14 May 2020 7:53 AM GMT
With 12 people dead in a major accident after the leakage of Styrene, a hazardous and toxic chemical[i], the question of civil liability of the chemical factory – LG Polymers India Pvt. Ltd, an enterprise engaged in hazardous or an inherently dangerous industry, once again comes to the forefront. While this question may find a final clarity through the "In Re: Gas Leak at LG...
With 12 people dead in a major accident after the leakage of Styrene, a hazardous and toxic chemical[i], the question of civil liability of the chemical factory – LG Polymers India Pvt. Ltd, an enterprise engaged in hazardous or an inherently dangerous industry, once again comes to the forefront. While this question may find a final clarity through the "In Re: Gas Leak at LG Polymers Chemical Plant in RR Venkatapuram Village Visakhapatnam in Andhra Pradesh" taken up suo moto by the National Green Tribunal ['NGT'], this paper looks at certain key principles of liability that may govern the instances of 'major accidents' like this.
The NGT's Order dated 8 May 2020, in this case, states that the 'leakage of hazardous gas at such a scale adversely affecting public health and environment, clearly attracts the principle of 'strict liability' against the enterprise engaged in a hazardous or inherently dangerous industry'. However, it is yet to ascertain the extent of damage and the failure of LG Polymers Pvt Ltd, if any. Based on the prima facie material the NGT has directed the enterprise to deposit an initial amount of Rs. 50 crores with the District Magistrate, Vishakhapatnam. The NGT determined this amount by considering 'the financial worth of the company and the extent of the damage caused'.
The principle of strict liability, as invoked in this case, evolved in 1866 in Rylands v. Fletcher  UKHL 1. It lays down that if a person brings on to his land and keeps there anything likely to cause harm, he is liable to compensate for the damage if such a thing escapes and does damage to another. The liability under this rule is strict and not having willful knowledge or no default or neglect is by no means a defence. However, there are few exceptions available against the principle of strict liability such as the escape being an act of God, default on part of the person injured, and consent of the person injured.
The limitation of the principle of strict liability in the contemporary industrialised world has been categorically highlighted by the Supreme Court more than once. In 1987, in the case more famously known as the Oleum Gas Leak case[ii], the Supreme Court evolved the principle of 'absolute liability'. It was held that "an enterprise which is engaged in a hazardous 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 community to ensure that no harm results to anyone on account of hazardous or inherently dangerous nature of the activity which it has undertaken" (emphasis added). The Supreme Court expressly referred to the rule of 'strict liability' as laid down in Rylands v. Fletcher but refuses to apply it stating that it is not suited to the emerging conditions in India. According to the Supreme Court, in the act of an enterprise engaging in a hazardous or inherently dangerous activity for its profit, the law must presume that the permission given to the enterprise is conditional on the enterprise absorbing the cost of any accident arising on account of such activity. In other words, the exceptions or defences available to a hazardous or inherently dangerous industry in cases of accidents was held unacceptable. This is the context in which the Oleum gas leak decision becomes relevant in the context of the Vizag gas leak incident.
The principle of absolute liability as propounded in the Oleum Gas Leak case, as remarked to be a binding precedent, was later upheld in the Bichhri case[iii] for being by far the most appropriate law. It is pertinent to note that the principle of absolute liability is not subject to any exceptions which operate vis-à-vis the principle of strict liability. One needs to look at this unique articulation of the Supreme Court as a result of the realisation that modern industries pose serious risk to people and environment at a wider and deeper scale, and therefore such a situation demands exceptional legal principle.
The Vizag incident is probably going to be a test case to see if the principle of absolute liability continues to be part of the legal system in India as held by the Supreme Court more than once in the 1980s and 1990s. The shadow of doubt regarding the applicability of the principle of absolute liability emerges from the NGT Act, 2010. Section 17 of the NGT Act, which deals with the liability to pay relief or compensation in certain cases, states that "The Tribunal shall, in case of an accident, apply the principle of no-fault". The NGT has, in its prima facie opinion, made it clear that the 'principle of no-fault' as mentioned in Section 17 refers to the principle of strict liability.
This scenario raises certain key interpretative puzzles. One way to look at it is to take the principle of no-fault as prescribed in the NGT Act as referring to strict liability. An alternate way is to understand it as encompassing both strict and absolute liability. The latter reading is also plausible for two reasons. First, the legislator has not used the term 'strict liability'. Second, a reasonable assumption can be made that the legislator was aware of the principle of absolute liability as developed through the Oleum gas leak and Bichhri judgments by the Supreme Court and the provision was probably kept like that to accommodate the principle of absolute liability at least in cases of accidents due to 'hazardous or inherently dangerous industry'.
If the latter reading as suggested above is acceptable, the concerned industry is not allowed to rely on any defences whatsoever and the only question is whether the industry is a 'hazardous or inherently dangerous' industry. An affirmative answer to this question is more probable than not. According to the Environment (Protection) Act, 1986 any industry handling or dealing with hazardous substance may be put under the category of hazardous industries. Section 2(c) of the EPA, defines hazardous substance as "any substance or preparation which, by reason of its chemical or physio-chemical properties or handling is liable to cause harm to human beings, other living creatures, plants micro-organisms, property or environment."
In a preliminary report by the Centre for Science and Environment, a Delhi based think-tank, 'the leaked gas- Styrene is likely a carcinogenic substance and can react with oxygen in the air to mutate into styrene dioxide which is more lethal'. The said report further highlights a number of serious health implications due to exposure to Styrene such as gastrointestinal effects, impacts on the central nervous system (CNS), hearing loss, and peripheral neuropathy. Further, the report warns that 'if the amount of styrene goes beyond 800 ppm (parts per million), then the person exposed to it can go into a coma'. Animal studies show they are more sensitive to styrene exposure and suffer greater effects. In addition to that, the NGT, in its order dated 8 May 2020, has already recognised this substance 'a toxic and hazardous chemical' and termed the industry a 'hazardous or inherently dangerous industry'.
Regardless of the final decision of the NGT in this test case, the larger concern is the issue of the safety of people including workers and the environment. At the outset, the Vizag gas leak incident necessitates progressive regulatory tools. While prior assessment of social and environmental impacts of industrial activities is a useful tool, the Vizag incident exposes the need for continuous assessment or monitoring. The idea of continuous Environment Impact Assessment (EIA) as advocated by Judge C.G. Weeramantry of the International Court of Justice in Gabcikovo-Nagymaros Project case demands serious and urgent attention in this regard. According to Judge Weeramantry, EIA is a dynamic principle and with the magnitude of projects in operation, prudence would point to the need for continuous monitoring.
The Vizag gas leak incident further raises questions on the degree of compliance with various rules in this regard. For instance, Rule 13 of the Manufacture, Storage and Import of Hazardous Chemical Rules, 1989 requires the concerned industries to keep "up-to-date an on-site emergency plan". It requires "that every person on the site who is affected by the plan is informed of its relevant provisions." It is also the duty of the occupier to ensure "that a mock drill of the on-site emergency plan is conducted every six months." Rule 14 read with Schedule 5 thereof requires the District Collector or District Emergency Authority designated by the State Government to prepare an off-site emergency plan. Was there an up-to-date emergency on-site plan to tackle such an accident? Had the residents in the nearby area been informed of the potential risks associated with the industry? Were any mock drills conducted? The public in general and the people who are 'communities at risk' have the right to be informed in this regard. The industry and the authorities concerned owe an explanation and this is very important before a more disturbing picture emerges with the opening of another similar red category (high polluting) industry as the lockdown restrictions are eased in India.
[i] Rule 2(e) read with Entry 583 of Schedule I to the Manufacture, Storage and Import of Hazardous Chemical Rules, 1989.
[ii] M.C. Mehta v. Union of India, AIR 1987 SC 1086.
[iii] Indian Council for Enviro-Legal Action v. Union of India, AIR 1996 SC 1446.