The furore over the recent changes to the Nuclear Liability Bill is well founded. Its ironical that after all the ruckus that was created by the Centre over liability in the Bhopal Gas leak disaster, the Centre now has introduced changes in the Bill to further dilute the liability of suppliers in case of nuclear accidents. First, to start with the crucial Section 17;
“the operator of a nuclear installation, after paying the compensation for nuclear damage in accordance with Section 6, shall have a right of recourse where –
(a) such right is expressly provided for in a contract in writing;
(b) the nuclear incident has resulted as a consequence of an act of supplier or his employees, done with the intent to cause nuclear damage, and such act includes supply of equipment or material with patent or latent defects or sub-standard services;
(c) the nuclear incident has resulted from the act of commission or omission of an individual done with intent to cause nuclear damage.”
In a background, Section 6 of the Bill provides for compensation that an Operation ought to pay upon the occurrence of an accident (which is fixed by the way). The Bill further gives the Operator a right to recourse, i.e., to recover some amount from the Supplier which is provided in Section 17. As one would notice, this option of recourse is severely limited only to those situation where the Supplier supplied faulty material and equipment with the intent to cause nuclear damage.
Most of us would have studied torts in first year law school. While studying Rylands v. Fletcher, we are prompted to understand as to how the Indian situation is way better with the pronouncement of ‘Absolute Liability’ by Bhagwati J. In MC Mehta v. Union of India (Shriram Chemicals, Oleum gas leak case). Absolute liability is the determination of liability of a defaulter without the consideration of intent. The consequence of the recent amendments, after already fixing the amount of compensation, is the dilution of the this principle of absolute liability on part of the supplier. On part of the Government, this seems as the best way to ensure that foreign suppliers of nuclear material don’t face any action despite the accident having occurred as a consequence of the fault in their material.
One may ask whether it is right (legal) for the Parliament to dilute a judicially evolved principle by a statute? The answer is in the affirmative and is an instance of parliamentary superiority over the judiciary. Unless such statute is against the Constitution, the Parliament is entitled to do so.
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Indian courts surely does follow the absolute liability rule which fixes liability irrespective of intent. But do remember that this rule is not merely any judicial principle, but is derived from Article 21 of the Constitution.
The absolute liability principle is however applicable only for “an enterprise which is engaged in a hazardous or inherently dangerous industry”. As has been already pointed out, there will be multiple suppliers dealing with the nuclear operator in facilitating the production of nuclear energy.
Please note that the nuclear supplier or reactor bulider is not the enterprise which would be absolutely liable, but it would be the nuclear operator (presently govt. companies) which carries on the hazardous activity that would liable as per the MC Mehta rule. Hence, having a provision which requires the intent of the supplier (though undesirable) will not be violating the principles derived from Article 21 of the Constitution.
The addition of intent (which was not there in the original bill or standing committee recommendations) is definitely to help the private suppliers, for it would be difficult to prove intent to cause damage. But i am quite sure that, due to the objections of the opposition, the bill will not be passed with such a condition.
If the govt. is guilty of attempting to deceive, the opposition is equally guilty of sheer demagoguery. The absurdity of cl.17(b)’s proposition is too obvious to miss and is hard to believe the opposition did not realize the implications of it.
There are numerous suppliers to any nuclear plant, some supplying small parts and others large. Cl.17(b) does not distinguish amongst them; each and every one of them can be held liable for up to the maximum amount. A company supplying some spare part is not going to earn the kind of revenue that will make internalizing such a huge liability worthwhile; so they will simply walk away from it. This holds equally for both domestic and foreign suppliers. From an economic standpoint, it makes no sense either for each supplier to be insured to the full amount which will be redundant (and impractical since the assets upon which such insurance may be drawn are limited) especially when the revenue stream only goes to the operator.
Also, the fact that this whole debate is not of much consequence to victims makes it all the more bizarre. If the reactor supplier has to purchase insurance, the company will add the cost of that premium to the sale price of the reactor. Alternatively, the operator can pay the premium directly to the insurer. Either way, the tax payer/consumer eventually foots the bill.
The standing committee was supposed to make serious, workable recommendations, not play to the gallery with ludicrous suggestions and faux outrage. It is not surprising then that the government does not take it very seriously.
How courts will come to interpret ‘intent’ will be interesting to see (although I hope we don’t ever get to a state where it would have to be). What would the court seek to balance then; to be strict and widen the ambit of intent in the interest of general public or to stick with the Parliamentary intent of not deterring foreign nuke suppliers?