weight of authority,  to               be found both in text books and in the decided               cases, affirm that no such power exists in the               district  attorney  and  the  district  court,               either  or  both, except as  placed  there  by               constitutional  or statutory language.  It  is               unnecesary to do more in this opinion in proof               of  the  statement  made than to  give  a  few               references  to texts and to cite some  of  the               leading cases. 319     After  the above observation, the court referred to  the words  of Chief Justice Cardozo [as he then was in  the  New York Court of Appeals] in Doyle v. Hafstader [257 NY 244]:               "   ........  The grant of an immunity  is  in               very  truth  the assumption of  a  legislative               power, and that is why the Legislature, acting               alone, is incompetent to declare it. It is the               assumption of a power to annul as to individu-               als or classes the statutory law of crimes, to               stem  the  course of justice, to  absolve  the               grand  jurors of the county from the  perform-               ance  of  their duties,  and  the  prosecuting               officer  from  his. All these changes  may  be               wrought  through the enactment of  a  statute.               They may be wrought in no other way while  the               legislative  structure of our government  con-               tinues what it is".     In  the same case the opinion of Associate  Judge  Pound who  dissented  in part on another point, but  who  entirely

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shared the view expressed by Chief Justice Cardozo may  also be cited:               "The grant of Immunity is a legislative  func-               tion. The Governor may pardon after conviction               [NY  Const. Art. 4 & 51, but he may not  grant               immunity from criminal prosecution or may  the               courts.  Amnesty is the determination  of  the               legislative  power  that  the  public  welfare               requires the witness to speak? [P. 1433]     Learned  Attorney General referred us to  the  following passage in "Jurisprudence" by Wortley:               "Again, if we say that X has an immunity  from               arrest  when a sitting member of the House  of               Commons, then during its subsistence he has an               immunity  that is denied to the generality  of               citizens; there is an inequality of rights and               duties  of citizens when the immunity is  made               out  ......  ".[p. 297]     This  inequality must be justified by intelligible  dif- ferentia  for classification which are both  reasonable  and have a rational nexus with the object.     Article 361(2) of the Constitution confers on the Presi- dent  and  the Governors immunity even in respect  of  their personal  acts and enjoins no criminal proceedings shall  be instituted  against them during their term of office. As  to the  theoretical basis for the need for such  immunity,  the Supreme  Court  of the United States in  a  case  concerning immunity from 320 civil liability [Richard Nixon v. Ernest Fitzgerald, 457  US 731:73 LEd 2d 349 said:               "   ....   This  court  necessarily  also  has               weighed concerns of public policy,  especially               as illuminated by our history and the struc-                     ture of our government  ...."   [p. 362]                     "   ....  In the case of  the  President               the inquiries into history and policy,  though               mandated  independently by our case,  tend  to               converge. Because the Presidency did not exist               through most of the development of common law,               any historical analysis must draw its evidence               primarily from our constitutional heritage and               structure.  Historical  inquiry  thus   merges               almost  at  its  inception with  the  kind  of               "public policy" analysis appropriately  under-               taken  by  a federal court. This  inquiry  in-               volves  policies  and principles that  may  be               considered  implicit  in  the  nature  of  the               President’s  office in a system structured  to               achieve effective government under a constitu-               tionally mandated separation of powers."                                                  [p. 362 and               363]               "   ......  In view of the special  nature  of               the  President’s  constitutional  office   and               functions,  we think it appropriate to  recog-               nise   absolute  Presidential  immunity   from               damages  liability for acts within the  "outer               perimeter" of his official responsibility.               Under the Constitution and laws of the  United               States the President has discretionary respon-               sibilities  in a broad variety of areas,  many               of  them  highly sensitive. In many  cases  it               would  be difficult to determine which of  the               President’s  innumerable  "functions"   encom-

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             passed a particular action...."               [p.-367]     Following observations of Justice Storey in his "Commen- taries  in the Constitution of United States" were  referred to:                        There are  ......  incidental powers,               belonging  to the executive department,  which               are necessarily implied from the nature of the               functions,  which  are confided to  it.  Among               these, must necessarily be included the  power               to  perform them  ....  The president  cannot,               therefore, be liable to arrest,  imprisonment,               or detention, while he is in the discharge  of               the duties of his               321               office;  and for this purpose his person  must               be deemed, in civil cases at least, to possess               an official inviolability".               [P-363]     23.  Indeed, the submissions of learned Attorney General on the theoretical foundations as to the source of  immunity as  being  essentially  legislative may be  sound.  But  the question  does  not  strictly arise in  that  sense  in  the present case. The direction that future criminal proceedings shall not be instituted or proceeded with must be understood as  a concomitant and a logical consequence of the  decision to withdraw the pending prosecutions.  In that context,  the stipulation that no future prosecutions shall be entertained may  not amount to conferment of any immunity but only to  a reiteration  of  the  consequences of  such  termination  of pending  prosecutions.  Thus understood any  appeal  to  the principle  as to the power to confer criminal  immunity  be- comes inapposite in this case.     24.   However, in view of our finding on contention  (D) that the quashing of criminal proceedings was not  justified and that the orders dated 14th and 15th of February, 1989 in that  behalf  require  to be  reviewed  and  set-aside,  the present  contention  does not survive because as  a  logical corollary  and consequence of such further directions as  to future  prosecutions  earlier  require to  be  deleted.  We, therefore,  direct that all portions in the orders  of  this Court which relate to the incompetence of any future  prose- cutions be deleted.     25.  The effect of our order on Contentions [D] and  [E] is that all portions of orders dated 14th and 15th February, 1989,  touching the quashing of the pending  prosecution  as well  as impermissibility of future criminal  liability  are set-aside.  However, in so far as the dropping of  the  pro- ceedings  in contempt envisaged by clause (b) of para  4  of the  order dated 15th February, 1989 is concerned, the  same is left undisturbed. Contention (e) is answered accordingly. Re.’ Contention (F)     26.   As we have seen earlier the memorandum of  settle- ment  as  well as the orders of the Court  contemplate  that with a view to effectuating the settlement there be a termi- nation of pending criminal prosecution with a further stipu- lation  for  abstention from  future  criminal  proceedings. Petitioners  have  raised  the plea-  and  learned  Attorney General supports them -- that the language of the memorandum of  settlement as well as the orders of the court  leave  no manner  of  doubt that a part of the consideration  for  the payment of 470 million US dollars was the stifling of the 322 prosecution  and, therefore, unlawful and opposed to  public

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policy.  Relying upon Sections 23 and 24 of the Indian  Con- tract Act it was urged that if any part of a single  consid- eration  for one or more objects or any one or any  part  of any  one  of several considerations for a single  object  is unlawful, the agreement becomes "void".     27.  At the outset, learned Attorney General  sought  to clear any possible objections based on estoppel to the Union of  India,  which was a consenting party to  the  settlement raising this plea. Learned Attorney General urged that where the plea is one of invalidity the conduct of parties becomes irrelevant and that the plea of illegality is a good  answer to  the  objection of consent. The invalidity urged  is  one based  on publicpolicy. We think that having regard  to  the nature  of plea --- one of nullity     no preclusive  effect of  the earlier consent should come in the way of the  Union of  India from raising the plea. Illegalities, it  is  said, are incurable. This position is fairly well established.  In re  A Bankruptcy Notice (1924 2 Ch.D. 76 at 97)  Atkin  L.J. said:     "It is well established that it is impossible in law for a person to allege any kind of principle which precludes him from alleging the invalidity of that which the statute  has, on  grounds of general public policy, enacted shall  be  in- valid."     In Maritime Electirc Co. Ltd. v. General Daines Ltd. AIR 1937 PC 114 at 116-117 a similar view finds expression:     ..........  an estoppel is only a rule of evidence which under  certain  special circumstances can be  invoked  by  a party to an action; it cannot therefore avail in such a case to  release the plaintiff from an obligation to obey such  a statute,  nor  can it enable the defendant  to  escape  from statutory  obligation  of  such a kind on his  part.  It  is immaterial whether the obligation is onerous or otherwise to the party suing. The duty of each party is to obey the law.     ........   The court should first of all  determine  the nature  of the obligation imposed by the statute,  and  then consider whether the admission of an estoppel would  nullify the statutory provision.     .....   there is not a single case in which an  estoppel has been allowed in such a case to defeat a statutory  obli- gation of an unconditional character."     The case of this Court in point is of the State o/Kerala &Anr.  v.  The Gwalior Rayon Silk Manufacturing  (Wvg.)  Co. Ltd. etc. [1974] 1 SCR 671 at 688 where this court  repelled the contention that an agreement on the part of the  Govern- ment  not to acquire, for a period of 60 years the lands  of the  company  did  not prevent the State  from  enacting  or giving 323 effect to a legislation for acquisition and that the surren- der  by the Government of its legislative powers  which  are intended to be used for public good cannot avail the company or operate against the Government as equitable estoppel.  It is unnecessary to expand the discussion and enlarge authori- ties.     We  do not think that the Union of India should be  pre- cluded  from urging the contention as to  invalidity  in-the present case.     28.  The  main arguments on invalidity  proceed  on  the premise  that the terms of the settlement and the orderS  of ’the  court passed pursuant thereto contemplate,  amount  to and permit a compounding of non-compoundable offences  which is  opposed to public policy and, therefore,  unlawful.  The orders  of the court based on an agreement whose or part  of whose consideration is unlawful have, it is Urged, no higher

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sanctity than the agreement on which it is based. The orders of the court based on consent of parties do not, so goes the argument,  reflect an adjudicative imposition of the  court, but merely set the seal of the court on what is  essentially an  agreement  between  the parties. It is  urged  that  the validity  and durability of a consent order are  wholly  de- pendent on the legal validity of the agreement, on which  it rests.  Such  an order is amenable to be  set-aside  on  any ground which would justify a setting aside of the  agreement itself.       These  principles  are  unexceptionable.  Indeed,   in Huddersfield Banking Company Ltd. v. Henry Lister & Son Ltd, [1895] 2 Ch. 273 at 276 Vaughan Williams J. said:                it  seems to me that the clear result of  the               authorities   is  that,  notwithstanding   the               consent order has been drawn up and completed,               and acted upon to the extent that the property               has been sold and the money has been paid into               the hands of the receiver, I may now set aside               tile  order  and arrangement upon  any  ground               which  would  justify me in setting  aside  an               agreement entered into between the parties.                        The real truth of the matter is  that               the order is a mere creature of the agreement,               and  to say that the Court can set  aside  the               agreement -- and it was not disputed that this               could be done if’ a common mistake were proved               -- but that it cannot set aside an order which               was  the creature of that agreement, seems  to               me to be giving the branch an existence  which               is independent of the tree.               [emphasis added] 324 This was affirmed in appeal by Lindley LJ. in the  following words:               "the  appellants,  contend that  there  is  no               jurisdiction  to set aside the  consent  order               upon  such materials as we have to deal  with;               and  they go so far as to say that  a  consent               order  can only be set aside on the ground  of               fraud.   1 dissent from that  proposition  en-               tirely. A consent order, I agree, is an order;               and so long as it stands I think it is as good               an estoppel as any other order. I have not the               slightest  doubt  on  that;  nor  have  I  the               slightest  doubt that a consent order  can  be               impeached,  not only on the ground  of  fraud,               but  upon  any grounds  which  invalidate  the               agreement  it expresses in a more  formal  way               than usual".               [p. 280]     In  Great  North-West  Central Railway  Co.  &  Ors.  v. Charlebois  and Ors, [1899 AC 114 at 124, the Privy  Council stated the proportion thus:                 it        is  quite  clear  that  a  company               cannot  do what is beyond its legal powers  by               simply  going into court and consenting  to  a               decree  which orders that the thing  shall  be               done  ...Such  a judgment cannot  be  of  more               validity than the invalid contract on which it               was founded".               [emphasis added]     It  is, indeed, trite proposition that a contract  whose object is opposed to public policy is invalid and it is  not any the less so by reason alone of the fact that the  unlaw-

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ful  terms are embodied in a consensual decree. In state  of Punjab  v.  Amar Singh, [1974] 2 SCC 70 at  90,  this  Court said:               After  all, by consent or  agreement,  parties               cannot  achieve what is contrary to law and  a               decree  merely based on such agreement  cannot               furnish  a judicial amulet against.  statutory               violation....  The true rule is that the  con-               tract  of the parties is not the less  a  con-               tract,  and  subject  to the  incidents  of  a               contract,  because  there  is  superadded  the               command of the Judge".     29.     We  do not think that the plea  of  "Accord  and Satisfaction" raised by the UCC is also of any avail to  it. UCC contends that the funds constituting the  subject-matter of  the  settlement had been accepted  and  appropriated  by Union  of India and that, therefore, there was  full  accord and satisfaction. We find factually that there is no  appro- priation  of  the funds by the Union of  India.   The  funds remain to the credit of the Registrar- General of this Court in  the  Reserve Bank of India. That apart  as  observed  in Corpus Juris  Seccundum, Vol. I: 325               "an illegal contract or agreement, such as one               involving  illegality of the  subject  matter,               one involving the unlawful sale or exchange of               intoxicating  liquors, or a  subletting,  sub-               leasing, or hiring out of convicts, held under               lease from the state, in violation of statute,               or stifling a prosecution for a public policy,               cannot  constitute  or effect  an  accord  and               satisfaction ".               [P. 473] [emphasis added]     30.  The main thrust of petitioner’s argument of  unlaw- fulness  of consideration is that the dropping  of  criminal charges  and undertaking to abstain from  bringing  criminal charges  in  future were part of the consideration  for  the offer  of 470 million US dollars by the UCC and as  the  of- fences  involved  in the charges were of public  nature  and non-compoundable,  the consideration for the  agreement  was stifling  of prosecution and, therefore, unlawful. It  is  a settled  proposition and of general application  that  where the criminal charges are matters of public concern there can be  no diversion of the course of public justice and  cannot be the subject matters of private bargain and compromise.     31.   Shri Nariman urged that there were certain  funda- mental  misconceptions about the scope of this  doctrine  of stifling of prosecution in the arguments of the petitioners. He  submitted  that the true principle was that  while  non- compoundable  offences  which are matter of  public  concern cannot be subject-matter of private bargains and that admin- istration of criminal justice should not be allowed to  pass from  the hands of Judges to private individuals,  the  doc- trine  is not attracted where side by side with  criminal  - liability there was a pre-existing civil liability that  was also  settled and satisfied. The doctrine, he said,  contem- plates invalidity based on the possibility of the element of coercion  by  private individuals for private  gains  taking advantages of the threat of criminal prosecution. The  whole idea of applicability of this doctrine in this case  becomes irrelevant having regard to the fact that the Union of India as dominus litis moved in the matter and that administration of  criminal justice was not sought to be exploited  by  any private individual for private gains. Shri Nariman submitted

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that  distinction between "motive" and  "consideration"  has been well recognised in distinguishing whether the  doctrine is or is not attracted.     32.   The questions that arise in the present case  are, first,  whether putting an end to the  criminal  proceedings was a part of the consideration 326 and  bargain for the payment of 470 million US  :dollars  or whether  it was merely one of the motives for entering  into the  settlement  and, secondly, whether  the  memorandum  of settlement  and  orders of this court,  properly  construed, amount  to  a compounding of the offences. If, on  the  con- trary,  what  was done was that Union of India  invited  the court  to exercise its powers under Article 142 to permit  a withdrawal of the prosecution and the expedient of  quashing was a mere procedure of recognising the effect of  withdraw- al, could the settlement be declared void ?       We think that the main settlement does not suffer from this vice. The pain of nullity does not attach to it flowing from any alleged unlawfulness of consideration. We shall set out our reasons presently.       Stating  the law on the matter, Fry L.J.  in  Windhill Local  Board of Health v. Vint. [1890] 45 Ch.D. 351  at  366 said:               "We have therefore a ease in which a  contract               is  entered into for the purpose of  diverting               --  I  may  say perverting --  the  course  of               justice;  and, although I agree that  in  this               ease  it  was entered into with  perfect  good               faith  and with all the security  which  could               possibly  be  given to such  an  agreement,  I               nevertheless think that the general  principle               applies, and that we cannot give effect to the               agreement,  the consideration of which is  the               diverting the course of public justice."       In Keir v. Leeman, 16 Quecn’s Bench 308 at 316,  3221, Lord Denman, C.J. said:                        "The principle of law is laid down by               Wilmot C.J. in Collins v.   Blantem (a) that a               contract  to withdraw a prosecution  for  per-               jury, and consent to give no evidence  against               the accused, is founded on an unlawful consid-               eration and void.                         On the soundness of this decision no               doubt can be entertained,    whether the party               accused  were innocent or guilty of the  crime               charged.  If innocent, the law was abused  for               the purpose of    extortion; if guilty the law               was eluded by a corrupt compromise,  screening               the criminal for a bribe.                But, if the offence is of a public nature, no               agreement can be valid that is founded on  the               consideration  of stifling a  prosecution               for it.               327               In  the present instance, the offence  is  not               confined  to personal injury, but is  accompa-               nied  with  riot and obstruction of  a  public               officer  in the execution of his  duty.  These               are  matters of public concern, and  therefore               not legally the subject of a compromise.               The  approbation of the Judge (whether  neces-               sary  or  not) may properly be  asked  on  all               occasions  where an indictment is  compromised               on  the  trial; plainly it  cannot  make  that

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             legal which the law condemns." This was affirmed in appeal by Tindal C.J. who said (p.393):               "It seems clear, from the various  authorities               brought  before us on the argument, that  some               misdemeanours  are  of such a  nature  that  a               contract to withdraw a prosecution in  respect               of  them, and to consent to give  no  evidence               against the parties accused, is founded on  an               illegal  consideration. Such was the  case  of               Collins  v. Blantern, 2 Wils. 341, 347,  which               was the case of a prosecution for perjury.  It               is strange that such a doubt should ever  have               been  raised. A contrary decision  would  have               placed it in the power of a private individual               to  make a profit to himself by doing a  great               public injury."      Narasimha  Raju  v. E Gurumurthy Raju & Ors.  [1963]  3 S.C.R.  687  of this court is a case in  point.   The  first respondent who had filed a criminal complaint in the  Magis- trate’s  Court against the appellant and his other  partners alleging of commission of offences under Sections 420,  465, 468 and 477 read with Sections 107, 120B of the Indian Penal Code  entered  into an agreement with  the  accused  persons under which the dispute between the appellant and the  first respondent  and others was to be referred to arbitration  on the  first  respondent  agreeing to  withdraw  his  criminal complaint. Pursuant to that agreement the complaint was  got dismissed, on the first-respondent abstaining from  adducing evidence. The arbitration proceedings, the consideration for which was the withdrawal of the complaint, culminated in  an award  and the first respondent :applied to have  the  award made  a rule of the court. The appellant turned  around  and challenged  the award on the ground that  the  consideration for the arbitration-agreement was itself unlawful as it  was one not to prosecute a non-compoundable offence. This  court held  that the arbitration agreement was void under  Section 23  of  the  Indian Contract Act as  its  consideration  was opposed to public policy. The award was held void.    34.  Even  assuming  that the Union of  India  agreed  to compound 328 non-compoundable offences, would this constitute a  stifling of prosecution in the sense in which the doctrine is  under- stood.  The essence of the doctrine of stifling of  prosecu- tion is that no private person should be allowed to take the administration  of criminal justice out of the hands of  the Judges and place it in his own hands. In Rameshwar v.  Upen- dranath, AIR 1926 Calcutta 451,456 the High Court said:               "Now  in order to show that the object of  the               Agreement was to stifle criminal  prosecution,               it  is  necessary to prove that there  was  an               agreement  between  the  parties  express   or               implied,  the consideration for which  was  to               take  the  administration of law  out  of  the               hands of the Judges and put it into the  hands               of  a private individual to determine what  is               to  be  done hi particular case and  that  the               contracting  parties should enter into a  bar-               gain to that effect".               [emphasis added]               Narasimha Raju (supra) this Court said .                                                          [p.               693]                        "The principle underlying this provi-               sion  is obvious. Once the           machinery

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             Of the Criminal Law is set into motion on  the               allegation that a non-compoundablc offence has               been committed, it is for the criminal  courts               and  criminal courts alone to deal with   that               allegation  and to decide whether the  offence               alleged  has in  fact been committed  or  not.               The  decision of this question  cannot  either               directly  or  indirectly be taken out  of  the               hands   of criminal courts and dealt with  by,               private individuals."                                               [Emphasis               added]       This was what was reiterated in Ouseph Poulo & Ors. v. Catholic Union Bank Ltd. & Ors. [1964] 7 SCR 745:         "With  regard to non-compoundable offence,  however, the  position  is  clear that no court to law  can  allow  a private party to take  lite administration of law in its own hands and settle the questiotion as to whettier a particular offence has been cornmitted or not for   itself" [Emphasis added] 329     In this sense, a private party is not taking administra- tion  of law in its own hands in this case. It is the  Union of India, as the dominus litis, that consented to the quash- ing  of the proceedings. We have said earlier that what  was purported to be done was not a compounding of the  offences. Though,  upon  review, we have set aside that  part  of  the order,  the  consequences  of the  alleged  unlawfulness  of consideration must be decided as at the time of the transac- tion. It is here that we see the significance of the concur- ring  observations  of Chapan J. in Majibar Rahman  v.  Muk- tashed  Hossein, ILR 40 Calcutta page 113 at page  118,  who said.               "I  agree, but desire to carefully confine  my               reason  for holding that the bond was void  to               the ground that the consideration for the bond               was  found by the lower Court to be a  promise               to withdraw from the prosecution in a case the               compromise of which is expressly forbidden  by               the Code of Criminal Procedure."     As  stated earlier, the arrangement which  purported  to terminate  the criminal cases was one of a  purported  with- drawal  not forbidden by any law but one which  was  clearly enabled.  Whether  valid grounds to permit  such  withdrawal existed or not is another matter.     35.   Besides as pointed out by this court in  Narasimha Raju’s case (supra) the consequence of doctrine of  stifling of  prosecution  is attracted, and its  consequences  follow where  a  "person sets the machinery of  criminal  law  into action  on the allegation that the opponent has committed  a noncompoundable-offence  and  by the use  of  this  coercive criminal  process he compels the opponent to enter  into  an agreement,  that agreement would be treated as  invalid  for the  reason  that  its consideration is  opposed  to  public policy".  (See page 692 of the report ). In that  case  this court  further  held that the doctrine applies  "when  as  a consideration for not proceeding with a criminal  complaint, an agreement is made, in substance it really means that  the complainant  has  taken upon himself to deal with  his  com- plaint  and  on the bargaming counter he has used  his  non- prosecution  of  the complaint as a  consideration  for  the agreement which his opponent has been induced or coerced  to enter into". (emphasis added). These are not the features of the present case.     36.     More  importantly, the distinction  between  the

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"motive" for entering into agreement and the "consideration" for the agreement must be kept clearly distinguished.  Where dropping of the criminal proceedings is a motive for  enter- ing  into  the agreement --and  not  its  consideration--the doctrine of stifling of prosecution is not attracted.  Where there is also a 330 pre-existing  civil  liability,  the  dropping  of  criminal proceedings need not necessarily be a consideration for  the agreement  to  satisfy that liability. In Adhikanda  Sahu  & Ors.  v. Jogi Sahu & Ors. AIR 1922 Patna 502, this  distinc- tion is pointed out:               "The distinction between the motive for coming               to  an agreement and the actual  consideration               for  the agreement must be kept  carefully  in               view and this care must be particularly  exer-               cised in a case where there is a civil liabil-               ity  already existing, which is discharged  or               remitted by the Agreement".               [P. 503]      In Deb Kumar Ray Choudhury V. Anath Bandhu Sen and Ors. AIR 1931 Cal. 421. it was mentioned:               "A contract for payment of money in respect of               which  a criminal prosecution was  permissible               under  the law, was not by itself  opposed  to               public policy.                     ......  the withdrawal of the prosecution               in  the  case before us might  have  been  the               motive  but  not certainly the object  or  the               consideration of the contract as evidenced  by               the bond in suit so as to render the agreement               illegal.               These  decisions are based upon the  facts  of               the cases showing clearly that the  agreements               or  the contracts sought to be  enforced  were               the  foundation  for the  withdrawal  of  non-               compoundable criminal cases and were  declared               to be unlawful on the ground of public  policy               wholly void in law and, therefore,  unenforce-               able. This class of cases has no  application,               where,  as  in the present case, there  was  a               pre-existing  civil liability based  upon  ad-               justment  of  accounts  between  the   parties               concerned."               [emphasis added] Again in Babu Harnarain Kapur v. Babu Ram Swamp Nigam & Anr.  [AIR 1941 Oudh 593] this distinction has been pointed out:                          "Though the motive of the execution               of  the  document may be the withdrawal  of  a               non-compoundable criminal case,-the considera-               tion  is  quite legal, provided  there  is  an               enforceable  preexisting  liability.  In   the               Patna  case it was observed that the  distinc-               tion  between  the  motive for  coming  to  an               agreement and    the actual consideration  for               the agreement must be kept care-               331               fully  in view and this care must be  particu-               larly  exercised  in a case where there  is  a               civil  liability  already  existing  which  is               discharged  or  remitted  by  the  agreement."               [P.592]               Finally, this Court in Ouseph Poulo (supra) at               page 749 held that:               "In  dealing  with  such  agreements,  it  is,

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             however,  necessary to bear in mind  the  dis-               tinction between the motive which may  operate               in the mind of the complainant and the accused               and  which may indirectly be  responsible  for               the  agreement and the consideration for  such               an  agreement. It is only where the  agreement               is  supported by the prohibited  consideration               that  it  fails  within the  mischief  of  the               principle,  that  agreements which  intend  to               stifle criminal prosecutions are invalid."               [Emphasis added]     37.  On a consideration of the matter, we hold that  the doctrine of stifling of prosecution is not attracted in  the present case. In reaching this conclusion we do not put  out of  consideration  that ii is inconceivable  that  Union  of India  would, under the threat of a prosecution, coerce  UCC to pay 470 million US dollars or any part thereof as consid- eration  for stifling of the prosecution. In the context  of the Union of India the’plea lacks as much in reality as in a sense of proportion.     38.     Accordingly on Contention (F) we hold  that  the settlement  is  not hit by Section 23 or 24  of  the  Indian Contract  Act  and  that no part of  the  consideration  for payment of 470 million US dollars was unlawful. Re: Contention (G)     39.    This  concerns  the  ground  that  a   "Fairness- Hearing", as understood in the American procedure is  manda- tory  before a mass- tort action is settled and the  settle- ment  in  the present case is bad as no such  procedure  had preceded  it. It is also urged that the quantum settled  for is hopelessly inadequate as the settlement has not envisaged and  provided  for many heads of compensation  such  as  the future medical surveillance costs of a large section of  the exposed population which is put at risk; and that Ihc  toxic tort actions where the latency-period for the  manifestation of the effects of the exposure is unpredictable it is neces- sary  to have a "re-opener" clause as in the very nature  of toxic  injuries the latency period for the manifestation  of effects  is  unpredictable  and  any  structured  settlement should  contemplate  and provide for  the  possible  baneful contingencies  of  the  future. It is pointed  out  for  the petitioners that the order recording the settlement and  the order  dated  4th May, 1989 indicate that no  provision  was made  for such imminent contingencies for the  future  which even in- 332 dude the effect of the toxic gas on pregnant mothers result- ing  in  congenital  abnormalities of  the  children.  These aspects,  it  is urged, would have been  appropriately  dis- cussed  before the Court, had the victims  and  victimgroups had a "Fairness-Hearing". It is urged that there has been no application  of  the Court’s mind  to  matters  particularly relevant  to  toxic injuries. The contention  is  two  fold. First is that the settlement did not  envisage the possibil- ities  of  delayed  manifestation or  aggravation  of  toxic morbidity,  in  the exposed population. This aspect,  it  is urged,  is required to be taken care of in two ways: One  by making adequate financial provision for medical surveillance costs for the exposed but still latent victims and secondly, by providing in the case of symptomatic victims a "re-opener clause" for meeting contingencies of aggravation of  damages in    the  case  of the presently  symptomatic  victims.  The second  contention is as to the infirmity of the  settlement by an omission to follow the ’Fairness-Hearing’ procedures.      40.     On  the  first aspect,  Sri  Nariman,  however,

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contends  that the possibility that the  exposed  population might  develop  hitherto unsuspected  complications  in  the future  was  known to and was in the mind of  the  Union  of India  and it must be presumed to have taken all the  possi- bilities  into  account in arriving at the  settlement.  Sri Nariman  said  we now have the benefit of hindsight  of  six years  which  is a sufficiently long period over  which  the worst  possibilities  would have blow-over. Indeed,  in  the plains  in the Bhopal Court, Shri Nariman points out,  Union of India has specifically   averred  that  there  were possibilities  of  such  future damage. Sri Nariman referred to the preface to the Report of April, 1986 of the Indian Council of Medical Research (ICMR) on  "Health Effects of the Bhopal Gas Tragedy"  where  these contingencies  are posited to point out that  these  aspects were in the mind of Union of India and that there was  noth- ing unforeseen which could be said to have missed its atten- tion. in the said preface ICMR said:                      , ......  How long will they (i.e.  the               respiratory,  ocular  and  other  morbidities)               last  ’?  What permanent  diabilities  can  be               caused? What is the outlook for these  victims               ? What of their off-spring?"       Shri Nariman referred to the following passage in  the introduction to the Working Manual 1 on "Health Problems  of Bhopal (;as Victims" April, 1986, ICMR;               "Based  on clinical experience gained so  far,               it  is believed that many of them  (i.e.  vic-               tims)  would require specialised medicare  for               several years since MIC is an extremely  reac-               tive substance",               333               the  possibility  of  the  exposed  population               developing hitherto unsuspected  complications               in the future cannot be overlooked."     What  is, however, implicit in this stand of the UCC  is the  admission that exposure to MIC has such  grim  implica- tions for the future; but UCC urges that the Union of  India must be deemed to have put all these into the scales at  the time  it settled the claim for 470 million US  dollars.  UCC also  suggests that with the passage of time all such  prob- lems of the future must have already unfolded themselves and that  going by the statistics of medical evaluation  of  the affected persons done by the Directorate of Claims, even the amount  of  470 million US dollars is very likely to  be  an over-payment. UCC ventures to suggest that on the  estimates of  compensation based on the medical categorisation of  the affected population, a sum of Rs. 440 crores could be  esti- mated  to  be an over-payment and that for all  the  latent- problems not manifested yet, this surplus of Rs. 440  crores should be a protectable and adequate financial cushion.     41.      We may at this stage have a brief look  at  the work  of  the medical evaluation and categorisation  of  the Health  Status  of the affected persons carried out  by  the Directorate  of  Claims.  It would appear that  as  on  31st October, 1990, 6,39,793 claims had been filed. It was stated that  a considerably large number of the claimants who  were asked  to appear for medical evaluation did not turn up  and only 3,61,166 of them responded to the notices. Their  medi- cal  folders were prepared. The total number of  deaths  had risen  to  3,828.   The results of  medical  evaluation  and categorisation  of the affected persons on the basis of  the data  entered in their Medical Folders as on  31st  October, 1990 are as follows:   No. of medical folders prepared        3,61,966

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 No. of folders evaluated               3,58,712   No. of folders categorised             3,58,712   No injury                              1,55,203   Temporary injuries                     1,73,382   Permanent injuries                     18,922   Temporary disablement   caused by a   Temporary injury                       7,172   Temporary disablement   caused by a   permanent injury                       1,313   Permanent Partial disablement          2,680 334   Permanent total disablement            40   Deaths                                 3,828     42. On the medical research literature placed before  us it  can  reasonably  be posited that the  exposure  to  such concentrations  of MIC might involve delayed  manifestations of  toxic  morbidity.  The exposed population may  not  have manifested any immediate symptomatic medical status.     But  the long latency-period of toxic  injuries  renders the  medical  surveillance costs a  permissible  claim  even ultimately the exposed persons may not actually develop  the apprehended  complications.  In Ayers v. Jackson TP,  525  A 2d.287 N.J.1987, referring to the admissibility of claims of medical surveillance expenses, it was stated:               "The  claim for medical surveillance  expenses               stands  on a different footing from the  claim               based  on enhanced risk. It seeks  to  recover               the  cost  of  periodic  medical  examinations               intended  to  monitor plaintiffs’  health  and               facilitate  early diagnosis and  treatment  of               disease  caused  by  plaintiffs’  exposure  to               toxic chemicals  .....  ".               "....The future expense of medical monitoring,               could  be a recoverable  consequential  damage               provided that plaintiffs can establish with  a               reasonable  degree of medical  certainty  that               such expenditures are "reasonably anticipated"               to  be incurred by reason of  their  exposure.               There  is  no doubt that such a  remedy  would               permit  the early detection and  treatment  of               maladies and that as a matter of public policy               the tort-feasor should bear its cost.               Compensation  for  reasonable  and   necessary               medical  expenses  is  consistent  with  well-               accepted legal principles. It is also consist-               ent with the important public health  interest               in  fostering  access to medical  testing  for               individuals whose exposure to toxic  chemicals               creates an enhanced risk of disease. The value               of  early diagnosis and treatment  for  cancer               patients is welldocumented."               "Although some individuals exposed to  hazard-               ous  chemicals may seek regular  medical  sur-               veillance  whether  or not the cost  is  reim-               bursed,  the  lack of reimbursement  will  un-               doubtedly  deter  others  from  doing  so.  An               application of tort law that               335               allows  post-injury, pre-symptom  recovery  in               toxic  tort litigation for reasonable  medical               surveillance  costs is  manifestly  consistent               with  the public interest in  early  detection               and treatment of disease.

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             Recognition of pre-symptom claims for  medical               surveillance  serves  other  important  public               interests.  The difficulty of  proving  causa-               tion,  where the disease is  manifested  years               after  exposure, has caused many  commentators               to  suggest that tort law has no  capacity  to               deter  pollutors, because the costs of  proper               disposal  are  often viewed  by  pollutors  as               exceeding  the risk of tort liability   ......               "               "Other considerations compel recognition of  a               pre-symptom medical surveillance claim. It  is               inequitable  for  an  individual,.  wrongfully               exposed  to  dangerous  toxic  chemicals   but               unable to prove that disease is likely to have               to pay his own expenses when medical interven-               tion     is     clearly     reasonable     and               necessary  ...........................  "               "Accordingly, we hold that the cost of medical               surveillance  is a   compensable item of  dam-               ages  where  the proves  demonstrate,  through               reliable expert testimony predicated upon  the               significance and extent of exposure to  chemi-               cals,  the  toxicity  of  the  chemicals,  the               seriousness of the diseases for which individ-               uals are at risk, the relative increase in the               chance  of onset of disease in those  exposed,               and  the value of early diagnosis,  that  such               surveillance to monitor the effect of exposure               to   toxic   chemicals   is   reasonable   and               necessary  ......  "     In  the  "Law of Toxic Tons" by Michael Dore,  the  same idea is expressed:               "In  Myers v. Johns-Manville Corporation,  the               court permitted plaintiff prove emotional harm               where  they were suffering from "serious  fear               or  emotional distress or a  clinically  diag-               nosed  phobia  of cancer." The  court  distin-               guished, however, between a claim for fear  of               cancer  and  a  claim  for  cancerphobia.  The               former  could  be based  on  plaintiffs  fear,               preoccupation and distress resulting from  the               enhanced  risk of cancer but the latter  would               require       expert      opinion       testi-               mony  .......................  "               "The reasonable value of future medical  serv-               ices required by a               336               defendant’s conduct is recoverable element  of               damage in tradition and toxic tort litigation.               Such damages have been awarded even in circum-               stances  where  no present injury  exists  but               medical testimony establishes that such future               medical surveillance is reasonably required on               the  basis  of  the conduct  of  a  particular               defendant  ..........................  "     It  is not the reasonable probability’ that the  persons put at risk will actually suffer toxic injury in future that determines  whether the medical surveillance  is  necessary. But  what determines it is whether, on the basis of  medical opinion, a person who has been exposed to a toxic  substance known  to  cause  long time serious  injury  should  undergo periodical medical tests in order to look for timely warning signs of the on-set of the feared consequences. These  costs constitute  a relevant and admissible head  of  compensation

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and  may  have  to be borne in mind in  forming  an  opinion whether a proposed settlement -- even as a settlement --  is just, fair and adequate.     43.   Sri Nariman, however, urged that the only form  of compensation known to the common law is a lumpsum award -- a once  and  for  all determination of  compensation  for  all plaintiffs’  losses,  past, present and future --  and  that split-trials for quantification of compensation taking  into account  future aggravation of injuries, except  statutorily enabled, are unknown to common law.     Indeed,  that this is the position in common law  cannot be  disputed. In an action for negligence, damages  must  be and  are assessed once and for all at the trial of  such  an issue.  Even if it is found later that the  damage  suffered was  much greater than was originally supposed,  no  further action could be brought. It is well settled rule of law that damages resulting from one and the same cause of action must be  assessed  and recovered once and for all.  Two  actions, therefore,  will  not  lie against the  same  defendant  for personal injury sustained in the same accident. (See Churls- worth and Percy on Negligence [1990] 8th Edn. Para 43.     Indeed,  even under the Common Law, as  administered  in U.K.  prior  to the introduction of sec.32A of  the  Supreme Court  Act  1981,  Lord Denning thought  that  such  special awards  were not impermissible.  But as pointed out  earlier the  House of Lords in Lim Poh Choo v. Camden Islington, did not approve that view.     Later  sec.32A of the Supreme Court Act, 1981  expressly enabled award of provisional damages and Order 37 Rules 7 to 10 (Part II) Rules of    337 Supreme  Court provided for the assessment of  such  further damages.  The contention of the UCC is that the  common  law rule  of  once  and for all damages is  unuttered  in  India unlike  in  England where split awards are  now  statutorily enabled  and that, therefore, references to  future  medical surveillance costs and "re-opener" Clauses are inapposite to a  once for all payment. The concept of re-opener clause  in settlement, it is contended, is the result of special  legal requirements in certain American jurisdictions and a settle- ment  is  not vitiated for not incorporating  a  "re-opener" clause or for not providing for future medical  surveillance costs inasmuch as all these must be presumed to have engaged the minds of the settling parties at the time of a once  for all  settlement. Shri Nariman pointed out that the  American case  of  Acushnet River v. New Bedford Harbour,  712  F  2d Supp. 1019 referred to by the learned Attorney-General was a case  where the "re-opener" clause was a statutory  incident under the Comprehensive Environmental Response, Compensation and Liability Act, 1980.     But petitioners say that in the process of evolving what is  a fair, reasonable and adequate settlement some  of  the elements  essential  and relevant to fairness  and  adequacy such  as provision for future medical surveillance  and  the likely  future, but yet unforeseen, manifestation  of  toxic injury, having regard to the nature of the hazard, have  not been  kept in mind and, therefore, the approval accorded  to the  settlement is on an incomplete criteria. But UCC  would say that Union of India was aware of the possibility of such future  manifestations  of the effects of the  exposure  and must be deemed to have kept all those in mind at the time of settlement.     44.   But the point to emphasise is that those who  were not  parties to the process of settlement are assailing  the settlement on these grounds. In personal injury actions  the

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possibility  of the future aggravation of the condition  and of consequent aggravation of damages are taken into  account in  the  assessment of damages. The estimate of  damages  in that sense is a very delicate exercise requiring  evaluation of many criteria some of which may border on the  impondera- ble.  Generally speaking actions for damages are limited  by the  general doctrine of remoteness and mitigation  of  dam- ages.  But  the hazards of assessment of once  and  for  all damages in personal injury actions lie in many yet  inchoate factors  requiring to be assessed. It is in this context  we must  look  at  the ’very proper refusal of  the  courts  to sacrifice physically injured plaintiffs on the alter of  the certainty  principle’.  The likelihood of  future  complica- tions--though they may mean mere assessment or evaluation of mere  chances--are  also put into the scales  in  qualifying damages.  This principle may, as rightly pointed out by Sri 338 Nariman,  take care of the victims who have  manifest  symp- toms. But what about those who are presently wholly a  symp- tomatic  and have no material to support a present  claim  ? Who  will provide them medical surveillance costs and if  at some  day  in  the future they develop any  of  the  dreaded symptoms, who will provide them with compensation ? Even  if the  award  is an "once and for  all"  determination,  these aspects must be taken into account.     45.      The  second  aspect is the  imperative  of  the exercise  of  a "Fairness-Hearing" as a  condition  for  the validity  of  the settlement. Smt. Indira  Jaising  strongly urged that in the absence of a "Fairness-Hearing" no settle- ment could at all be meaningful. But the question is whether such a procedure is relevant to and apposite in the  context of  the  scheme under the Act. The "Fairness-Hearing"  in  a certified class of action is a concept in the United  States for  which  a  provision is available under rule  23  of  US Federal Rules of Procedure. Smt. Indira Jaising referred  to certain  passages in the report of Chief Judge Weinstein  in what  is known as the Agent Orange Litigation  (597  Federal Supplement  740 (1984), to indicate what according  to  her, are the criteria a Court has to keep in mind in approving  a settlement. The learned judge observed (at page 760 para 9):               "In deciding whether to approve the settlement               the Court must have a sufficient grasp of  the               facts  and  the law involved in  the  case  in               order  to  make a sensible evaluation  of  the               ligation’s prospects. (See Malchman v.  Davis,               706 F.2d, 426, 433 (2d Cir.1983). An apprecia-               tion  of  the  probabilities  of   plaintiffs’               recovery after a trial and the possible  range               of  damages is essential.  The cases  caution,               however, that the court"should not ....   turn               the  settlement hearing ’into a trial  or  re-               hearsal  of the trial. "Flin v. FMC  Corp.,528               F.2d, 1169, 1172(4th Cir. 1975), Cert. denied,               424  U.S.  967,  96  S.Ct.  1462,  47  L.Ed.2d               734(734(1976), quoting Teachers Ins. & annuity               Ass’n  of  America  v. Beame,  67  F.R.D.  30,               33(S.D.N.Y.1975). See also Malchman v.  Davis,               706 F.2d 426, 433 (2D Cir. 1983)."               "A democratic vote by informed members of  the               class  would  be virtually impossible  in  any               large  class suit. The costs of ensuring  that               each  member of the class in this  case  fully               understood the issue bearing on settlement and               then voted on it would be prohibitive and  the               enterprise  quixotic. Even though hundreds  of

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             members  of the class were heard  from,  there               was  an overwhelminglv large silent  majority.               In the final analysis there was and can be  no               "consent" in any meaningful sense."               [Emphasis added] 339     Learned  Judge also referred to the nine  relevant  fac- tors: (1) The complexity expense and likely duration of  the litigation, (2) The reaction of the class of the settlement, (3) The stage of the proceedings and the amount of discovery completed, (4) The risks of establishing liability, (5)  The risks  of establishing damages (6) The risks of  maintaining the  class action through the trial, (7) The ability of  the defendants  to withstand a greater judgement, (8) The  range of reasonableness of the settlement fund in the light of the best possible recovery and, (9) the range of  reasonableness of  the settlement fund to a possible recovery in the  light of  all  the attendant risks of litigation. But  the  limits were also indicated by learned Judge:               ’Thus  the trial court has a limited scope  of               review  for  determining  fairness.  The  very               purpose  of  settlement is to avoid  trial  of               sharply  disputed issue and the costs of  pro-               tracted litigation."               "The  Court may limit its fairness  proceeding               to whatever is necessary to aid it in reaching               a  just and informed decision. ’Flirt  v.  FMC               Corp. 528 F.2d at 1173. An evidentiary hearing               is not required."     The settlement must, of course, be an informed one.  But it  will be an error to require its quantum to be  co-exten- sive  with the suit claim or what, if the  plaintiffs  fully succeeded, they would be entitled to expect.     The  Bhopal  Gas Disaster (Processing  of  Claims)  Act, 1985, has its own distinctive features. It is a  legislation to meet a one time situation. It provides for exclusivity of the  right  of representation of all claimants by  Union  of India  and  for divesting the individual  claimants  of  any right  to pursue any remedy for any cause of action  against UCC and UCIL. The constitutionality of this scheme has  been upheld  in the Sahu’s case. Sri Nariman contended  that  the analogy  of "Fairness-Hearing" euvisaged in certified  class action in the United States is inapposite in the context  of the  present  statutory right of the Union  of  India.  Shri Nariman referred to the following statement of the Court  in Saint case:               "...Our attention was drawn to the  provisions               of  Order  1 Rule 8(4) of the  Code.  Strictly               speaking  Order 1, Rule 8 will not apply to  a               suit or a proceeding under the Act. It is  not               a  case  of one having  common  interest  with               others.   Here the plaintiff the Central  Gov-               ernment  has replaced and divested  tire  vic-               tims."               [Emphasis added] 340     Consistent  with  the limitations of the  scope  of  the review,  says Shri Nariman, the Court cannot go  behind  the settlement so as to take it back to a stage of proposal  and order  a "Fairness Hearing". He urged that a settlement  was after  all a settlement and an approval of a settlement  did not depend on the legal certainty as to the claim or counter claim being worthless or valuable.  Learned counsel commend- ed  the following passage from the judgment in the Court  of Appeal  for the Fifth Circuit stated in Florida Trailer  and

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Equipment Co. v. Deal,284 F.2d 567 (1960):               "   ......................  The probable  out-               come in the event of litigation, the  relative               advantages  and disadvantages are, of  course,               relevant factors for evaluation. But the  very               uncertainties  of  outcome in  litigation,  as               well  as the avoidance of wasteful  litigation               and  expense,  lay  behind  the  Congressional               infusion  of a power to compromise. This is  a               recognition of the policy of the law generally               to encourage settlements. This could hardly be               achieved  if the test on hearing for  approval               meant  establishing  success or failure  to  a               certainty.  Parties would be hesitant  to  ex-               plore  the likelihood of settlement  apprehen-               sive  as they would then be that the  applica-               tion for approval would necessarily result  in               a  judicial  determination that there  was  no               escape  from liability or no hope of  recovery               and (thus) no basis for a compromise."     Sri  Nariman also pointed out that In Agent Orange  set- tlement  only a small fraction of one percent of  the  class Came  forward  at the fairness hearings; that there  was  no medical evidence nor a mini-trial about the factual  aspects of  the case and that in the end: "the silent  majority  re- mains inscrutable". It is pointed out that in United Kingdom a  different variant or substitute of fairness  hearing  ob- tains.   Order  15  Rule 13, Rules of  Supreme  Court  makes provision for orders made in representative actions  binding on persons, class or members of a class who cannot be ascer- tained or cannot be readily ascertained.     46.      In our opinion, the right of the  victims  read into  section 4 of the Act to express their views on a  pro- posed settlement does not contribute to a position analogous to  that  in United States in which  fairness  hearings  are imperative.   Section  4 of the Act to which  the  right  is traceable  merely enjoins Government of India to have  ’due- regard’ to the views expressed by victims. The power of  the Union of India under the Act to 341 enter  into  a compromise is not necessarily confined  to  a situation  where  suit has come to be instituted  by  it  on behalf of the victims. Statute enables the Union of India to enter  into a compromise even without such a suit. Right  of being  heard  read  into sec. 4--and subject  to  which  its constitutionality  has been upheld in Sahu’s  case--subjects the  Union of India to a corresponding obligation. But  that obligation  does not envisage or compel a procedure  like  a "Fairness-Hearing" as a condition precedent to a  compromise that Union of India may reach, as the situations in which it may do so are not necessarily confined to a suit.     Accordingly,  contention (G) is answered  against  peti- tioners.   We  hold that the settlement is not  vitiated  by reason  alone  of  want of  a  "Fairness-Hearing"  procedure preceding  it.  Likewise, the settlement is not vitiated  by reason of the absence of a "re-opener" clause built into it. But there is one aspect as to medical surveillance costs and as to a provision for possible cases which are now a-sympto- matic and which may become symptomatic after a drawn-out  of latency period.  We will discuss that aspect under Point (J) infra. Re: Contention (H)     47.  The question is if the settlement is  reviewed  and set aside what should happen to the funds brought in by  the UCC  pursuant to the order. This question was raised by  the

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petitioners  and argued before us by the parties inviting  a decision.  We  propose  to decide it though  the  stage  for giving effect to it has not yet arrived.     The stand of the Union of India and other petitioners is that even upon a setting aside of the settlement, the  funds should not be allowed to be repatriated to the United States as that would embroil the victims in endless litigations  to realise  the  fruits of the decree that may be made  in  the suit and to realise the order for interim-payment. The stand of  the Union of India as recorded in the proceedings  dated 10.4.1990 is as follows:                        "1.   It is submitted that the  Union               of  India consistent with its duty  as  parens               patriae  to the victims cannot consent to  the               taking away by Carbide of the moneys which are               in  India outside the jurisdiction  of  Indian               Courts.                    2.  At this stage, the Union of India  is               not  claiming unilaterally to appropriate  the               moneys,  nor  to disburse  or  distribute  the               same. The moneys can continue to be  deposited               in the Bank as               342               at  present and earn interest subject to  such               orders  that  may  be  passed  in  appropriate               proceedings by courts.               3.  It is submitted that in view of the  facts               and  circumstances of the case,  the  previous               history  of the litigation, the orders  passed               by  the district court Bhopal, Madhya  Pradesh               High  Court  and this Hon’ble Court,  and  the               undertakings  given  by UCIL  and  Carbide  to               Courts in respect of their assets, this  Hon’-               ble Court may, in order to do complete justice               under Article 142 of the constitution, require               retention of the moneys for such period as  it               may  deem fit, in order to satisfy any  decree               that  may be passed in the suit including  the               enforceable order of the M.P. High Court dated               4th April 1988."     48.  It  is urged by the learned Attorney  General  that restitution  being in the nature of a  proceedings  inexecu- tion,  the party claiming that benefit must be relegated  to the court of first instance to work out its remedies. It  is also  urged that the UCC did not bring in the funds  on  the faith  of the court’s order, but did so deliberately and  on its  own  initiative and choice and deposited the  funds  to serve its own interest even after it was aware of the insti- tution  of the proceedings challenging the settlement in  an attempt  to effectuate a fait-accompli. It is  further  said that the order of the High Court directing payment of inter- im compensation of Rs. 250 crores is operative and since the UCC has not sought or obtained any stay of operation of that order, the sums to the extent of Rs. 250 crores should  not, at all events, be permitted to be repatriated.     Learned  Attorney General also sought to point out  that the UCC had, subsequent to the settlement, effected  certain corporate  and  administrative changes and  without  a  full disclosure  by the UCC of these changes and their effect  on the  interests  of the claimants, the funds  should  not  be permitted  to  be  taken out of  the  court’s  jurisdiction, though, however, Government of India should not also be free to appropriate or use the funds.     49. We are not impressed by any of these contentions. It is  not  shown that the UCC brought-in the monies  with  any

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undue haste with a view to confronting Union of India with a fait  accompli. The records indicate a different  complexion of the matter. The payment appears to have been expedited at instance by the Union of India itself.     50.  Strictly speaking no restitution in the sense  that any  funds obtained and appropriated by the Union  of  India requiring to be paid back 343 arises.   The funds brought in by the UCC are  deposited  in the  Reserve  Bank of India and remain  under  this  Court’s control and jurisdiction. Restitution is an equitable  prin- ciple and is subject to the discretion of the Court. Section 144,  Code  of Civil Procedure, embodying  the  doctrine  of restitution does not confer any new substantive right to the party  not  already  obtaining under the  general  law.  The section  merely  regulates the power of the  court  in  that behalf,     51.  But, in the present case, Section 144 CPC does  not in terms apply. There is always an inherent jurisdiction  to order  restitution a fortiorari where a party has  acted  on the faith of an order of the court. A litigant should not go back with the impression that the judicial-process so  oper- ated  as to weaken his position and whatever it did  on  the faith of the court’s order operated to its disadvantage.  It is  the  duty of the court to ensure that no  litigant  goes back  with a feeling that he was prejudiced by an act  which he did on the faith of the court’s order. Both on  principle and authority it becomes the duty of the court to -- as much moral  as it is legal -- to order refund and restitution  of the amount to the UCC-- if the settlement is set aside.     In Binayak v. Ramesh, [1966] 3 SCR 24 this Court dealing with scope of Section 144 CPC observed:               ".   .........  The principle of the  doctrine               of  restitution is that on the reversal  of  a               decree,  the law imposes an obligation on  the               party to the suit who received)the benefit  of               the  erroneous decree to make  restitution  to               the  other  party for what he has  lost.  This               obligation arises automatically on the  rever-               sal  or modification of the decree and  neces-               sarily  carries with it the right to  restitu-               tion  of  all  that has been  done  under  the               erroneous  decree;  and the  court  in  making               restitution  is bound to restore the  parties,               so  far as they can be restored, to  the  same               position  they  were in at the time  when  the               Court  by its erroneous action  had  displaced               them from  ...........               [p.27]     In  Jai  Berham  and others v. Kedar  Nath  Marwari  and Others [1922] P.C. 269 at 271 the Judicial Committee noticed that:               "The auction-purchasers have parted with their               purchasemoney  which they paid into  Court  on               the faith of the order of               344               confirmation  and certificate of sale  already               referred to  .......  ".               and said:               "   ............  and it would be  inequitable               and  contrary  to justice that  the  judgment-               debtor  should  be restored to  this  property               without  making good to the  auction-purchaser               the  moneys  which have been applied  for  his               benefit."

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In  L.  Guran Ditta v. T.R. Ditta, [1935] PC 12  Lord  Atkin said:               "   ...........   The duty of the  Court  when               awarding  restitution  under sec. 144  of  the               Code is imperative. It shall place the  appli-               cant  in the position in which he  would  have               been  if the order had not made: and for  this               purpose  the Court is armed with  powers  [the               ’may’ is empowering, not discretionary] as  to               mesne profits, interest and so forth. As  long               ago  as 1871 the Judicial Committee in 3  P.C.               465  (1) made it clear that interest was  part               of the normal relief given in restitution: and               this decision seems right to have grounded the               practice in India in such cases  ........  "               [P. 13]                   In  Jagendra Nath Singh v. Hira  Sahu  and               others.  AIR  1948  All. 252  F.B.  Motham  J.               observed:               "Every  Court has a paramount duty  to  ensure               that it does no injury to any litigant and the               provisions  of Sec. 144 lay down  a  procedure               where  effect  can be given  to  that  general               provision of the law. The Court should be slow               so  to  construe this section as to  impose  a               restriction  upon its obligation to act  right               and  fairly  according  to  the  circumstances               towards all parties involved."               [p.253]     52.  We are satisfied in this case that the  UCC  trans- ported the funds to India and deposited the foreign currency in  the  Reserve Bank of India on the faith of  the  Court’s order. If the settlement is set aside they shall be entitled to  have  their funds remitted to them back  in  the  United States  together with such interest as has accrued  thereon. So  far as the point raised by the learned  Attorney-General as  to  the corporate changes of the UCC  is  concerned,  we think, a direction to the UCC to prove and establish compli- ance  with the District Court’s order dated 30the  November, 1986, 345 should  be sufficient safeguard and should meet the ends  of justice.     53   Accordingly, in the event of the  settlement  being set  aside the UCC shall be entitled to have 420 million  US Dollars  brought  in by it remitted to it by  the  Union  of India  at the United States along with such interest as  has accrued on it in the account.     But this right to have the restitution shall be strictly subject  to  the condition that the UCC  shall  restore  its undertaking   dated   27.11.1986  which  was   recorded   on 30.11.1986  by District Court at Bhopal and on the  strength of  which the court vacated the order of injunction  earlier granted against the UCC. Pursuant to the order recording the Settlement, the said order dated 30.11.1986 of the  District Court  was set-aside by this Court. If the settlement  goes, the order dated 30.11.1986 of the District Court will  auto- matically  stand restored and the UCC would be  required  to comply  with  that order to keep and  maintain  unencumbered assets  of  the  value of US 3 billion  dollars  during  the pendency  of  the suit. The right of the UCC to  obtain  the refund  of and repatriate the funds shall be subject to  the performance  and effectuation of its obligations  under  the said  order of 30.11.1986 of the District Court  at  Bhopal. Till then the funds shall remain within the jurisdiction  of

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this  Court  and shall not be amenable to  any  other  legal process. The Contention (H) is disposed of accordingly. Re: Contention (1)     54. The contention is that notices to and  opportunities for  hearing of the victims, whom the Union of India  claims to represent, were imperative before the proposed settlement was recorded and this, admittedly, not having been done  the orders  dated 14th and 15th February, 1989 are nullities  as these  were made in violation of the rules of  natural  jus- tice.  Shri Shanti Bhushan urged that the invalidity of  the settlement  is squarely covered and concluded, as a  logical corollary, by the pronouncement of the Constitution Bench in Sahu  case.  He referred to and relied  upon  the  following observations of Chief Justice Sabyasachi Mukharji in  Sahu’s case:               "It  has been canvassed on behalf of the  vic-               tims  that the Code of Civil Procedure  is  an               instant  example of what is a just,  fair  and               reasonable procedure, at least the  principles               embodied  therein and the Act would be  unrea-               sonable  if there is exclusion of the  victims               to vindicate properly their views and  rights.               This  exclusion may amount to denial  of  jus-               tice.  In any case, it has been suggested  and               in  our opinion there is a good deal of  force               in  this  contention, that if a  part  of  the               claim, for good reasons or bad, is               346               sought  to be compromised or adjusted  without               at least considering the views of the  victims               that would be unreasonable deprivation of  the               rights of the victims  ..........  "               "  .............  Right to a hearing or repre-               sentation  before entering into  a  compromise               seems to be embodied in the due process of law               understood in the sense the term has been used               in  the constitutional jargon of this  country               though       perhaps      not       originally               intended  ..............  "               "In  view  of the principles settled  by  this               court and accepted all over the world, we  are               of  the opinion that in a case of this  magni-               tude  and nature, when the victims  have  been               given  some  say by section 4 of  Hie  Act  in               order  to make that opportunity,  contemplated               by sec. 4 of the Act meaningful and effective,               it should be so read that the victims have  to               be  given an opportunity of the  making  their               representation before the court comes to  any,               conclusion in respect of any settlement."               "In  our opinion, the constitutional  require-               ments,  the language of the section, the  pur-               pose of the Act and the principles of  natural               justice  lead  us to  this  interpretation  of               section  4 of the Act that in case of  a  pro-               posed   or  contemplated  settlement,   notice               should be given to the victims who ace affect-               ed  or  whose  rights are to  be  affected               to ascertain their views. Section 4 is signif-               icant. It enjoins the Central Government  only               to have "due regard" to any matters which such               person may require to be urged. So the obliga-               tion is on the Central Govt. in the  situation               contemplated  by Sec. 4 to have due regard  to               the  views of the victims and that  obligation

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             cannot be discharged by the Central Government               unless the victims are told that a  settlement               is  proposed, intended or contemplated. It  is               not  necessary that such views  would  require               consent of all the victims.  The Central Govt.               as the Representative of the victims must have               the views of the victims and place such  views               before  the court in such manner it  considers               necessary before a settlement is entered into.               If  the  victims  want to  advert  to  certain               aspects  of the matter during the  proceedings               under  the  Act and settlement  indeed  is  an               important stage in the proceedings, opportuni-               ties must be given to the victims.  Individual               notices  may not be necessary. The court  can,               and  in our opinion should, in such  situation               formulate  modalities  of  giving  notice  and               public               347               notice can also be given inviting views of the               victims by the help of mass media."                   "  ...........  The Act would be bad if it               is  not  construed in the  light  that  notice               before  any settlement under sec.4 of the  Act               was required to be giver  ..........  "               [Emphasis Supplied]     Shri  Shanti Bhushan urged that with these findings  and conclusions  the only logical resultant is that the  settle- ment must be declared a nullity as one reached in  violation of  the rules of natural justice. For Shri  Shanti  Bhushan, the matter is as simple as that.     But  after making the observation excerpted  above,  the Constitution  Bench,  having regard to the  nature  of  this litigation, proceeded to spell out its views and conclusions on  the  effect  of non-compliance of  natural  justice  and whether  there  were other remedial and  curative  exercise. Chief  Justice Mukharji noticed the problem arising  out  of non-compliance thus:               "   .........   It further appears  that  that               type  of notice which is required to be  given               had not been given. The question therefore, is               what is to be done and what is the consequence               ? The Act would be bad if it is not  construed               in the light that notice before any settlement               under  sec.  4 of the Act was required  to  be               given.  Then  arises the  question  of  conse-               quences of not giving the notice  ........  "               [Emphasis supplied] Learned Chief Justice proceeded to say:               "   ...........  In this adjudication, we  are               not  strictly concerned with the  validity  or               otherwise of the settlement, as we have  indi-               cated hereinbefore.  But constitutional  adju-               dication  cannot be divorced from the  reality               of a situation, or the impact of an  adjudica-               tion. Constitutional deductions are never made               in the vacuum. These deal with life’s problems               in  the reality of a given situation.  And  no               constitutional  adjudication is also  possible               unless  one  is aware of the  consequences  of               such an adjudication. One hesitates in matters               of  this type where large consequences  follow               one  way  or the other to put  as  under  what               others have put together. It is well to remem-               ber,  as  old Justice Holmes,  that  time  has

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             upset many fighting faiths and one must always               wager one’s salvation upon some prophecy based               upon               348               imperfect  knowledge. Our  knowledge  changes;               our perception of truth also changes  ........               "   ............   No man or  no  man’s  right               should  be affected without an opportunity  to               ventilate  his  views. We are  also  conscious               that  justice is a psychological yearning,  in               which men seek acceptance of their view  point               by  having  an opportunity of  vindication  of               their  view  point  before the  forum  or  the               authority enjoined or obliged to take a  deci-               sion  affecting their right. Yet, in the  par-               ticular  situations, one has to bear  in  mind               how an infraction of that should be sought  to               be removed in accordance with justice.  In the               facts and the circumstances of this case where               sufficient   opportunity  is  available   when               review  application  is heard  on  notice,  as               directed  by Court, no further opportunity  is               necessary and it cannot be said that injustice               has been done. do a great right" after all, it               is  permissible  sometimes  "to  do  a  little               wrong". In the facts and circumstances of  the               case,    this   is   one   of    those    rate               occasions  ..........               [Emphasis supplied] Chief Justice Mukharji also observed;                 But  having  regard to the  urgency  of  the               situation  and having regard to the  need  for               the  victims  for relief and help  and  having               regard  to  the fact that so much  effort  has               gone  in finding a basis for  the  settlement,               we,  at  one point of time,  thought   that  a               post-decisional  hearing  in  the  facts   and               circumstances of this case might be considered               to be sufficient compliance with the  require-               ments  of  principles of  natural  justice  as               embodied under Sec. 4 of the Act.  ........  "               [p. 63]                 In the facts and the circumstances of  this,               therefore,  we are of the opinion,  to  direct               that  notice  should be given now,  would  not               result  in doing justice hi the situation.  In               the  premises, no further consequential  order               is necessary by this Court.  ........  "               [P. 65]     While  Shri  Nariman understandably strongly  relies  on these  observations  as  the law of the  case,  Shri  Shanti Bhushan  seeks to deny them any binding force on the  ground that they were mere passing observations 349 inasmuch  as the question of validity of the settlement  was not before the court in Sahu case Shri Shanti Bhushan relied upon  several  pronouncements of this Court  :viz.  National Textile Workers Union v. P.R. Ramakrishnan, [1983] 1 SCC 228 Institute  of Chartered Accountants v. L.K. Ratna, [1986]  4 SCC 537, K.I. Shephard v. Union of India, [1987] 4 SCC  431, R.B. Shreeram Durga Prasad v. Settlement Commission,  [1989] 1 SCC 628 and H.L. Trehan v. Union of lndia [1989] 1 SCC 764 to  emphasise the imperatives of observance of natural  jus- tice and the inevitability of the consequences the flow from a  non-compliance  of the requirements of  a  pre-decisional

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hearing.     These are all accepted principles. Their wisdom,  verity and  universality in the discipline of law are  well  estab- lished. Omission to comply with the requirements of the rule of  Audi  Alteram  Pattern, as a general  rule,  vitiates  a decision.  Where  there is violation of natural  justice  no resultant  or  independent prejudice need be shown,  as  the denial  of natural justice is, in itself, sufficient  preju- dice and it is no answer to say that even with observance of natural justice the same conclusion would have been reached. The citizen "is entitled to be under the Rule of law and not the  Rule  of Discretion" and "to remit the  maintenance  of constitutional right to judicial discretion is to shift  the foundation of freedom from the rock to the sand".     But  the effects and consequences of non-compliance  may alter  with  situational  variations  and   particularities, illustrating  a "flexible use of discretionary  remedies  to meet  novel legal situations". "One motive" says Prof.  Wade "for  holding administrative acts to be voidable  where  ac- cording to principle they are void may be a desire to extend the discretionary powers of the Court". As observed by  Lord Reid  in Wiseman v. Borneman [1971 AC 297]  natural  justice should  not  degenerate into a set of hard and  fast  rules. There should be a circumstantial flexibility.     In  Sahu case this Court held that there was no  compli- ance  with the principles of natural justice but  also  held that  the result of the non-compliance should not be  a  me- chanical  invalidation.  The Court suggested curatives.  The Court  was not only sitting in judicial review  of  legisla- tion; but was a court of construction also, for, it is  upon proper construction of the provisions, questions of  consti- tutionality  come to be decided.  The Court was  considering the scope and content of the obligations to afford a hearing implicit in Section 4 of the Act. It cannot be said to  have gone  beyond the pale of the enquiry when it considered  the further  question  as to the different ways  in  which  that obligation could be complied with or satisfied. This is,  in substance,  what the Court has done and that is the  law  of the  case.  It cannot be said that these  observations  were made by the way and had no binding force. 350     Sri Garg submitted that when the Union of India did not, even  primafacie,  probabilise that the  quantification  re- flected  in the settlement was arrived on the basis  of  ra- tional  criteria relevant to the matter,  the  determination fails  as the statutory authority had acted ultra-vires  its powers and trusts under the statutory scheme. Sri Garg  said that  it would be a perversion of the process to  call  upon the victims to demonstrate how the settlement is inadequate. There  was, according to Sri Garg, no material to shift  the risk  of  non-persuasion.  Sri Garg urged  that  unless  the elements of reasonableness and adequacy- even to the  extent a  settlement goes -are not established and the  quantifica- tion shown to be justified on some tenable basis the settle- ment.  would incur the criticism of being the result  of  an arbitrary action of Government.     Shri  Shanti  Bhushan, however, strongly  commended  the following  observations  of Megarry J in Leary  v.  National Union  of Vehicle Builders [1971] Ch.34 which were  referred to  with  approval by the court in  Institute  of  Chartered Accountants v. L.K. Ratna [1986] 4 SCC 537 as to the  effect of non-observance of natural justice:               "If  one accepts the contention that a  defect               of  natural justice in the trial body  can  be               cured  by the presence of natural  justice  in

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             the  appellate  body, this has the  result  of               depriving  the member of his right  of  appeal               from the expelling body. If the rules and  the               law combine to give the member the right to  a               fair trial and the right of appeal, why should               he be told that he ought to be satisfied  with               an unjust trial and a fair appeal? Even if the               appeal  is treated as a hearing de  novo,  the               member  is  being  stripped of  his  right  to               appeal  to  another body  from  the  effective               decision  to  expel him. I cannot  think  that               natural  justice  is satisfied  by  a  process               whereby an unfair  trial, though not resulting               in a valid expulsion, will never-the-less have               the  effect  of depriving the member  ’of  his               right of appeal when a valid decision to expel               him  is subsequently made. Such a  deprivation               would  be a powerful result to be achieved  by               what  in law is a mere nullity; and it  is  no               mere triviality that might be justified on the               ground  that  natural justice  does  not  mean               perfect  justice.  As a general rule,  at  all               events,  I  hold  that a  failure  of  natural               justice in the trial body cannot be cured by a               sufficiency of natural justice in an appellate               body." Prof. Wade in his treatise on Administrative Law observes:               "If  natural justice is violated at the  first               stage,  the right of appeal is not so  much  a               true right of appeal as a corrected initial               351               hearing:  instead  of fair trial  followed  by               appeal,  the  procedure is reduced  to  unfair               trial followed by fair trial."     We might recall here that the Privy Council in Calvin v. Carr  [1980]  AC 576 had expressed  its  reservations  about Megarry  J’s  ’General Rule’ in Learv’s case.  However,  the reservations  were  in the area  of  domestic  jurisdiction, where  contractual or Conventional Rules operate.  The  case did  not  involve a public law situation. But the  House  of Lords in Llyod v. Memahan [1987] AC 625 applied the  princi- ple  to  a clearly public law situation.  The  principle  in Leary’s might, perhaps, be too broad a generalisation.     But  the question here is not so much as to  the  conse- quences of the omission on the part of the Union of India to have "due regard" to the views of the victims on the settle- ment  or the omission on the part of the Court to afford  an opportunity to the victims of being heard before recording a settlement  as it is one of the effects and implications  of the pronouncement in Sahu case which is the law of the case. In Sahu case the Court , expressly held that the non-compli- ance  with the obligation to issue notices did not, by  such reason alone, in the circumstances of the case, vitiate  the settlement,  and that the affected persons may  avail  them- selves of an opportunity of being heard in the course of the review  petitions.  It is not proper to isolate  and  render apart  the two implications and hold the suggested  curative as a mere obiter.     55.  While reaching this conclusion, we are not  unmind- ful  of the force of the petitioner’s case. The Sahu’s  case laid  down that Section 4 of the Act contemplated  and  con- ferred  a right on the victims of being heard. It also  held that they were not so heard before the Government agreed  to the terms of the settlement.  According to the Sahu’s  case, the victims should have an opportunity of being heard in the

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Review Proceedings. The petitioners who were litigating  the matter did not represent all the victims and victim-groups.     56.   In the ultimate analysis, the crucial question  is whether  the opportunity to the affected persons  predicated in the Sahu case can reasonably be said to have been afford- ed.  Indeed, at the very commencement of the hearing of  the review  petitions,  Smt.  Indira Jaising  made  a  pertinent submission  that the court should determine and clarify  the nature and scope of the review hearing: whether they partake of the nature of a "Fairness Hearing" or of the nature of  a "post-decisional hearing" or whether the court would  device some way in which the victims at large 352 would have an effective sense of participation as  envisaged in  the  Sahu decision. Smt. Indira Jaising  submitted  that opportunity  of  being  heard in the  review  suggested  and indicated  by  the  Sahu decision cannot  be  understood  to confer  the  opportunity only to those  who  were  eo-nomine parties to the review petitions.     57.  In the present hearings Shri Nariman placed  before us  a number of press-clippings to show that, from  time  to time,  largely circulated newspapers in the country  carried detailed  news reports of the settlement and of  the  subse- quent  legal  proceedings questioning them.  Shri  Nariman’s contention is that in view of this wide publicity the major- ity  of  the affected persons must be presumed to  have  had notice, though not in a formal way and to have accepted  the settlement as they had not bestirred themselves to move  the Court.     58.  Shri Nariman also raised what he urged  were  basic objection as to the scope of the review jurisdiction and  to the  enlargement  of  the scope of the  review  hearings  to anything  resembling  a "Fairness Hearing" by  treating  the concluded  settlement  as a mere proposal  to  settle.  Shri Nariman  said that the Court could either review the  orders dated 14th and 15th February, 1989 if legal grounds for such review  under  law  were strictly made out  or  dismiss  the review  petitions if petitioners fail to make out a case  in accordance  with  the  accepted  principles  regulating  the review  jurisdiction; but the court could not adopt  an  in- termediate  course by treating the settlement as a  proposed or provisional settlement and seek now to do what the  Union of  India  was  expected to do  before  the  settlement  was reached.     59.   The whole issue, shorn of legal subtleties,  is  a moral  and  humanitarian one. What was transacted  with  the court’s  assistance between the Union of India on  one  side and the UCC on the other is now sought to be made binding on the  tens of thousands of innocent victims who, as  the  law has now declared, had a right to be heard before the settle- ment  could be reached or approved. The implications of  the settlement  and its effect on the lakhs of citizens of  this country  are,  indeed,  crucial in their  grim  struggle  to reshape and give meaning to their torn lives. Any  paternal- istic condescension that what has been done is after all for their own good is out of place. Either they should have been heard  before a settlement was approved in  accordance  with the law declared by this Court or it, at least, must  become demonstrable  in a process in which they have  a  reasonable sense  of participation that the settlement has  been  their evident advantage or, at least, the adverse consequences are effec- 353 tively neutralised. The ultimate directions on Point J  that we  propose  to issue will, we think, serve to  achieve  the

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last mentioned expectation. Legal and procedural technicali- ties should yield to the paramount considerations of justice and  humanity. It is of utmost importance that in an  endea- vour of such great magnitude where the court is trusted with the  moral responsibility of ensuring justice to these  tens of thousand innocent victims, the issues of human  suffering do  not  become obscure in procedural thickets. We  find  it difficult to accept Shri Nariman’s stand on the scope of the review.  We  think that in a situation of  this  nature  and magnitude,  the  Review-proceeding  should  not  be  strict, orthodox and conventional but one whose scope would accommo- date the great needs of justice. That apart, quite  obvious- ly, the individual petitioners and the  petitioner-organisa- tions which have sought review cannot, be held to  represent and exhaust the interest of all the victims.     Those represented by the  petitioner-organisations--even if  their claims of membership are accepted on face  value-- constitute  only a small percentage of the total  number  of persons medically evaluated. The rest of the victims consti- tute the great silent majority.     When  an order affects a person not a party to the  pro- ceedings, the remedy of an affected person and the powers of the  Court  to grant it are well-settled. For  instance,  in Shivdeo  Singh & Ors. v. State of Punjab & Ors. AIR 1963  SC 1909  on  a  writ petition filed under Article  226  of  the Constitution by A for cancellation of the order of allotment passed by the Director of Rehabilitation in favour of B, the High Court made an order cancelling the allotment though ’B’ was not a party. Later, B filed a writ petition under  Arti- cle 226 for impleading him as a party and for re-hearing the whole matter. The High Court granted it. Before this  Court, the objection was this:               ’Learned counsel contends that Art. 226 of the               Constitution does not confer any power on  the               High Court to review its own order and, there-               fore,  the  second  order of  Khosla,  J,  was               without jurisdiction." This Court rejected the contention observing that:               "It is sufficient to say that there is nothing               in Art. 226 of the Constitution to preclude  a               High Court from exercising the power of review               which inheres in every court of plenary juris-               diction  to prevent miscarriage of justice  or               to correct grave and               354               palpable  errors  committed by  it.  Here  the               previous  order  of Khosla, J.,  affected  the               interests of persons who are not made  parties               to the proceedings before him. It was at their               instance  and for giving them a  hearing  that               Khosla,  J., entertained the second  petition.               In doing so, he merely did what the principles               of  natural justice required him to do. It  is               said  that  the respondents before us  had  no               right  to apply for review because  they  were               not parties to the previous proceedings. As we               have  already  pointed out,  it  is  precisely               because  they  were not made  parties  to  the               previous  proceedings, though their  interests               were sought to be affected by the decision  of               the  High Court, that the  second  application               was entertained by Khosla, J."     60.  The  nature of the present  review  proceedings  is indeed suigeneris. Its scope is pre-set by the terms of  the order dated 4th May 1989 as well as what are further  neces-

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sarily implicit in Sahu decision. In the course of the order dated 4th May 1989, it was observed.               "   ........  If, owing to the  pre-settlement               procedures being limited to the main  contest-               ants  in the appeal, the benefit of some  con-               trary or supplemental information or material,               having  a crucial bearing on  the  fundamental               assumptions basic to the settlement, have been               denied  to  the Court and that  as  a  result,               serious miscarriage of justice, violating  the               constitutional and legal rights of the persons               affected, has been occasioned, it will be  the               endeavour  of  this  Court to  undo  any  such               injustice. But that, we reiterate, must be  by               procedures recognised by law. Those who  trust               this Court will not have cause for despair."     The scope of the review in the present case is to ensure that  no miscarriage of justice occurs in a matter  of  such great  moment.  This is, perhaps, the  last  opportunity  to verify  our doubts and to undo injustice, if any, which  may have occurred. The fate and fortunes of tens of thousands of persons  depend on the effectiveness and fairness  of  these proceedings. The legal and procedural technicalities  should yield  to the paramount considerations of justice and  fair- ness. The considerations go beyond legalism and are  largely humanitariam.  It is of utmost importance that great  issues of human suffering are not subordinated to legal technicali- ties.     But  in  view of our conclusion on point J that  on  the material on record, the settlement-fund should be sufficient to  meet the needs of a just compensation and the  order  we propose to pass with regard to point J, the grievance of the petitioners  on  the present contention would  not,  in  our opinion  really survive. Contention (1) is answered  accord- ingly. 355 Re: Point (J)     61.  Before we go into the question whether the  settle- ment  should  be set aside on grounds of inadequacy  of  the settlement  fund, certain subsidiary contentions  and  argu- ments may be noticed. They deal with (i) that there has been an exclusion of a large number of claims on the ground  that despite  service of notices they did not respond and  appear for  medical documentation and (ii) that the whole  exercise of medical documentation is faulty and is designed and tends to exclude genuine victims. These contentions are really not directly  germane  to the question of the  validity  of  the settlement.  However, they were put forward to discredit the statistics  emerging from the medical documentation done  by the  Directorate of Claims on which the UCC sought to  rely. We may as well deal with these two contentions.     62.  The first contention is that the claims of a  large number of persons who had filed their claims are not  regis- tered on the ground that they did not respond to the notices calling upon them to undergo the requisite medical tests for medical documentation. It was urged that no effective  serv- ice of notice had taken place and that the claims of a large number  of claimants---according to them almost over 30%  of the total number---- have virtually gone for default.  While the victim-groups allege that there was a systematic attempt to suppress the claims, the Directorate of Claims would  say that  the  lack of response indicated that the  claims  were speculative  and spurious and, therefore, the claimants  did not offer themselves to medical examination.     In  order  to appreciate this grievance of  the  victim-

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groups it is, perhaps, necessary to advert to the provisions of  the Act and the Scheme attracted to this stage of  proc- essing of the claims. Section 9 of the Act enjoins upon  the Central  Government to frame a Scheme providing for  any  or all of the matters enumerated in clauses (a) to (i) of  Sub- section (2) of Sec. 9. The Scheme, known as the "Bhopal  Gas Leak  Disaster  (Registration  and  Processing  of   Claims) Scheme,  1985," was promulgated by notification  dated  24th September,  1985, published in the Gazette of India. Para  4 of the Scheme deals with the manner of filing of claims  and specifies the forms in which they should be filed. Para 5(1) requires  the  Deputy Commissioner of Claims  to  place  the claims in the appropriate category amongst those  enumerated in sub-para (2) of para 5. Sub-para (2) requires the  regis- tration of the claim under various heads such , as  "death"; "total disablement resulting in permanent disability to earn livelihood";  ’permanent partial disablement  effecting  the overall  capacity  of  a person  to  earn  his  livelihood"; "temporary partial disablement resulting in reduced 356 capacity  to earn livelihood" and so on. Sub-paras (3),  (4) and (5) of para 5 of the Scheme provide:               "(3)  On  the consideration of  a  claim  made               under paragraph 4 of the Scheme, if the Deputy               Commissioner is of the opinion that the  claim               falls  in a category different from the  cate-               gory mentioned by the claimant, he may  decide               the  appropriate  category  after  giving   an               opportunity  to the claimant to be  heard  and               also after taking into consideration any facts               made  available to him in this behalf  by  the               Government  or the authorities  authorised  by               the Government in this behalf.               (4)  Where the Deputy Commissioner is  of  the               opinion  that a claim made under  paragraph  4               does not fall in any of the categories  speci-               fied  in  sub-paragraph (2) he may  refuse  to               register the claim:               Provided that before so refusing he shall give               a reasonable opportunity for a personal  hear-               ing to the claimant.               (5) If the claimant is not satisfied with  the               order  of the Deputy Commissioner  under  sub-               paragraph  (3)  or sub-paragraph  (4)  he  may               prefer  an  appeal against such order  to  the               Commissioner, who shall decide the same."     The  stage  at which medical  examination  was  required related  presumably to the exercise under sub-paragraph  (3) of Para 5 of the Scheme. Failure of a claimant to respond to the  notice and offer himself for medical examination  would entail a refusal to register the claim. It is manifest  that such  a  refusal is apealable under the  scheme.   But  this grievance does not survive in view of the stand taken by the Government  in  these proceedings. In the affidavit  of  Sri Ramesh Yashwant Durve, dated 5th December, 1989 in W.P.  No. 843/88, it is stated:-               "That all claimants who did not respond to the               first  notice were given a second and  then  a               third  notice to appear at one of the  medical               documentation centers for their medical exami-               nation. Wide publicity was also done by way of               beating of drums in mohallas, radio  announce-               ments  and newspaper advertisements. In  addi-               tion to all these, ward committee members were               also  involved in motivating the claimants  to

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             get  themselves medically examined. All  those               claimants who approach the Director of  Claims               even  now are given a fresh date on  which  to               appear  for  medical examination and  are  in-               formed accordingly.               357               Although the medical documentation exercise is               completed,  even then if a claimant  fails  to               appear  for medical examination after  service               of all three notices and he makes an  applica-               tion  for  medical  examination,  his  medical               examination  is  arranged at one  of  the  two               medical documentation centers---TB Center  and               JP  Hospital-specially  kept  functioning  for               such  claimants. It is relevant to  point  out               that  this  arrangement has been  approved  by               Supreme  Court vide order dated 29  September,               1989  ..........  "               "For  the reasons given above, a fresh  public               notice  and fixing of dates for medical  docu-               mentation is also not needed. It may be point-               ed out here that these people will still  have               an opportunity to file claims when the Commis-               sioner for Welfare of the gas victims issues a               notification  in terms of para 4(i) of  Bhopal               Gas  Leak Disaster (Registration &  Processing               of Claims) Scheme, 1985 inviting claims."     This  assurance coupled with the right of appeal  should sufficiently safeguard the interests of genuine claimants.     63.  It was urged by the petitioners that the very  con- cept of injury’ as an element in the eligibility for medical documentation was erroneous as it tended to exclude  victims who  did  not have or retain some medical  documentation  of their initial treatment immediately after the exposure.  The stand of the Director of Claims on the point is this: --               "That  it  is unlikely that a person  who  was               injured and suffered during the  post-exposure               period  is  not in possession of any  form  of               medical  record.   The line of  treatment  was               widely publicised. Therefore, the patient must               have  received treatment from one of the  pri-               vate  practitioners,  if not from one  of  the               many temporary and permanent  govt./semi-govt.               institutions or institutions run by  voluntary               organisations, and he must be in possession of               some form of record.               Every  claimant is advised to  bring  relevant               medical record at the time of medical examina-               tion.  Documents  of  post-exponsure   medical               record  are  accepted even after  the  medical               documentation of the claimant is over.               It is incorrect to say that the documents  for               post-exposure               358               period  are just not available.  Had  it  been               so, 55% of the claimants who fail in  category               ’B’  to ’CF’ would also have been  categorised               as ’A’. In this connection it may be clarified               that  even in post-exposure  period  prescrip-               tions  were  issued.  Besides  this,   private               practitioners were also issuing  prescriptions               in printed form. It is therefore incorrect  to               say  that  there is dearth  of  documentation.               However,  bearing this point in mind,  a  very               liberal  approach in admitting  documents  was

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             adopted  as will be clear from the  guidelines               for evaluation. It will also be relevant  here               to  state that the claimants are being  helped               to  get  the benefit of  any  medical  records               available  in  any  hospital  or   dispensary.               Institutions  like  ICMR,  COM  (Gas  Relief),               Jawahar Lal Nehru Hospital, Bhopal Eye  Hospi-               tal,  Indian Red Cross Society, BHEL  Hospital               and the Railway Hospital have treated numerous               gas  victims during the post-exposure  period.               The  relevant medical records from  them  have               been  retrieved and are being linked with  the               respective  claim folders so that the  benefit               of  such post-exposure record is  extended  to               these claimants.               It  will  be irrational  and  unscientific  to               admit  all  claims without  reference  to  any               documentary  evidence  as  suggested  by   the               petitioner  ........               (See the affidavit dated 5th December, 1989 of               Sri  Ramesh Yeshwant Durve filed in  W.P.  No.               843/88.)     63.  As to the charge that after the  purported  settle- ment,  Government  is playing down the  seriousness  of  the effects of the disaster, and that the medical  documentation did not help proper evaluation it is, perhaps, necessary  to read the affidavit dated 5th December, 1989 of the Addition- al  Director of Claims, in W.P. No. 843 of 1988.  The  Addi- tional Director says:               ’The  Medical Documentation Exercise has  been               an  unique  effort. It was  possibly  for  the               first  time that such a comprehensive  medical               examination (with documentation evaluation and               categorisation) of such a large population was               undertaken anywhere in the world. There was no               earlier  experience or expertise to fail  back               upon. The whole exercise had, therefore, to be               conceived,   conceptualised  and   concretised               locally. But care was taken to ensure that the               guidelines were approved by legal and  medical               experts  not only at the State level but  also               at                  359                     the National level.  The guidelines were               also  approved  by        GOI’s  Committee  of               Experts    on   Medical   Documentation.    In               other  words,  a  systematic  arrangement  was               organised  to  make       the  most  objective               assessment  of  the medical health  status  of               the claimants in a scientific manner.               It  has to be recognised in this context  that               the guidelines for categorisation can only  be               a  broad indicator as it is not  possible  for               anyone to envisage all types of situations and               prescribe  for  them. Likewise,  the  examples               cited are only ’illustrative examples’ and not               ’exhaustive instructions’.               Hundreds of graduate and post-graduate doctors               assisted by qualified para-medical staff  have               examined  the claimants with the help  of  so-               phisticated equipments. It cannot be  reasona-               bly  contended that all of them have  colluded               with  the  Government  to  distort  the  whole               exercise.               The exercise of categorisation is not just  an

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             arithmetical  exercise directly  flowing  from               the evaluation sheet. Had it been so. the same               Assistant Surgeon, who does the evaluation can               him  self  do the  categorisation  also.  Post               graduate  specialists  have been  engaged  for               this work because the total medical folder has               to be assessed keeping the evaluation sheet as               a  basic indicator.  In doing the  categorisa-               tion,  the postgraduate specialist takes  into               account symptoms reported, clinical  findings,               specialist’s  opinions and  investigation  re-               ports." The Additional Director accordingly assests:               "...it will be meaningless to suggest that the               Govt.  is  jeopardising the interests  of  the               claimants   by  deliberately  distorting   the               Medical Documentation Exercise. Similarly,  it               will  be absurd to suggest that the  Govt.  is               trying to help UCC in any way."     The  Additional Director also refers to the attempts  by unscrupulous persons to exploit the situation in pursuit  of unjust  gains and how the authorities had to  encounter  at- tempts  of impersonation and "attempts by claimants to  pass of other’s urine as their own." It was said that there  were urine-donors.  The  affidavit also  discloses  certain  real practices  involving medical prescriptions and  certificates by  some  members of the medical profession  and  ante-dated urine-thiocynate  estimations. The Additional Director  says that despite all this Government endeavoured to give the 360 benefit to the claimants wherever possible. It is stated:               ’The State Govt. had to preserve the scientif-               ic character and ensure the credibility of the               exercise  of evaluation. Beating this  limita-               tion  in mind, wherever possible, the  govern-               ment has attempted to give the benefit to  the               claimants. The various guidelines relating  to               documentation  of the  immediate  postdisaster               phase are proof of this intention. At the same               time, government have had to adhere to certain               quality  standards so that the exercise  could               stand up to scrutiny in any Court of law or in               any scientific form."     The stand of the Directorate cannot be brushed aside  as arbitrary.  However,  provisions of appeal  ensure  that  in genuine cases there will be no miscarriage of justice.      64.  Shall  we  set aside the settlement  on  the  mere possibility  that medical documentation  and  categorisation are  faulty?  And that the figures of the various  kinds  of injuries  and disablement indicated are undependable? As  of now,  medical  documentation  discloses that  "there  is  no conclusive  evidence  to  establish a  casual  link  between cancer-incidence  and  MIC exposure". It is true  that  this inference  is tentative as it would appear studies are  con- tinuing  and conclusions of scientific value in this  behalf can  only  be drawn after the studies arc  over.  While  the medical  literature relied upon by the petitioners  suggests possibilities  of the exposure being carcinogenic, the  ICMR studies  show that as of now the annual incidence of  cancer registration  is  more  among the  unexposed  population  as compared to the exposed population."  (See Sri Ramesh  Yesh- want  Durve’s affidavit dated 5th December, 1989,  para  9). Similarly,  "there is no definite evidence that  derangement in  immune system of the gas exposes have taken place".  But the  literature  relied ’upon by petitioners  does  indicate

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that  such prognosis cannot be ruled out. These matters  are said to be under close study of the ICMR and other  research agencies using, as indicated, the "multi-test CMI  technique to screen the status of the immune system".      65.    But the whole controversy about the adequacy  of the  settlement-fund  arises on account of  the  possibility that  the totality of the awards made on all the claims  may exceed  the settlement-fund in which event  the  settlement- fund will be insufficient to satisfy all the Awards. This is the main concern of the victims and victim-groups. There is, as it now  stands, a fund of one thousand two hundred crores of rupees for the 361 benefit  of  the victims. The main attack  on  its  adequacy rests solely on the possibility that the medical  documenta- tion  and  categorisation  based thereon,  of  the  victims’ medical status done by the Directorate of Claims is  faulty. The  charge  that medical documentation was faulty  and  was calculated  to play down the iII-effects of the exposure  to MIC  is,  in  our opinion, not  substantiated.  This  attack itself  implies that if the categorisation of the  claimants on the basis of the severity of the injuries is correct then the settlement-fund may not, as a settlement, be  unreasona- ble.     66.    At the same time, it is necessary to remind  our- selves  that in bestowing a second thought whether the  set- tlement is just, fair and adequate. We should not proceed on the  premise that the liability of the UCC has  been  firmly established.  It is yet to be decided if the matter goes  to trial. Indeed, UCC has seriously contested the basis of  its alleged liability. But it is true that even to the extent  a settlement goes, the idea of its fairness and adequacy  must necessarily  be related to the magnitude of the problem  and the question of its reasonableness must be assessed  putting many considerations into the scales. It may be hazardous  to belittle  the  advantages of the settlement in a  matter  of such complexity.  Every effort should be made to protect the victims  from the prospects of a protracted, exhausting  and uncertain  litigation. While we do not intend to comment  on the  merits of the claims and of the defences,  factual  and legal arising in the suit, it is fair to recognise that  the suit  involves  complex questions as to the basis  of  UCC’s liability and assessment of the quantum of compensation in a mass  tort action. One of the areas of controversy is as  to the admissibility of scientific and statistical data in  the quantification of damages without resort to the evidence  as to injuries in individual cases.      67.  Sri Nariman contended that scientific and  statis- tical  evidence for estimates of damages in toxic  tort  ac- tions  is  permissible only in fairness  hearings  and  such evidence  would not be so admissible in the  proceedings  of adjudication,  where personal injury must be proved by  each individual plaintiff. That would, indeed, be a struggle with infinity as it would involve individual adjudication of tens of  thousands  of claims for purposes of  quantification  of damages.         In an article on ’Scientific and Legal Standards  of Statistical Evidence in Toxic Tort and Discrimination Suits’ by  Carl  Cranor and Kurt Nutting (See: Law  and  Philosophy Vol.  9 No. 2 May, 1990) there is an interesting  discussion as to what would be the appropriate standard of evidence  in presenting and evaluating scientific and statistical  infor- mation  for  use in legal proceedings. The  learned  authors say:         . 362

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             "These  are two of the main sides in the  con-               troversy  concerning  the kind and  amount  of               scientific   evidence  necessary  to   support               legally  a  verdict for the  plaintiff.  Black               seems  to urge that courts should only  accept               evidence  that  is scientifically  valid,  and               adhere  to the standards of evidence  implicit               in  the  discipline, while the  Ferebee  court               urges that plaintiffs in presenting scientific               evidence   and  expert  scientific   testimony               should be held to legal standards of evidence.               Powerful  forces are arrayed on both sides  of               this issue. On the side of requiring scientif-               ic  testimony  only  to measure  up  to  legal               standards  of  evidence,  the  social   forces               include  plaintiffs or  potential  plaintiffs,               plaintiffs’ attorneys, public interest groups,               consumer advocacy groups, all individuals  who               are  concerned to make it somewhat  easier  to               recover damages under personal injury law  for               alleged injuries suffered as a consequence  of               activities of others. On the other side of the               same  issue are defendants, potential  defend-               ants  (typically  corporations,  manufacturing               firms)  and,  interestingly,  the   scientific               community." [Page 118]     In  Sterling v. Velsicol Chemical Corp. (855 F  2d  1188 (1988))  the  US Court of Appeals tended to  the  view  that generalised  proof  of damages is not  sufficient  to  prove individual  damages and that damages in mass  tort  personal injury cases must be proved individually by each  individual plaintiff. The Court held:               "We  cannot  emphasise  this  point   strongly               enough  because  generalised  proof  will  not               suffice to prove individual damages. The  main               problem  on  review stems from  a  failure  to               differentiate  between  the  general  and  the               particular.  This  is an  understandably  easy               trap  to  fall into in mass  tort  litigation.               Although  many common issues of fact  and  law               will  be  capable  of resolution  on  a  group               basis, individual particularised damages still               must be proved on an individual basis."     68.    While Shri Nariman contends that admissibility of scientific and statistical evidence is confined to  Fairness Hearings alone and not in adjudication where personal injury by  each  individual plaintiff must be proved,  the  learned Attorney-General,  however,  urges that  such  evidence  and estimates  of damages are permissible in toxic-tort  actions and  says  that the fundamental principle is and  should  be that  countless injured persons must not suffer  because  of the difficulty of proving damages with certainty or  because of the delay involved in pursuing each individual claim. He    363 referred to the following passage in Florance B. Bigelow  v. RKO Radio Pictures Inc., (327 US 251, 264 (1946):               "the  most elementary conceptions  of  justice               and public policy require that the wrong  doer               shall  bear the risk of the uncertainty  which               his own wrong has created."     Learned Attorney General also urged that in tort actions of this kind the true rule is the one stated in Story Parch- ment  Company v. Paterson Parchment Paper Co. (282  US  555, 568):               "The  rule  which precludes  the  recovery  of

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             uncertain  damages applies to such as are  not               the certain result of the wrong, not to  those               damages  which are definitely attributable  to               the  wrong  and only uncertain in  respect  of               their  amount. Taylor v. Bradley, 4 Abb.  App.               DEc. 363,366, 367, 100 Am. Dec. 415:               It is sometimes said that speculative  damages               cannot  be  recovered, because the  amount  is               uncertain; but such remarks will generally  be               found  applicable  to such damages  as  it  is               uncertain  whether sustained at all  from  the               breach.  Sometimes  the claim is  rejected  as               being  too  remote.  This is another  mode  of               saying  that  it  is  uncertain  whether  such               damages  resulted necessarily and  immediately               from the breach complained of.               The general rule is, that all damages  result-               ing  necessarily and immediately and  directly               from the breach are recoverable, and not those               that  are contingent and uncertain. The  later               description embraces, as I think, such only as               are not the certain result of the breach,  and               does  not  embrace  such as  are  the  certain               result, but uncertain in amount.               Where  the tort itself is of such a nature  as               to preclude the ascertainment of the amount of               damages with certainty, it would be a  perver-               sion  of fundamental principles of justice  to               deny  all  relief to the injured  person,  and               thereby relieve the wrongdoer from making  any               amend  for his acts. In such case,  while  the               damages may not be determined by mere specula-               tion  or guess, it will be enough if the  evi-               dence  show  the extent of the  damages  as  a               matter  of  just  and  reasonable   inference,               although  the result be only approximate.  The               wrongdoer  is  not entitled to  complain  that               they cannot be measured with the               364               exactness and precision that would be possible               if the case, which he alone is responsible for               making,were otherwise.’       And  in Frederick Thomas Kingsley v. The Secretary  of State for India, (AIR 1923 Calcutta 49), it was observed:               "Shall the injured party be allowed to recover               no  damages  (or merely  nominal)  because  he               cannot show the exact amount of the certainty,               though  he is ready to show, to the  satisfac-               tion  of the Jury, that he has suffered  large               damages by the injury ? Certainty, it is true,               would  be thus attained, but it would  be  the               certainty of injustice. Juries are allowed  to               act upon probable and inferential, as well  as               direct and positive proof. And when, from  the               nature  of  the case, the  amount  of  damages               cannot be estimated with certainty, or only  a               part  of them can be so estimated, we can  see               no  objection to placing before the  Jury  all               the  facts  and  circumstances  of  the  case,               having any tendency to show damages, or  their               probable amount, so as to enable them to  make               the  most intelligible and  probable  estimate               which the nature of the case will permit."       The  risk of the uncertainty, says  learned  Attorney- General, should, in such cases, be thrown upon the wrongdoer

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instead of upon the injured party. Learned Attorney  General also  urged that, on first principle, in cases  where  thou- sands  have  been injured, it is far simpler  to  prove  the amount of damages to the members of the class by  establish- ing  their total damages than by collecting and  aggregating individual  claims as a sum to be assessed against  the  de- fendants. He said statistical methods are commonly  accepted and  used  as admissible evidence in a variety  of  contexts including  quantification of damages in such mass  tort  ac- tions.  He said that these principles are essential  princi- ples of justice and the Bhopal disaster is an ideal  setting for an innovative application of these salutary principles.       69.    The foregoing serves to highlight the  complex- ities  of the area. Indeed, in many tort actions the  world- over  speedy adjudications and expeditious reliefs  are  not easily accomplished and many of them have ended  in  settle- ments.  In  the  context of the problems  presented  by  the issues  of  liability in cases of  certain  corporate  torts beyond  the  corporate veil there is an impressive  body  of academic opinion amongst the school men that the very  theo- ries  of limited corporate liability which initially  served as  incentives for commercial risk-taking needs  re-thinking in certain areas of tortious liability of Corporations. Some scholars have advocated abolition of 365 imited  liability      for "knowable tort risks".  (See  "An Economic  Analysis  of Limited liability    117  1980"  "The Limited Liability in Corporation Law’ (30 U.Toronto LJ.  , ( Place  of Enterprise Liability in the Control  of  Corporate Conduct" (90Yale Law Journal 1 (1980); "Should  Shareholders be personally liable for the torts of their  Corporations?"- (76  Yale Law Journal 1190 (1967). This, of course, has  the limitation  of one more shade of an academician’s  point  of view for radical changes in law.   70.    With  the passage of time there are  more  tangible details available by way of the proceedings of the Director- ate of Claims which has medically evaluated and  categorised nearly  3,60,000 affected persons. We have looked  into  the formats  and folders prepared by the Directorate  of  Claims for the medical evaluation of the conditions of the victims. Some  sample medical dossiers pertaining to some  individual claimants containing an evaluation of the data pertaining to the  medical status of the persons have also been  shown  to us. It is on the basis of such medical dossiers that evalua- tion  and categorisation are stated to have been  done.  The guidelines for carrying out these medical evaluations, it is stated, have been formulated and issued by the Government of India.   71.   Petitioners seriously assail the correctness of  the guidelines for medical evaluation as also the result of  the actual  operational processes of evaluation  based  thereon. Petitioners  described the results indicated by the  medical categorisation  done  by  the Directorate  of  Claims  which showed  only  40  cases of total  permanent  disablement  as shocking and wholly unrelated to the realities. Indeed, some learned counsel for the petitioners, of course in a  lighter vein,  remarked  that  if these were the  final  figures  of injuries  and incapacitations caused by the Bhopal Gas  Leak Disaster, then UCC should be entitled to a refund out of the sum settled and wondered why, in the circumstances, UCC  was taking  shelter under the settlement and fighting shy  of  a trial. It  appears  to us that particulars care has gone  into  the prescription  of  the medical documentation  tests  and  the formulation  of the results for purposes of  evaluation  and

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categorisation.   72.   After a careful thought, it appears to us that while it may not   be wise or proper to deprive the victims of the benefit  of the settlement, it   is, however,  necessary  to ensure that in the-perhaps unlikely--event of   the  settle- ment-fund  being found inadequate to meet  the  compensation determined  in respect of all the present  claimants,  those persons  who  may   have their claims determined  after  the fund  is exhausted are not left to fend    themselves.  But, such a contingency may not arise having regard to the size 366 of  the settlement-fund. If it should arise, the  reasonable way to protect the interests of the victims is to hold  that the  Union of India, as a welfare State and in  the  circum- stances  in  which the settlement was made,  should  not  be found wanting in making good the deficiency, if any. We hold and declare accordingly.     73.   It is relevant here that the Union of India while, quite  fairly, acknowledging that there was in fact  such  a settlement,  however, sought to assail its validity on  cer- tain legal issues. But the factum of the settlement was  not disputed.  Indeed, Union of India did not initiate any  sub- stantive  proceedings of its own to assail the agreement  or the  consensual element constituting the substratum  of  the order of the Court. The legal contentions as to the validity of the settlement were permitted to be raised in as much  as that an order made on consent would be at no higher  footing and  could be assailed on the grounds on which an  agreement could be. But, as stated earlier, the factum of the  consen- sual  nature of the transaction and its existence as a  fact was not disputed. Those legal contentions as to the validity have now failed. The result is that the agreement subsists.     For  all these reasons we leave the settlement  and  the orders  dated 14/15th February, 1989---except to the  extent set    aside   or   modified   pursuant   to    the    other findings---undisturbed.     74.   We  may here refer to and set at  rest  one  other contention which had loomed in the hearings. The petitioners had  urged  that  the principles of the  liability  and  the standards  of  assessment of damages in a  toxic  mass  tort arising out of a hazardous enterprise should be not only  on the  basis  of absolute liability-not merely on  Rylands  v. Fletcher principle of strict liability--not admitting of any exceptions  but also that the size of the award  be  propor- tional to the economic superiority of the offender, contain- ing a deterrent and punitive element. Sustenance was  sought from  M.C. Mehta v. Union of India, AIR 1987 SC  1086.  This argument in relation to a proceeding assailing a  settlement is to be understood as imputing an infirmity to the  settle- ment process as not being informed by the correct  principle of  assessment  of damages.   Respondents,  however,  raised several contentions as to the soundness of the Mehta princi- ple  and  its applicability. It was also  urged  that  Mehta principle,  even to the extent it goes, does not  solve  the issues of liability of the UCC as distinct from that of UCIL as  Mehta case only spoke of the liability of the  offending enterprise  and  did not deal with  principles  guiding  the determination  of  a holding-company for the  torts  of  its subsidiaries. It is not necessary to go into this controversy. The settle- ment was 367 arrived at and is left undisturbed on an over-all view.  The settlement cannot be assailed as violative of Mehta  princi- ple  which might have arisen for consideration in  a  strict

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adjudication. In the matter of determination of compensation also under the Bhopal Gas Leak Disaster (P.C) Act, 1985, and the Scheme flamed thereunder, there is no scope for applying the Mehta principle inasmuch as the tort-feasor, in terms of the settlement -for all practical purposes--stands notional- ly  substituted by the settlementfund which  now  represents and  exhausts the liability of the alleged hazardous  entre- preneurs viz., UCC and UCIL. We must also add that the Mehta principle  can  have no application against Union  of  India inasmuch  as  requiring it to make good the  deficiency,  if any,  we do not impute to it the position of a  joint  tort- feasor but only of a welfare State. There is, therefore,  no substance in the point that Mehta principle should guide the quantification of compensation to the victim-claimants.     75.  This  necessarily takes us to the question  of  the medical surveillance costs; and the operational expenses  of the Hospital. We are of the view that for at least a  period of eight years from now the population of Bhopal exposed  to the hazards of MIC toxicity should have provision for  medi- cal surveillance by periodic medical check-up for gas relat- ed afflictions.  This shall have to be ensured by setting up long-term  medical  facilities in the form  of  a  permanent specialised medical and research establishment with the best of expertise. An appropriate action-plan should be drawn up. It  will be proper that expert medical facility in the  form of the establishment of a full-fledged hospital of at  least 500 bed strength with the best of equipment for treatment of MIC  related affliction should be provided for medical  sur- veillance  and  for expert medical treatment. The  State  of Madhya Pradesh shall provide suitable land free of cost. The allocation  of the land shall be made within two months  and the  hospital shall be constructed, equipped and made  func- tional within 18 months. It shall be equipped as a  Special- ist  Hospital  for  treatment and research  of  MIC  related afflictions  and  for medical surveillance  of  the  exposed population.     76.   We hold that the capital outlays on  the  hospital and its operation expenses for providing free treatment  and services to the victims should, both on humanitarian consid- erations  and  in fulfilment of the offer  made  before  the Bhopal court, be borne by the UCC and UCIL. We are conscious that  it  is not part of the function of this Court  to  re- shape  the settlement or restructure its terms. This  aspect of  the further liability is also not a matter on which  the UCC and the UCIL had an opportunity to express their  views. However, from the tenor of the written submissions 368 made before the District Court at Bhopal in response to  the proposal of the Court for "reconciliatory substantial inter- im  relief"  to the gas victims, both the UCC and  UCIL  had offered to fund and provide a hospital for the’ gas victims. The UCC had re-called that in January, 1986, it had  offered "to  fund the construction of hospital for the treatment  of gas victims the amount being contributed by the UCC and  the UCIL  in equal proportions". Shri Nariman had also  referred to  this offer during the submissions in the context of  the bona fides of the UCC in that behalf. It is, no doubt,  true that the offer was made in a different context and before an overall settlement. But that should not detract the UCC  and the  UCIL from fulfilling these obligations, as indeed,  the moral  sensibilities to the immense need for relief  in  all forms and ways should make both the UCC and UCIL forthcoming in  this behalf. Such a hospital should be a fully  equipped hospital  with  provision for maintenance for  a  period  of eight years which in our estimate might together involve the

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financial outlay of around Rs. 50 crores. We hope and  trust that UCC and UCIL will not be found wanting in this behalf.     77. Then comes the question which we posed at the end of paragraph  44.  This  concerns the exposed  members  of  the populace  of  Bhopal  who were put at risk  and  who  though presently a symptomatic and filed no claim for  compensation might become symptomatic in future. How should cases of  yet unborn children of mothers exposed to MIC toxicity where the children are found to have or develop congenital defects  be taken care of?     The question is as to who would provide compensation for such cases?     We  are  of the view that such  contingencies  shall  be taken  care  of by obtaining an  appropriate  medical  group insurance  cover from the General Insurance  Corporation  of India or the Life Insurance Corporation of India for compen- sation  to  this contingent class  of  possible  prospective victims. There shall be no individual upper  monetary  limit for  the insurance liability. The period of insurance  cover should be a period of eight years in the future. The  number of  persons  to be covered by this  Group  Insurance  scheme should  be  about  and not less than one  lakh  of  persons. Having  regard to the population of the  seriously  affected wards of Bhopal city at the time of the disaster and  having regard  to the addition to the population by the  subsequent births  extrapolated  on the basis of  national  average  of birth  rates  over the past years and the future  period  of surveillance, this figure broadly accords with the  percent- age of population of the affected wards bears to the  number of  persons found to be affected by medical  categorisation. This insurance cover will virtually serve to render the set- 369 tlement an open ended one so far as the contingent class  of future  victims both existing and after-born are  concerned. The  possible claimants fall into two categories: those  who were  in  existence at the time of exposure; and  those  who were  yet unborn and whose congenital defects are  traceable to MIC toxicity inherited or derived congenitally.     In  so  far as the second class of cases  is  concerned, some  aspects have been dealt with in the report of the  Law Commission  in United Kingdom on "Injuries to  Unborn  Chil- dren".  The Commission, referring to the  thenexisting  Law, said:               "7. Claims for damages for pre-natal  injuries               have been made in many other jurisdictions but               there  is no English or Scottish authority  as               to  whether a claim would lie and, if it  did,               what  rules and limitations should govern  it.               In  our  working paper we did not  attempt  to               forecast how such a claim would be decided  if               it  came before a court in this  country,  al-               though  we  did  add, as an  appendix  to  the               paper,  a brief account of some of  the  deci-               sions of courts in other jurisdictions..."               "8.  It is, however, important from our  point               of view to express our opinion (reinforced  by               our general consultation and supported by  the               report of the Scottish Law Commission) that it               is highly probable that the common law  would,               in appropriate circumstances, provide a remedy               for  a  plaintiff suffering from  a  pre-natal               injury caused by another’s fault. It is impor-               tant  to make our opinion on this point  clear               because, on consultation, it has become appar-               ent  that many people think that we  were,  in

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             our  working paper, proposing the creation  of               new  liabilities, whereas it is probable  that               liability   under  the  common   law   already               exists  .....  ".     Thereafter  in United Kingdom, the Congenital  Disabili- ties (Civil Liability) Act, 1976, was brought forth. Section 1 (1) of that Act says:                         (1)  If a child is born disabled  as               the  result of such an occurrence  before  its               birth  as  is  mentioned  in  sub-section  (2)               below,  and a person (other than  the  child’s               own  mother) is under this section  answerable               to the child in respect of the occurrence, the               child’s  disabilities  are to be  regarded  as               damage resulting from the wrongful act of that               person and actionable accordingly at the  suit               of the child." It is not necessary for the present purpose to go into other features of 370 that  legislation  and  the state of  corresponding  law  in India.  Our  present  question is as to how  and  who  would provide  compensation to the two class of cases referred  to us  earlier.  We hold that these two classes  of  cases  are compensatable  if the claimants are able to prove injury  in the course of the next eight years from now.     The premia for the insurance shall be paid by the  Union of India out of the settlement fund. The eligible  claimants shall be entitled to be paid by the insurer compensation  on such principles and upon establishment of the nature of  the gas related toxic morbidity by such medical standards as are applicable to the other claimants under the Bhopal Gas  Leak Disaster  (Processing of Claims) Act, 1985, and  the  scheme framed  thereunder. The individual claimants shall be  enti- tled  to have their claims adjudicated under  the  statutory scheme. 78. We must, however, observe that there is need for expedi- tious  adjudication  and disposal of the  claims.  Even  the available  funds would     admit of utilisation  unless  the claims are adjudicated upon and the quantum of  compensation determined. We direct both the Union of India and the  State Government  to  take expeditious steps and  set-up  adequate machinery  for adjudication of claims and  determination  of the compensation. The appointment of the Claim Commissioners shall be completed expeditiously and the adjudicative  proc- ess  must  commence within four months from  today.  In  the first instance, there shall at least be 40 Claim Commission- ers  with  necessary  secretarial assistance  to  start  the adjudication of the claims under the Scheme.     79.  In  the matter of disbursement of  the  amounts  so adjudicated and determined it will be proper for the author- ities  administering the funds to ensure that the  compensa- tion-amounts, wherever the beneficiaries are illiterate  and are  susceptible to exploitation, are properly invested  for the benefit of the beneficiaries so that while they  receive the income therefrom they do not, owing to their  illiteracy and ignorance, deprive themselves of what may turn out to be the  sole  source  of their living and  sustenance  for  the future.  We may usefully refer to the guide-lines laid  down in the case of Muljibhai Ajarambhai Harijan & Anr. v. United India Insurance Co. Ltd.& Ors., 1982 (1) Gujarat Law Report- er 756. We approve and endorse the guidelines formulated  by the  Gujarat High Court. Those guidelines, with  appropriate modifications,  could usefully be adopted.  We  may  briefly recapitulate those guidelines:

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             (i)  The  Claims Commissioner should,  in  the               case of minors, invariably order the amount of               compensation awarded to the               371               minor to be invested in long term fixed depos-               its  at least till the date of the  minor  at-               taining majority. The expenses incurred by the               guardian  or  next  friend  may,  however,  be               allowed to be withdrawn;               (ii) In the case of illiterate claimants  also               the  Claims  commissioner  should  follow  the               procedure  set out in (i) above, but  if  lump               sum  payment  is required for  effecting  pur-               chases  of any movable or  immovable  property               such   as,  agricultural  implements,   assets               utilisable to earn a living, the  Commissioner               may consider such a request after making  sure               that  the  amount is actually  spent  for  the               purpose   and  the  demand  is  not   a   ruse               to .withdraw money;               (iii)   In the case of  semi-literate  persons               the  Commissioner should ordinarily resort  to               the procedure set out in (ii) above unless  he               is  satisfied  that the whole or part  of  the               amount is required for expanding any  existing               business  or for purchasing some property  for               earning a livelihood.               (iv) In the ease of widows the Claims  Commis-               sioner should invariably follow the  procedure               set out in (i) above;               (v) In personal injury cases if further treat-               ment is necessary withdrawal of such amount as               may  be necessary for incurring  the  expenses               for such treatment may be permitted;               (vi)    In  all cases in which  investment  in               long term fixed deposits is made it should  be               on condition that the Bank will not permit any               loan  or  advance  on the  fixed  deposit  and               interest on the amount invested is paid month-               ly  directly to the claimant or his  guardian,               as the case may be.               It  should  be stipulated that the  FDR  shall               carry a note on the face of the document  that               no  loan  or advance will be  allowed  on  the               security of the said document without  express               permission.               (vii)   In  all  eases liberty  to  apply  for               withdrawal  in case of an emergency should  be               available to the claimants.     Government  might also consider such  investments  being handled  by   promulgating an appropriate scheme  under  the Unit Trust of India Act so 372 as to afford to the beneficiaries not only adequate  returns but also appropriate capital appreciation to neutralise  the effect of denudation by inflation. 80.  Point  (J)  is disposed of in terms  of  the  foregoing directions.     81.   We might now sum up the conclusions  reached,  the findings  recorded  and  directions issued  on  the  various contentions:               (i) The contention that the Apex Court had  no               jurisdiction to withdraw to itself the  origi-               nal  suits  pending in the District  Court  at               Bhopal and dispose of the same in terms of the

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             settlement  and the further  contention  that,               similarly,  the Court had no  jurisdiction  to               withdraw the criminal proceedings are  reject-               ed.               It  is held that under Article 142(1)  of  the               Constitution,  the  Court  had  the  necessary               jurisdiction and power to do so.               Accordingly, contentions (A) and (B) are  held               and answered against the petitioners.               (ii)   The contention that the  settlement  is               void for non-compliance with the  requirements               of  Order  XXIII  Rule 3B,  CPC  is  rejected.               Contention  (C) is held and  answered  against               the petitioners.               (iii)   The contention that the Court  had  no               jurisdiction to quash the criminal proceedings               in  exercise of power under Article 142(1)  is               rejected.  But,  in the particular  facts  and               circumstances, it is held that the quashing of               the criminal proceedings was not justified.               The  criminal  proceedings  are,  accordingly,               directed to be  proceeded with. Contention (D)               is answered accordingly.               (iv)  The orders dated 14th 15th of  February,               1989 in so far a, they seek to prohibit future               criminal proceedings are held no to amount  to               a  conferment  of criminal immunity;  but  are               held to be merely consequential to the  quash-               ing of the criminal proceedings.               Now  that the quashing is reviewed, this  part               of the order i               373               also  set  aside. Contention (E)  is  answered               accordingly.               (v)  The contention (F) that  the  settlement,               and the orders of the Court thereon, are  void               as  opposed to public policy and as  amounting               to  a  stifling  of  criminal  proceedings  is               rejected.               (vi) Having regard to the scheme of the Bhopal               Gas Leak Disaster (Processing of Claims)  Act,               1985,  the  incidents and imperatives  of  the               American  Procedure of ’Fairness  Hearing’  is               not  strictly attracted to the  Court’s  sanc-               tioning of a settlement. Likewise, the absence               of a "Re-opener" clause does not, ipso  facto,               vitiate  the  settlement.  Contention  (G)  is               rejected.               (vii)   It is held, per invitim, that  if  the               settlement is set aside the UCC shah be  enti-               tled to the restitution of the US 420  million               dollars  brought  in  by it  pursuant  to  the               orders of this Court.               But, such restitution shall be subject to  the               compliance  with and proof of satisfaction  of               the  terms  of the order dated  30th  November               1986,  made  by  the  Bhopal  District  Court.               Contention  (H)  is rejected  subject  to  the               condition aforesaid.               (viii) The settlement is not vitiated for  not               affording  the  victims and  victim-groups  an               opportunity  of being heard. However,  if  the               settlement-fund  is found to be  insufficient,               the deficiency is to be made good by the Union               of India as indicated in paragraph 72. Conten-

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             tion (I) is disposed of accordingly.               (ix) On point (J), the following findings  are               recorded and directions issued:               (a) For an expeditious disposal of the  claims               a  time-bound consideration and  determination               of  the claims are necessary.  Directions  are               issued as indicated in paragraph 77.               (b)  In the matter of administration and  dis-               bursement  of the compensation amounts  deter-               mined, the guide-lines contained in the  judg-               ment of the Gujarat High Court in Muljibhai v.               United India Insurance Co, are required to  be               taken  into  account and,  wherever  apposite,               applied.  Union of India is also  directed  to               examine  whether an appropriate  scheme  under               the  Unit Trust of India Act could be  evolved               for the benefit of the Bhopal victims.               374               (c)  For  a period of 8 years  facilities  for               medical surveillance of the population of  the               Bhopal  exposed to MIC should be  provided  by               periodical medical check-up. For this  purpose               a  hospital with at least 500  beds  strength,               with  the  best of  equipment  and  facilities               should be established. The facilities shall be               provided free of cost to the victims at  least               for  a period of 8 years from now.  The  state               Government shall provide suitable land free of               cost.               (d)   In  respect  of the  population  of  the               affected  wards,  [excluding  those  who  have               filed claims], Government of India shall  take               out  an  appropriate medical  group  insurance               cover  from the Life Insurance Corporation  of               India or the General Insurance Corporation  of               India  for compensation to those  who,  though               presently asymtomatic and filed no claims  for               compensation,  might  become  symptomatic   in               future  and to those later-born  children  who               might  manifest  congenital  or  prenatal  MIC               related  afflictions. There shall be no  upper               individual  monetary limit for  the  insurance               liability.  The period of insurance  shall  be               for  a  period of eight years in  future.  The               number of persons to be covered by this  group               shall  be about one lakh persons.  The  premia               shall be paid out of the settlement fund.               (e)   On  humanitarian  consideration  and  in               fulfilment of the offer made earlier, the  UCC               and  UCIL should agree to bear  the  financial               burden for the establishment and equipment  of               a hospital, and its operational expenses for a               period of eight years.     82.  In the result, the Review Petitions arc allowed  in part and all the contentions raised in the  Review-Petitions and  the I.As in the civil appeals are disposed of in  terms of the findings recorded against the respective contentions. In  the light of the disposal of the  Review-petitions,  the question  raised in the writ-petitions do not  survive.  The writ-Petitions  are dismissed accordingly without any  order as to costs.     AHMADI,  J. I have carefully gone through the  elaborate judgment  prepared by my learned Brother Venkatachaliah,  J. and  I  am by and large in agreement  with  his  conclusions except  on a couple of aspects which I will presently  indi-

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cate.          375     The  points which arise for determination on the  plead- ings,  documents  and  submissions made at the  Bar  in  the course of the hearing of these petitions have been formulat- ed at points (A) to (J) in paragraph 8 of my learned  Broth- er’s  judgment and the conclusions reached by him have  been summarised  and set out in the penultimate paragraph of  his judgment at (i) to (ix), with their sub-paragraphs. I am  in agreement with the conclusions at (i) to (vii) which  answer contentions (A) to (H). So far as conclusion (viii) pertain- ing contention (I) is concerned. I agree that the settlement is  not  vitiated for not affording the victims  or  victim- groups an opportunity or being heard but I find it difficult to persuade myself to the view that if the settlement.  Fund is found to be insufficient the shortfail must be made  good by  the Union of India.  For reasons which I will  presently state  I am unable to comprehend how the Union of India  can be  directed to suffer the burden of the shortfall, if  any, without finding the Union of India liable in damages on  any count.    As   regards   conclusion   (ix)   referable    to contention(J).  I am in agreement with  sub-paragraphs  (a), (b) and (d) thereof but so far as sub-paragraphs (c) and (e) are  concerned  I  agree with the directions  therein  as  I understand them to be only recommendatory in nature and  not linked with the settlement.      In  Charan Lal Sahu’s case [1990]1 SCC 613  this  Court upheld  the constitutional validity of the Bhopal  Gas  Leak Disaster  (Processing  of Claims) Act,. 1985  (herein  after called  ’the Act’). In that case although the  question  re- ferred  to  the Bench was in regard  to  the  constitutional validity of the said enactment, submissions were made on the question  whether the impugned settlement was liable  to  be set aside on the ground that it was in flagrant violation of the  principles of natural justice, in that, the victims  as well as the victim-groups had no opportunity to examine  the terms  of  the settlement and express their  views  thereon. Mukharji,  CJ. who spoke for the majority  (Ranganathan,  J. and  myself  expressing  separately) observed  that  on  the materials available "the victims have not been able to  show at all any other point or material which would go to impeach the  validity of the settlement".  It was felt  that  though the  settlement without notice to the victims was not  quite proper, justice had in fact been done to the victims but did not appear to have been done. Taking the view that in enter- ing  upon the settlement regard should have been had to  the views  of  the victims and for that purpose  notices  should have  been  issued before arriving at  the  settlement,  the majority held that "post- decisional notice might be  suffi- cient  but in the facts and circumstances of this  case,  no useful  purpose would be served by giving a  post-decisional hearing having regard to the 376 circumstances mentioned in the order of this Court dated May 4,  1989,  and having regard to the fact that there  are  no further additional data and facts available with the victims which  can profitably and meaningfully be presented to  con- trovert  the  basis  of the settlement  and  further  having regard  to  the fact that the victims had their  say  or  on their behalf their views have been agitated in the  proceed- ings and will have further opportunity in the pending review proceedings". It would, therefore, appear that the  majority had applied its mind fully to the terms of the settlement in the light of the data as well as the facts and circumstances placed before it and was satisfied that the settlement was a

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fair  and reasonable one and a postdecisional hearing  would not be of much avail. Referring to the order of May 4,  1989 carrying the Court’s assurance that it will be only too glad to  consider  any aspect which may have been  overlooked  in considering  the  terms of the  settlement,  Mukharji,  CJ., opined  that  the  further hearing which  the  victims  will receive  at the time of the hearing of the review  petitions will  satisfy the requirement of the principles  of  natural justice.  K.N.  Singh, J. while agreeing with the  view  ex- pressed by Mukharji, CJ. did not express any opinion on  the question  of  inadequacy of the settlement. In  the  circum- stances  it  was held that there was no failure  of  justice necessitating the setting aside of the settlement as  viola- tive of fundamental rights.  After stating this the  learned Chief  Justice observed tha while justice had in  fact  been done,  a feeling persisted in the minds of the victims  that they  did  not have a full opportunity  to  ventilate  their grievances  in  regard to the settlement. In his  view  this deficiency  would  be adequately met in the hearing  on  the Review  Petitions  (the  present  petitions).  After  taking notice of the aforesaid view expressed by the learned  Chief Justice,  Ranganathan,  J. (myself concurring)  observed  as under:               "Though  we are prima facie inclined to  agree               with  him that there are good reasons why  the               settlement  should  not be set  aside  on  the               ground that the principles of natural  justice               have been violated quite apart from the  prac-               tical  complications  that  may’  arise  as  a               result of such an order, we would not  express               any  final  opinion  on the  validity  of  the               settlement  but  would  leave it  open  to  be               agitated  to the extent permissible in law  in               the   review  petition  pending  before   this               Court."      It is, therefore, manifest from the above that the Sahu Bench was ’prima facie’ of the view that the settlement  was not liable to be set aside on 377 the  ground that the principles of natural justice had  been violated.  Mukharji, CJ. went on to say that no useful  pur- pose  would be served by a post-decisional hearing and  that the settlement was quite reasonable and fair. Of course K.N. Singh,  J. did not express any opinion on the inadequacy  of the settlement amount but he was otherwise in agreement with the view expressed by Mukharji, CJ. on all the other points. The  view of Ranganathan, J. and myself is evident from  the passage extracted above.     This case has gone through several twists and turns. One of the world’s worst disaster occurred on the night  between 2nd  and  3rd December, 1984 choking several  tO  death  and injuring thousands of residents living near about the indus- trial  plant of UCIL. Litigation was initiated on behalf  of some  of  the victims in the U.S. District  Court,  Southern District  of New-York presided over by Judge  Keenan.  After the  enactment of the Act on 29th March, 1985, the Union  of India  also approached Judge Keenan with a complaint.  Judge Keenan  ultimately terminated the proceedings before him  on the ground of ’forum-non-convenience’. Thereafter the  Union of india representing the victims file a suit for damages in the  Bhopal District Court against the UCIL as well  as  the UCC  in  which an order for interim  compensation  was  made against  which  an appeal was filed in the High  Court.  The matter  was  brought to this Court against  the  High  Court order.  It was during the hearing of the said matter that  a

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court assisted settlement was struck and orders were  passed recording the same on 14th/15th February, 1989. On 4th  May, 1989 this Court gave its reasons for the settlement. Soon  a hue  and  cry was raised against the settlement  by  certain victims  and victim groups. In the meantime  petitions  were filed in this Court challenging the constitutional  validity of the Act on diverse grounds. In the course of the  hearing of  the  cases raising the question of validity of  the  Act submissions  were  also made regarding the validity  of  the settlement.  The hearing continued from 8th March,  1989  to 3rd May, 1989 and the same received wide publication in  the media. The judgment in the said case was pronounced on  22nd December,  1989 upholding the validity of the Act..  In  the meantime  petitions  were  filed under Article  137  of  the Constitution  to review the settlement. Several  Writ  Peti- tions under Article 32 also came to be filed. These came  up for  hearing  before a Constitution Bench presided  over  by Mukharji,CJ.  The hearing continued for more than two  weeks and  the media carried reports of the day to day court  pro- ceedings  throughout the country. Unfortunately, before  the judgment  could  be pronounced a tragic  event  took  place. Mukharji, CJ. passed away 378 necessitating  a rehearing by a Constitution Bench  presided over  by Misra, CJ. This hearing lasted for about 18  to  19 days and received the same wide coverage in the press,  etc. In fact considerable heat was generated throughout the court hearings and the press also was none too kind on the  court. It  is, therefore, difficult to imagine that all  those  who were interested in the review of the settlement were unaware of  the  proceedings.  Mr. Nariman has placed  on  record  a number of press-clippings to make good his point that  news- papers  having  large  circulation  throughout  the  country carried  news  regarding the settlement and  subsequent  at- tempts  to challenge the same. Can it then be said that  the victims were unaware of the proceedings before this Court  ? To say so would be to ignore the obvious.      In  view of the observations in Sahu’s case, the  scope of the inquiry in the present petitions can be said to be. a narrow  one.  One way of approaching the problem is  to  ask what  the Court could have done if a pre-decisional  hearing was afforded to the victims. The option obviously would have been  either to approve the terms of the compromise,  or  to refuse  to super add the Court’s seal to the settlement  and leave  the parties to go to trial. The Court could not  have altered,  varied  or modified the terms  of  the  settlement without  the express consent of the contracting parties.  If it  were to find the compensation amount payable  under  the settlement inadequate, the only option left to it would have been to refuse to approve the settlement and turn it into  a decree of the Court. It could not have unilaterally  imposed any additional liability on any of the contracting  parties. If it found the settlement acceptable it could turn it  into a  Court’s decree.  According to the interpretation  put  by the majority in Sahu’s case on the scope of sections 3 and 4 of  the  Act, a pro-decisional hearing ought  to  have  been given but failure to do so cannot vitiate the settlement  as according  to  the majority the lapse could be  cured  by  a post-decisional  hearing. The scope of the review  petitions cannot be any different at the post. decisional stage  also. Even  at  that  stage the Court can either  approve  of  the settlement  or disapprove of it but it cannot,  without  the consent of the concerned party, impose any new or additional financial obligations on it. At the post decisional stage it must be satisfied that the victims are informed of or  alive

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to  the  process of hearing, individually or  through  press reports, and if it is so satisfied it can apply its mind  to the fairness and reasonableness of the settlement and either endorse  it  or  refuse to do so. In the  present  case  the majority speaking through Brother Venkatachaliah, J. has not come to the conclusion that the settlement does 379 not deserve to be approved nor has it held that the  settle- ment-fund is inadequate. Merely on the apprehended possibil- ity that the settlementfund may prove to be inadequate,  the majority  has sought to saddle the Union of India  with  the liability  to  make good the deficit, if any. The  Union  of India has not agreed to bear this liability. And why  should it  burden the Indian tax-payer with this liability when  it is neither held liable in tort nor is it shown to have acted negligently in entering upon the settlement?  The Court  has to  reach a definite conclusion on the question whether  the compensation fixed under the agreement is adequate or other- wise  and based thereon decide whether or not to convert  it into  a decree. But on a mere possibility of there  being  a shortfall,  a  possibility not supported  by  any  realistic appraisal of the material on record but on a mere  apprehen- sion, quia timet, it would not be proper to saddle the Union of  India with the liability to make good the  shortfall  by imposing  an additional term in the settlement  without  its consent,  in  exercise  of power under Article  142  of  the Constitution  or any statute or on the premises of its  duty as a welfare State. To my mind, therefore, it is impermissi- ble in law to impose the burden of making’good the shortfall on  the  Union of India and thereby saddle the  Indian  tax- payer  with the tortfeasor’s liability, if at all. If I  had come  to the conclusion that the settlement-fund was  inade- quate, I would have done the only logical thing of reviewing the settlement and would have Left the parties to work out a fresh  settlement  or go to trial in the  pending  suit.  In Sailit’s  case as pointed out by Mukharji, CJ.  the  victims had  not been able to show any material which would  vitiate the  settlement. The voluminous documentary  evidence-placed on the record of the present proceedings also does not  make out  a  case of inadequacy of the  amount,  necessitating  a review  of  the settlement. In the circumstances  I  do  not think  that the Union of India can be saddled with  the  li- ability to make good the deficit, if any, particularly  when it  is  not found to be a tortfeasor. It’s  liability  as  a tortfeasor,  if  at  all, would have to be gone  into  in  a separate  proceeding  and  not  in  the  present  petitions. These,  in brief, are my reasons for my inability  to  agree with the latter part of conclusion (viii) imposing a liabil- ity on the Union of India to make good the deficit, if any.        One  word  about the shifting stand of the  Union  of India. It entered into a Court assisted settlement but  when the review applications came up for hearing it supported the review  petitioners  without seeking the  Court’s  leave  to withdraw  from  the  settlement on  permissible  grounds  or itself  filing  a review petition.  To say  the  least  this conduct is indeed 380 surprising.      I  would  have liked to reason out my view  in  greater detail  but the constraint of time does not permit me to  do so.  The draft of the main judgment was finalised only  yes- terday by noon time and since the matter was already  listed for  judgment  today,  I had only a few hours  to  state  my views.  I had, therefore, no time to write a detailed  judg- ment but just a little time to indicate in brief the crux of

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some of the reasons for my inability to agree with the  view expressed  in the judgment of Brother Venkatachaliah, J.  on the question of Union of India’s liability to make good  the deficiency, if any. G.N.                                               Petitions disposed of. 381