Union Carbide Corporation (Appellant) v. Union of India and others (Respondents)

The Union Carbide Corporation filed an application in revision in the Supreme Court, in terms of Section 155 of the CPC, against the order of the Bhopal District Court, in a claim for damages made by the Union of India on behalf of all the claimants, under the Bhopal Gas Leak Disaster (Processing of Claim) Act, 1985. The Union Carbide Corporation as well as the Union of India filed separate appeals in the Supreme Court against the judgment of the Madhya Pradesh High Court, both of which were heard together. Damages were sought on behalf of victims of Bhopal gas leak disaster. The Court examined the prima facie material for the purpose of quantifying the damages, and also the question of domestication of the decree in the United States for the purpose of execution. It examined the question which amount of damages would be “just, equitable and reasonable” for an over-all settlement of the case. The Court referred to the case M.C. Mehta v Union of India (AIR 1987 SC 1086) where it was held that the measure of damages payable had to be correlated to the magnitude and the capacity of the enterprises because such compensation had to have a deterrent effect. The Court decided as follows: (1) The Union Carbide Corporation should pay a sum of U.S. Dollars 470 million (Four hundred and seventy million) 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 Union Carbide Corporation shall pay the aforesaid sum to the Union of India on or before 31 March 1989. (3) To enable the effectuation of the settlement, all civil proceedings related to and arising out of the Bhopal gas disaster shall thereby stand transferred to the Supreme Court and shall stand concluded in terms of the settlement, and all criminal proceedings related to and arising out of the disaster shall stand quashed, wherever these may be pending.