'Can't Second-Guess State Policy, Will Try To Clear Apprehensions' : Supreme Court On Challenge To SHANTI Act Limiting Nuclear Liability

The Supreme Court on Tuesday expressed reluctance to examine the validity of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, observing that it was a "sensitive legislative policy issue". At the same time, the Court assured the petitioners that it would try to clear their apprehensions regarding the power of the Courts to fix compensation in the event of an unfortunate nuclear accident.

The Court orally commented that the capping of liability may not limit the power of the Court to fix compensation.

A bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice Vipul Pancholi was hearing a public interest litigation challenging the SHANTI Act for capping the liability of private nuclear operators and the Government for mishaps.

During the hearing, Advocate Bhushan raised concerns about the cap on the liability and exemption given to suppliers, and cautioned that this can encourage private operators to "cut corners" on safety requirements.

He submitted that the total liability has been capped at under Rs. 4000 crores, even though major nuclear accidents like Chornobyl and Fukushima have shown that the cost of such incidents can be a thousand times over. The counsel also referred to the Shri Ram Oleum Gas Leakage case of 1986, where the Supreme Court established the principle of absolute liability for any hazardous activity.

"Government can do whatever it wants by way of policy, but it cannot sacrifice Article 21 rights of citizens...", Bhushan emphasised.

Calling the issue raised a "sensitive, legislative policy issue", the CJI noted that Courts can always enforce liability insofar as the State is concerned and the Act, in case of an accident, only seeks to limit the liability of those who are coming to invest in a nuclear project. "That does not take away the power of the Court to compensate..." the CJI said.

At this point, Bhushan explained that the total cap on liability of the government and the operator is less than Rs.4000 crores. The CJI however remarked that the Parliament, by way of a legislation, may choose to commit to an investor that its liability will be restricted to Rs.4000 crores in case of an accident, but that does not restrict a Court's power to assess and determine the compensation in favor of a victim.

Later, Bhushan again emphasized that the Act caps the government's liability as well. Also, it essentially exempts the supplier of nuclear equipment from liability, though that was not the case in the erstwhile Act. The counsel also pointed to the potential of fulfilling energy demand through solar power, instead of cost-intensive nuclear power plants.

When the CJI asked Bhushan to name any country which was not using nuclear plants to generate energy, he replied that Germany and Japan have entirely stopped use of the same. "They have dismantled all their plants and there is no cap on liability...even in the US, the cap is over 100 times the cap imposed here", he said.

In response, the CJI noted that it would take some time for India to match the per capita income, etc., of the US. Further, he stressed that the key concern was whether there was a robust compensation mechanism in place in the event of an unfortunate incident. "If that is effectively addressed, your apprehension disappears", the CJI stated.

On the exemption of suppliers from the ambit of liability, the CJI said, "That may not be our concern that who has been exempted, who has been absolved of liability. Our concern is that unfortunately, and God forbid, if any accident takes place, and a common citizen of this country or any person suffers an injury, do we have a robust compensatory mechanism for that person?"

When Bhushan underlined the cap on the residual liability of the State, the CJI asked whether the power of a Constitutional Court, or even a Tribunal for that matter, to assess and grant compensation can be restricted. "Are we examining to prevent installation of power plants or we are concerned about safety of people in event of unfortunate incidents?", the CJI further asked, opining that the second issue was the "real" and "most important" issue.

Justice Bagchi, on his part, commented, "When the State, in its own policy, decides to cap liability of a private entity, we are not here to second guess decision making of the State in its subjective...You are now challenging constitutionality of a legislation on motive...".

Notably, Bhushan also put into question the provision of the Act which provides that the AERB shall have a Search Committee headed by the Atomic Energy Commission and appointment/removal will be by the government. He highlighted that India is signatory to an international convention, which requires the AERB to be independent of the AEC and the government.

Later, CJI opined that if the Parliament enacts a law in furtherance of its FDI policy, stipulating a cap on maximum liability and leaving rest to be borne by the State, it's a question of "core fiscal policy". Ultimately, assuring that some of the concerns raised by the petitioners will be clarified, the bench listed the matter in 2nd week of July. 

"Some of your apprehensions which require attention, we will try to clarify. We will list in 2nd week of July," the CJI observed.

While dealing with a PIL challenging the SHANTI Act, 2025, the Supreme Court today expressed that it would attempt to "clarify" some of the apprehensions warranting attention with regard to nuclear safety and/or the compensatory mechanism in case of an unfortunate nuclear incident.

Briefly put, while challenging the SHANTI Act provisions as violative of fundamental rights under the Constitution, the petitioners seek a direction that entire cost of nuclear damage be borne by operators and suppliers jointly and severally. They further pray for an independent mechanism for selection, appointment and removal of Atomic Energy Regulatory Board members.

Also, a restraint on expansion of nuclear activity involving private participation is sought until: (a) an independent, autonomous nuclear regulator insulated from executive control is established; (b) robust and scientific Deep Geological Repository consistent with constitutional and international standards is established for long-term disposal of Spent Nuclear Fuels.

Case Title: EAS SARMA AND ORS. Versus UNION OF INDIA AND ANR., W.P.(C) No. 240/2026