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PETITIONER:

M.C. MEHTA AND ANR.

Vs.

RESPONDENT:

UNION OF INDIA & ORS.

DATE OF JUDGMENT20/12/1986

BENCH:

BHAGWATI, P.N. (CJ)

BENCH:

BHAGWATI, P.N. (CJ)

MISRA RANGNATH

OZA, G.L. (J)

DUTT, M.M. (J)

SINGH, K.N. (J)

CITATION:

1987 AIR 1086 1987 SCR (1) 819

1987 SCC (1) 395 JT 1987 (1) 1

1986 SCALE (2)1188

CITATOR INFO :

F 1989 SC1642 (24)

RF 1990 SC 273 (28,43)

E&D 1992 SC 248 (13,14,15,16,28,100)

ACT:

Constitution of India 1950--Articles 12 & 21--Private

corporation-Engaged in industry vital to public interest

with potential to affect life and health of people--Whether

'other authority'--Extent of availability of Article 21.

Article 32--Jurisdiction and Power of Court--Not only

injunctive in ambit--Remedial in scope and provides relief

for infringement of fundamental right--Power to award com-

pensation.

Public Interest Litigation--Maintainability of--Whether

letters addressed even to an individual judge

entertainable--Whether preferred form of address

applicable--Whether letters to be supported by

affidavits--Hyper-technical approach to be avoided by the

Court--Court must look at the substance and not the

form--Court's power to collect relevant material and to

appoint commissions.

Law of Torts--Liability of an enterprise engaged in a

hazardous and inherently dangerous industry for occurrence

of accident--Strict and absolute--Quantum of compensation

payable for harm caused--Determination of--Rule laid in

Rylands v. Fletcher--Whether applicable in India.

Jurisprudence--Law--Should keep pace with changing

socioeconomic norms---Where a law of the past does not fit

in to the present context, Court should evolve new law.

Interpretation of Constitution--Creative and innovative

interpretation in consonance with human rights jurisprudence

emphasised.

Interpretation of statutes--Foreign case law--Supreme

Court of India not bound to follow.

HEADNOTE:

The petitioners, in this writ petition under Art. 32,

sought a direction for closure of the various units of

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Shriram Foods & Fertilizers

820

Industries on the ground that they were hazardous to the

community. During the pendency of the petition, there was

escape of oleum gas from one of the units of Shriram. The

Delhi Legal Aid and Advice Board and the Delhi Bar Associa-

tion filed applications for award of compensation to the

persons who had suffered harm on account of escape of oleum

gas.

A Bench of three Hon'ble Judges while permitting Shriram

to restart its power plant as also other plants subject to

certain conditions, referred the applications for compensa-

tion to a larger Bench of five Judges because issues of

great constitutional importance were involved, namely, (1)

What is the scope and ambit of the jurisdiction of the

Supreme Court under Art. 32 since the applications for

compensation are sought to be maintained under that Article;

(2) Whether Art. 21 is available against Shriram which is

owned by Delhi Cloth Mills Limited, a public company limited

by shares and which is engaged in an industry vital to

public interest and with potential to affect the life and

health of the people; and (3) What is the measure of liabil-

ity of an enterprise which is engaged in an hazardous or

inherently dangerous industry, if by reason of an accident

occurring in such industry, persons die or are injured. Does

the rule in Rylands v. Fletcher, (1866 Law Report 1 Excheq-

uer 265) apply or is there any other principle on which the

liability can be determined.

Disposing of the applications,

HELD: 1. The question whether a private corporation like

Shriram would fall within the scope and ambit of Art. 12 so

as to be amenable to the discipline of Art. 21 is left for

proper and detailed consideration at a later stage if it

becomes necessary to do so. [844F-G]

Rajasthan Electricity Board v. Mohan Lal, [1967] 3 SCR

377; Sukhdev v. Bhagwat Ram, [1975] 1 SCC 421; Ramanna

Shetty v. International Airport Authority, [1979] 3 SCR

1014; Ajay Hasia v. Khalid Mujib, [1981] 2 SCR 79; Som

Prakash v. Union of India, [1981] 1 S.C.C. 449; Appendix I

to Industrial Policy Resolution, 1948; Industries (Develop-

ment and Regulation) Act, 1951; Delhi Municipal Act, 1957

Water (Prevention and Control of Pollution) Act, 1974; Air

(Prevention and Control of Pollution) Act, 1981; Eurasian

Equipment and Chemicals Ltd. v. State of West Bengal, [1975]

2 SCR 674; Rasbehari Panda v. St.ate, [1969] 3 SCR 374; Kas-

turi Lal Reddy v. State of Jammu & Kashmir, [1980] 3 SCR

1338, referred to.

821

2. The Delhi Legal Aid and Advice Board is directed to

take up the cases of all those who claim to have suffered on

account of oleum gas and to file actions on their behalf in

the appropriate Court for claiming compensation and the

Delhi Administration is directed to provide necessary funds

to the Board for the purpose. [844G-H; 845A]

3.(i) Where there is a violation of a fundamental or

other legal right of a person or class of persons who by

reason of poverty or disability or socially or economically

disadvantaged position cannot approach a Court of law for

justice, it would be open to any public-spirited individual

or social action group to bring an action for vindication of

the fundamental or other legal right of such individual or

class of individuals and this can be done not only by filing

regular writ petition under Art. 226 in the High Court and

under Art. 32 in this Court, but also by addressing a letter

to the Court. [828B-C; E-F]

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3.(ii) Even if a letter is addressed to an individual

Judge of the Court, it should be entertained, provided of

course it is by or on behalf of a person in custody or on

behalf of a woman or a child or a class or deprived or

disadvantaged persons. [829B-C]

3.(iii) Letters addressed to individual Justices of this

Court should not be rejected merely because they fail to

conform to the preferred form of address nor should the

Court adopt a rigid stance that no letters will be enter-

tained unless they are supported by an affidavit. If the

Court were to insist on an affidavit as a condition of

entertaining the letters the entire object and purpose of

epistolary jurisdiction would be frustrated because most of

the poor and disadvantaged persons will then not be able to

have easy access to the Court and even the social action

groups will find it difficult to approach the Court. [828H;

829B]

Bandhua Mukti Morcha v. Union of India & Ors., [1984] 2

SCR 67; S.P. Gupta v. Union of India, [1981] (Suppl) SCC 87

and Union for Democratic Rights & Ors. v. Union of India,

[1983] 1 SCR 456, relied

upon.

4.(i) Article 32 does not merely confer power on this

Court to issue direction, order or writ for enforcement of

the fundamental rights but it also lays a constitutional

obligation on this Court to protect the fundamental rights

of the people and for that purpose this Court has all inci-

dental and ancillary powers including the power to forge new

remedies and fashion new strategies designed to enforce the

fundamental rights. It is in realisation of this constitu-

tional obligation that this Court

822

has, in the past, innovated new methods and strategies for

the purpose of securing enforcement of the fundamental

rights, particularly in the case of the poor and the disad-

vantaged who are denied their basic human rights and to whom

freedom and liberty have no meaning. [827F-828A]

4.(ii) The power of the Court is not only injunctive in

ambit, that is, preventing the infringement of fundamental

right but it is also remedial in scope and provides relief

against a breach of the fundamental right already committed.

[830A-B]

4.(iii) The power of the Court to grant such remedial

relief may include the power to award compensation in appro-

priate cases. The infringement of the fundamental right must

be gross and patent, that is incontrovertible and exfacie

glaring and either such infringement should be on a large

scale affecting the fundamental rights of a large number of

persons or it should appear unjust or unduly harsh or op-

pressing on account of their poverty or disability or so-

cially or economically disadvantaged position to require

the person or persons affected by such infringement to

initiate and pursue action in the Civil Courts. [830D; E-F]

4. (iv) Ordinarily a petition under Art. 32 should not

be used as a substitute for enforcement of the right to

claim compensation for infringement of a fundamental right

through the ordinary process of Civil Court. It is only in

exceptional cases that compensation may be awarded in a

petition under Art. 32. [830F-G]

4.(v) The applications for compensation in the instant

writ petition are for enforcement of the fundamental right

to life enshrined in Art. 21 of the Constitution and while

dealing with such applications the Court cannot adopt a

hyper-technical approach which would defeat the ends of

justice. The Court must look at the substance and not the

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form. Therefore, the instant applications for compensation

are maintainable under Art. 32. [827A-B]

Bandhua Mukti Morcha v. Union of India & Ors., [1984] 2

SCR 67; S.P. Gupta v. Union of India, [1981] (Suppl.) SCR

87; Union for Democratic Rights & Ors. v. Union of India,

[1983] 1 SCR 456 and Rudul Shah v. State of Bihar, AIR 1983

SC 1086, relied upon.

5. The rule in Rylands v. Fletcher (supra) laid down a

principle of liability that if a person who brings on to his

land and collects and keeps there anything likely to do harm

and such thing escapes and does

823

damage to another, he is liable to compensate for the damage

caused. 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 author-

ity. 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. In a modern industrial society with highly de-

veloped scientific knowledge and technology where hazardous

or inherently dangerous industries are necessary to carry on

as part of developmental programme, the Court need not feel

inhibited by this rule merely because the new law does not

recognise the rule of strict and absolute liability in case

of an enterprise engaged in hazardous and dangerous activi-

ty. [842D-G]

Halsburry Laws of England, Vol. 45 Para 1305, relied upon.

6.(i) 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. Law cannot afford

to remain static. The Court cannot allow judicial thinking

to be constricted by reference to the law as it prevails in

England or in any other foreign country. Although this Court

should be prepared to receive light from whatever source it

comes, but it has to build up its own jurisprudence, evolve

new principles and lay down new norms which would adequately

deal with the new problems which arise in a highly indus-

trialised economy. If it is found that it is necessary to

construct a new principle of law to deal with -an unusual

situation which has arisen and which is likely to arise in

future on account of hazardous or inherently dangerous

industries which are concommitant to an industrial economy

the Court should not hesitate to evolve such principles of

liability merely because it has not been so done in England.

[843A-E]

6(ii) This Court has throughout the last few years

expanded the horizon of Art. 12 primarily to inject respect

for human-rights and social conscience in corporate struc-

ture. The purpose of expansion has not been to destroy the

raison d'etre of creating corporations but to advance the

human rights jurisprudence. The apprehension that including

within the ambit of Art. 12 and thus subjecting to the

discipline of Art. 21 those private corporations whose

activities have the potential of affecting the life and

health of the people, would deal a death blow to

824

the policy of encouraging and permitting private enterpre-

neurial activity is not well founded. It is through creative

interpretation and bold innovation that the human-rights

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jurisprudence has been developed in India to a remarkable

extent and this forward march of the humanrights movement

cannot be allowed to be halted by unfounded apprehensions

expressed by status quoists. [841C-E]

7.(i) 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 abso-

lute non-delegable duty to the community to ensure that if

any harm results to anyone, the enterprise must be held to

be under an obligation to provide that the hazardous or

inherently dangerous activity must be conducted with the

highest standards of safety and if any harm results on

account of such activity the enterprise must be absolutely

liable to compensate for such harm irrespective of the fact

that the enterprise had taken all reasonable care and that

the harm occurred without any negligence on its part.

[843E-G]

7.(ii) If the enterprise is permitted to carry on an

hazardous or inherently dangerous activity for its profit,

the law must presume that such permission is conditional on

the enterprise absorbing the cost of any accident arising on

account of such activity as an appropriate item of its

overheads. The enterprise alone has the resource to discover

and guard against hazards or dangers and to provide warning

against potential hazards. [844A-B]

7.(iii) The measure of compensation in such kind of

cases must be co-related to the magnitude and capacity of

the enterprise because such compensation must have a deter-

rent effect. The larger and more prosperous the enterprise,

the greater must be the amount of compensation payable by it

for the harm caused on account of an accident in carrying on

of the hazardous or inherently dangerous activity by the

enterprise. [844E-F]

8. The historical context in which the American doctrine

of State action evolved in the united States is irrelevant

for the purpose of Indian Courts, especially in view of Art.

15(2) of the Indian Constitution. But, it is the principle

behind the doctrine of State aid, control and regulation so

impregnating a private activity as to give it the colour of

State action which can be applied to the limited extent to

which it can be Indianised and harmoniously blended with

Indian constitutional

825

jurisprudence. Indian Courts are not bound by the American

exposition of constitutional law. The provisions of American

Constitution cannot always be applied to Indian conditions

or to the provisions of Indian Constitution and whilst some

of the principles adumberated by the American decisions may

provide a useful guide, close adherence to those principles

while applying them to the provisions of the Indian Consti-

tution is not to be favoured, because the social conditions

in India are different. [840D-H]

Ramanna Shetty v. International Airport Authority,

[1979] 3 SCR 1014; Jackson v. Metropolitan Edison Co., 42

L.ed. (2d) 477; Air India v. Nargesh Mirza, [1982] 1 SCR 438

and General Electric Co. Maratha v. Gilbert, 50 L.ed (2d)

343, relied upon.

JUDGMENT:

ORIGINAL JURISDICTION: Writ Petition (Civil) No. 12739

of 1985.

(Under Article 32 of the Constitution of India.)

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Petitioner-in-person.

B. Datta, Additional Solicitor General, A.B. Diwan, F.S.

Nariman, B.R.L. lyengar, Hardev Singh, Hemant Sharma, C.V.S.

Rao, R.D. Aggarwal, Ms. S. Relan, R.S. Sodhi, S. Sukumaran,

Ravinder Narain, D.N. Mishra, Aditya Narayan, Ms. Lira

Goswami, S. Kachwaha, Mohan, Ravinder Bana, K.C. Dua, K.

Kumaramangalam, O.C. Jain and K.R.R. Pilai for the Respond-

ents.

Raju Ramachandran for the Intervener.

Soli J. Sorabji for Citizens Action Committee.

The Judgment of the Court was delivered by

BHAGWATI, CJ. This writ petition under Article 32 of the

Constitution has come before us on a reference made by a

Bench of three Judges. The reference was made because cer-

tain questions of seminal importance and high constitutional

significance were raised in the course of arguments when the

writ petition was originally heard. The facts giving rise to

the writ petition and the subsequent events have been set

out in some detail in the Judgment given by the Bench of

three Judges on 17th February 1986, and it is therefore not

necessary to reiterate the same. Suffice it to state that

the Bench of three Judges

826

permitted Shriram Foods and Fertiliser Industries (hereinaf-

ter referred to as Shriram) to restart its power plant as

also plants for manufacture of caustic chlorine including

its by-products and recovery plants like soap, glycerine and

technical hard oil, subject to the conditions set out in the

Judgment. That would have ordinarily put an end to the main

controversy raised in the writ petition which was filed in

order to obtain a direction for closure of the various units

of Shriram on the ground that they were hazardous to the

community and the only point in dispute which would have

survived would have been whether the units of Shriram should

be directed to be removed from the place where they are

presently situate and relocated in another place where there

would not be much human habitation so that there would not

be any real danger to the health and safety of the people.

But while the writ petition was pending there was escape of

oleum gas from one of the units of Shriram on 4th and 6th

December, 1985 and applications were filed by the Delhi

Legal Aid & Advice Board and the Delhi Bar Association for

award of compensation to the persons who had suffered harm

on account of escape of oleum gas. These applications for

compensation raised a number of issues of great constitu-

tional importance and the Bench of three Judges therefore

formulated the issues and asked the petitioner and those

supporting him as also Shriram to file their respective

written submissions so that the Court could take up the

hearing of these applications for compensation. When these

applications for compensation came up for hearing it was

felt that since the issues raised involved substantial

questions of law relating to the interpretation of Articles

21 and 32 of the Constitution, the case should be referred

to a larger Bench of five Judges and this is how the case

has now come before us.

Mr. Diwan, learned counsel appearing on behalf of Shri-

ram raised a preliminary objection that the Court should not

proceed to decide these constitutional issues since there

was no claim for compensation originally made in the writ

petition and these issues could not be said to arise on the

writ petition. Mr. Diwan conceded that the escape of oleum

gas took place subsequent to the filing of the writ petition

but his argument was that the petitioner could have applied

for amendment of the writ petition so as to include a claim

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for compensation for the victims of oleum gas but no such

application for amendment was made and hence on the writ

petition as it stood, these constitutional issues did not

arise for consideration. We do not think this preliminary

objection raised by Mr. Diwan is sustainable. It is undoubt-

edly true that the petitioner could have applied for amend-

ment of the writ petition so as to include a claim for

compensation but merely because he did

827

not do so, the applications for compensation made by the

Delhi Legal Aid & Advice Board and the Delhi Bar Association

cannot be thrown out. These applications for compensation

are for enforcement of the fundamental right to life en-

shrined in Article 21 of the Constitution and while dealing

with such applications, we cannot adopt a hypertechnical

approach which would defeat the ends of justice. This Court

has on numerous occasions pointed out that where there is a

violation of a fundamental or other legal right of a person

or class of persons who by reason of poverty or disability

or socially or economically disadvantaged position cannot

approach a Court of law for justice, it would be open to any

public spirited individual or social action group to bring

an action for vindication of the fundamental or other legal

right of such individual or class of individuals and this

can be done not only by filing a regular writ petition but

also by addressing a letter to the Court. If this Court is

prepared to accept a letter complaining of violation of the

fundamental right of an individual or a class of individuals

who cannot approach the Court for justice, there is no

reason why these applications for compensation which have

been made for enforcement of the fundamental right of the

persons affected by the oleum gas leak under Article 21

should not be entertained. The Court while dealing with an

application for enforcement of a fundamental right must look

at the substance and not the form. We cannot therefore

sustain the preliminary objection raised by Mr. Diwan.

The first question which requires to be considered is as

to what is the scope and ambit of the jurisdiction of this

Court under Article 32 since the applications for compensa-

tion made by the Delhi Legal Aid and Advice Board and the

Delhi Bar Association are applications sought to be main-

tained under that Article. We have already had occasion to

consider the ambit and coverage of Article 32 in the Bandhua

Mukti Morcha v. Union of India & Ors., [1984] 2 SCR 67 and

we wholly endorse what has been stated by one of us namely,

Bhagwati, J. as he then was in his judgment in that case in

regard to the true scope and ambit of that Article. It may

now be taken as well settled that Article 32 does not merely

confer power on this Court to issue a direction, order or

writ for enforcement of the fundamental rights but it also

lays a constitutional obligation on this Court to protect

the fundamental rights of the people and for that purpose

this Court has all incidental and ancillary powers including

the power to forge new remedies and fashion new strategies

designed to' enforce the fundamental rights. It is in reali-

sation of this constitutional obligation that this Court has

in the past innovated new methods and strategies for the

purpose of securing enforcement of the fundamental rights,

828

particularly in the case of the poor and the disadvantaged

who are denied their basic human rights and to whom freedom

and liberty have no meaning.

Thus it was in S,P. Gupta v. Union of India, [1981]

Supp. SCC 87 that this Court held that "where a legal wrong

or a legal injury is caused to a person or to a determinate

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class of persons by reason of violation of any constitution-

al or legal right or any burden is imposed in contravention

of any constitutional or legal provision or without authori-

ty of law or any such legal wrong or legal injury or illegal

burden is threatened, and any such person or determinate

class of persons is by reason of poverty or disability or

socially or economically disadvantaged position unable to

approach the court for relief, any member of the public or

social action group can maintain an application for an

appropriate direction, order or writ in the High Court under

Article 226 and in case of breach of any fundamental right

of such person or class of persons, in this Court under

Article 32 seeking judicial redress for the legal wrong or

injury caused to such person or determinate class of per-

sons." This Court also held in S.P. Gupta's case (supra) as

also in the People's Union for Democratic Rights and Ors. v.

Union of India, [1983] 1 SCR 456 and in Babdhua Mukti Mor-

cha's case (supra) that procedure being merely a hand-maden

of justice it should not stand in the way of access to

justice to the weaker sections of Indian humanity and there-

fore where the poor and the disadvantaged are concerned who

are barely eking out a miserable existence with their sweat

and toil and who are victims of an exploited society without

any access to justice, this Court will not insist on a

regular writ petition and even a letter addressed by a

public spirited individual or a social action group acting

probono publico would suffice to ignite the jurisdiction of

this Court. We wholly endorse this statement of the law in

regard to the broadening of locus standi and what-has come

to be known as epistolary jurisdiction.

We may point out at this stage that in Bandhua Mukti

Morcha's case (supra) some of us apprehending that letters

addressed to individual justices may involve the court in

frivolous cases and that possibly the view could be taken

that such letters do not invoke the jurisdiction of the

court as a whole, observed that such letters should not be

addressed to individual justices of the court but to the

Court or to the Chief Justice and his companion judges. We

do not think that it would be right to reject a letter

addressed to an individual justice of the court merely on

the ground that it is not addressed to the court or to the

Chief Justice and his companion Judges. We must not forget

that

829

letters would ordinarily be addressed by poor and disadvan-

taged persons or by social action groups who may not know

the proper form of address. They may know only a particular

Judge who comes from their State and they may therefore

address the letters to him. If the Court were to insist that

the letters must be addressed to the court, or to the Chief

Justice and his companion Judges, it would exclude from the

judicial ken a large number of letters and in the result

deny access to justice to the deprived and vulnerable sec-

tions of the community. We are therefore of the view that

even if a letter is addressed to an individual Judge of the

court, it should be entertained, provided of course it is by

or on behalf of a person in custody or on behalf of a woman

or a child or a class of deprived or disadvantaged persons.

We may point out that now there is no difficulty in enter-

taining letters addressed to individual justice of the

court, because this Court has a Public Interest Litigation

Cell to which all letters addressed to the Court or to the

individual justices are forwarded and the staff attached to

this Cell examines the letters and it is only after scrutiny

by the staff members attached to this Cell that the letters

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are placed before the Chief Justice and under his direction,

they are listed before the Court. We must therefore hold

that letters addressed to individual justice of the court

should not be rejected merely because they fail to conform

to the preferred form of address. Nor should the court adopt

a rigid stance that no letters will be entertained unless

they are supported by an affidavit. If the court were to

insist on an affidavit as a condition of entertaining the

letters the entire object and purpose of epistolary juris-

diction would be frustrated because most of the poor and

disadvantaged persons will then not be able to have easy

access to the Court and even the social action groups will

find it difficult to approach the Court. We may point out

that the court has so far been entertaining letters without

an affidavit and it is only in a few rare cases that it has

been found that the allegations made in the letters were

false. But that might happen also in cases where the juris-

diction of the Court is invoked in a regular way:

So far as the power of the court under Article 32 to

gather relevant material bearing on the issues arising in

this kind of litigation, which we may for the sake of con-

venience call.social action litigation, and to appoint

Commissions for this purpose is concerned, we endorse. what

one of us namely, Bhagwati, J., as he then was, has said in

his Judgment in Bandhua Mukti Morcha's case (supra). We need

not repeat what has been stated in that judgment.' It has

our full approval.

We are also of the view that this Court under Article 32(1)

is free

830

to devise any procedure appropriate for the particular

purpose of the proceeding, namely, enforcement of a funda-

mental right and under Article 32(2) the Court has the

implicit power to issue whatever direction, order or writ is

necessary in a given case, including all incidental or

ancillary power necessary to secure enforcement of the

fundamental right. The power of the Court is not only in-

junctive in ambit, that is, preventing the infringement of a

fundamental right, but it is also remedial in scope and

provides relief against a breach of the fundamental right

already committed vide Bandhua Mukti Morcha's case (supra).

If the Court were powerless to issue any direction, order or

writ in cases where a fundamental right has already been

violated, Article 32 would be robbed of all its efficacy,

because then the situation would be that if a fundamental

right is threatened to be violated, the Court can injunct

such violation but if the violator is quick enough to take

action infringing the fundamental right, he would escape

from the net of Article 32. That would, to a large extent,

emasculate the fundamental right guaranteed under Article 32

and render it impotent and futile. We must, therefore, hold

that Article 32 is not powerless to assist a person when he

finds that his fundamental right has been violated. He can

in that event seek remedial assistance under Article 32. The

power of the Court to grant such remedial relief may include

the power to award compensation in appropriate cases. We are

deliberately using the words "in appropriate cases" because

we must make it clear that it is not in every case where

there is a breach of a fundamental right committed by the

violator that compensation would be awarded by the Court in

a petition under Article 32. The infringement of the funda-

mental right must be gross and patent, that is, incontro-

vertible and ex facie glaring and either such infringement

should be on a large scale affecting the fundamental rights

of a large number of persons, or it should appear unjust or

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unduly harsh or oppressive on account of theft poverty or

disability or socially or economically, disadvantaged posi-

tion to require the person or persons affected by such

infringement to initiate and pursue action in the civil

courts. Ordinarily, of course, a petition under Article 32

should not be used as a substitute for enforcement of the

right to claim compensation for infringement of a fundamen-

tal right through the ordinary process of civil court. It is

only in exceptional cases of the nature indicated by us

above, that compensation may be awarded in a petition under

Article 32. This is the principle on which this Court award-

ed compensation in Rudul Shah v. State of Bihar, (AIR 1983

SC 1086). So also, this Court awarded compensation to Bhim

Singh, whose fundamental right to personal liberty was

grossly violated by the State of Jammu and Kashmir. If we

make a fact analysis of the cases where compensation has

been

831

awarded by this Court, we will find that in all the cases,

the fact of infringement was patent and incontrovertible,

the violation was gross and its magnitude was such as to

shock the conscience of the court and it would have been

gravely unjust to the person whose fundamental right was

violated, to require him to go to the civil court for claim-

ing compensation.

The next question which arises for consideration on

these applications for compensation is whether Article 21 is

available against Shriram which is owned by Delhi Cloth

Mills Limited, a public company limited by shares and which

is engaged in an industry vital to public interest and with

potential to affect the life and health of the people. The

issue of availability of Article 21 against a private corpo-

ration engaged in an activity which has potential to affect

the life and health of the people was vehemently argued by

counsel for the applicants and Shriram. It was emphatically

contended by counsel for the applicants, with the analogical

aid of the American doctrine of State Action and the func-

tional and control test enunciated by this Court in its

earlier decisions, that Article 21 was available, as Shriram

was carrying on an industry which, according to the Govern-

ment's own declared industrial policies, was ultimately

intended to be carried out by itself, but instead of the

Government immediately embarking on that industry, Shriram

was permitted to carry it on under the active control and

regulation of the Government. Since the Government intended

to ultimately carry on this industry and the mode of carry-

ing on the industry could vitally affect public interest,

the control of the Government was linked to regulating that

aspect of the functioning of the industry which could vital-

ly affect public interest. Special emphasis was laid by

counsel for the applicants on the regulatory mechanism

provided under the Industries Development and Regulation

Act, 1951 where industries are included in the schedule if

they vitally affect public interest. Regulatory measures are

also to be found in the Bombay Municipal Corporation Act,

the Air and Water Pollution Control Acts and now the recent

Environment Act, 1986. Counsel for the applicants also

pointed to us the sizable aid in loans, land and other

facilities granted by the Government to Shriram in carrying

on the industry. Taking aid of the American State Action

doctrine, it was also argued before us on behalf of the

applicants that private activity, if supported, controlled

or regulated by the State may get so entwined with govern-

mental activity as to be termed State action and it would

then be subject to the same constitutional restraints on the

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exercise of power as the State.

832

On the other hand, counsel for Shriram cautioned against

expanding Article 12 so as to bring within its ambit private

corporations. He contended that control or regulation of a

private corporations functions by the State under general

statutory law such as the Industries Development and Regula-

tion Act, 1951 is only in exercise of police power of regu-

lation by the State. Such regulation does not convert the

activity of the private corporation into that of the State.

The activity remains that of the private corporation, the

State in its police power only regulates the manner in which

it is to be carried on. It was emphasised that control which

deems a corporation, an agency of the State, must be of the

type where the State controls the management policies of the

Corporation, whether by sizable representation on the board

of management or by necessity of prior approval of the

Government before any new policy of management is adopted,

or by any other mechanism. Counsel for Shriram also pointed

out the inappositeness of the State action doctrine to the

Indian situation. He said that in India the control and

function test have been evolved in order to determine wheth-

er a particular authority is an instrumentality or agency of

the State and hence 'other authority' within the meaning of

Article 12. Once an authority is deemed to he 'other author-

ity' under Article 12, it is State for the purpose of all

its activities and functions and the American functional

dichotomy by which some functions of an authority can be

termed State action and others private action, cannot oper-

ate here. The learned counsel also pointed out that those

rights which are specifically intended by the Constitution

makers to be available against private parties are so pro-

vided in the Constitution specifically such as Articles 17,

23 and 24. Therefore, to so expand Article 12 as to bring

within its ambit even private corporations would be against

the scheme of the Chapter on fundamental rights.

In order to deal with these rival contentions we think

it is necessary that we should trace that part of the devel-

opment of Article 12 where this Court embarked on the path

of evolving criteria by which a corporation could be termed

'other authority' under Article 12.

In Rajasthan Electricity Board v. Mohan Lal, [1967] 3

SCR 377 this Court was called upon to consider whether the

Rajasthan Electricity Board was an 'authority' within the

meaning of the expression 'other authorities' in Article 12.

Bhargava, J. who delivered the judgment of the majority

pointed out that the expression 'other authorities' in

Article 12 would include all constitutional and statutory

authorities on whom powers are conferred by law. The learned

Judge also said that if any body of persons has authority to

issue directions, the dis-

833

obedience of which would be publishable as a criminal of-

fence, that would be an indication that the concerned au-

thority is 'State'. Shah, J., who delivered a separate

judgment agreeing with the conclusion reached by the majori-

ty, preferred to give a slightly different meaning to the

expression 'other authorities'. He said that authorities,

constitutional or statutory, would fail within the expres-

sion "other authorities" only if they are invested with the

sovereign power of the State, namely, the power to make

rules and regulations which have the force of law. The ratio

of this decision may thus be stated to be that a constitu-

tional or statutory authority would be within the expression

"other authorities" if it has been invested with statutory

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power to issue binding directions to third parties, the

disobedience of which would entail penal consequences or it

has the sovereign power to make rules and regulations having

the force of law.

This test was followed by Ray, C J, in Sukhdev v. Bhagat

Ram, [1975] 1 SCC 421. Mathew, J. however, in the same case

propounded a broader test. The learned Judge emphasised that

the concept of 'State' had undergone drastic changes in

recent years and today 'State' could not be conceived of

simply as a coercive machinery wielding the thunderbolt of

authority; rather it has to be viewed mainly as a service

corporation. He expanded on this dictum by stating that the

emerging principle appears to be that a public corporation

being an instrumentality or agency of the 'State' is subject

to the same constitutional limitations as the 'State' it-

self. The preconditions of this are two, namely, that the

corporation is the creation of the 'State' and that there is

existence of power in the corporation to invade the consti-

tutional rights of the individual. This Court in Ram anna

Shetty v. International Airport Authority, [1979] 3 SCR 1014

accepted and adopted the rational of instrumentality or

agency of State put forward by Mathew, J., and spelt out

certain criteria with whose aid such an inference could be

made. However, before we come to these criteria we think it

necessary to refer to the concern operating behind the

exposition of the broader test by Justice Mathew which is of

equal relevance to us today, especially considering the fact

that the definition under Article 12 is. an inclusive and

not an exhaustive definition. That concern is the need to

curb arbitrary and unregulated power wherever and howsoever

reposed.

In Ramanna D. Shetty v. International Airport Authority

(supra) this Court deliberating on the criteria on the basis

of which to determine whether a corporation is acting as

instrumentality or agency of Government said that it was not

possible to formulate an all inclu-

834

sive or exhaustive test which would adequately answer this

question. There is no out and dried formula which would

provide the correct division of corporations into those

which are instrumentalities or agencies of Government and

those which are not. The Court said whilst formulating the

criteria that analogical aid can be taken from the concept

of State Action as developed in the United States wherein

the U.S. Courts have suggested that a private agency if

supported by extra-ordinary assistance given by the State

may be subject to the same constitutional limitations as the

State. It was pointed out that the State's general common-

law and statutory structure under which its people carry on

their private affairs, own property and enter into con-

tracts, each enjoying equality in terms of legal capacity,

is not such assistance as would transform private conduct

into State Action. "But if extensive and unusual financial

assistance is given and the purpose of such assistance

coincides with the purpose for which the corporation is

expected to use the assistance and such purpose is of public

character, it may be a relevant circumstance supporting an

inference that the corporation is an instrumentality or

agency of the Government".

On the question of State control, the Court in R.D.

Shetty's case (supra) clarified that some control by the

State would not be determinative of the question, since the

State has considerable measure of control under its police

power over all types of business organisations. But a find-

ing of State financial support plus an unusual degree of

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control over the management and policies of the corporation

might lead to the characterisation of the operation as State

Action.

Whilst deliberating on the functional criteria namely,

that the corporation is carrying out a governmental func-

tion. the Court emphasised that classification of a function

as governmental should not be done on earlier day percep-

tions but on what the State today views as an indispensable

part of its activities, for the State may deem it as essen-

tial to its economy that it owns and operate a railroad, a

mill or an irrigation system as it does to own and operate

bridges street lights or a sewage disposal plant. The Court

also reiterated in R.D. Shetty's case (supra) what was

pointed out by Mathew, J. in Sukhdev v. Bhagatram that

"Institutions engaged in matters of high public interest or

public functions are by virtue of the nature of the func-

tions performed government agencies. Activities which are

too fundamental to the society are by definition too impor-

tant not to be considered government functions."

The above discussion was rounded off by the Court in R.D.

835

Shetty's case (supra) by enumerating the following five

factors namely, (1) financial assistance given by the State

and magnitude of such assistance (2) any other form of

assistance whether of the usual kind or extraordinary (3)

control of management and policies of the corporation by the

State-nature and extent of control (4) State conferred or

State protected monopoly status and (5) functions carried

out by the corporation, whether public functions closely

related to governmental functions, as relevant criteria for

determining whether a corporation is an instrumentality or

agency of the State or not, though the Court took care to

point out that the enumeration was not exhaustive and that

it was the aggregate or cumulative effect of all the rele-

vant factors that must be taken as controlling.

The criteria evolved by this Court in Ramanna Shetty's

case (supra) were applied by this Court in Ajay Hasia v.

Khalid Mujib, [1981] 2 SCR 79 where it was further empha-

sised that:

"Where constitutional fundamentals vital to the maintenance

of human rights are at stake, functional realism and not

facial cosmetics must be the diagnostic tool for constitu-

tional law must seek the substance and not the form. Now it

is obvious that the Government may through the instrumental-

ity or agency of natural persons or it may employ the in-

strumentality or agency of judicial persons to carry out its

functions. It is really the Government which acts through

the instrumentality or agency of the corporation and the

juristic veil of corporate personality worn for the purpose

of convenience of management and administration cannot be

allowed to obliterate the true nature of the reality behind

which is the Government ..... (for if the Government

acting through its officers is subject to certain constitu-

tional limitations it must follow a fortiorari that the

Government acting through the instrumentality or agency of a

corporation should be equality subject to the same limita-

tions".

On the canon of construction to be adopted for interpreting

constitutional guarantees the Court pointed out:

".... constitutional guarantees ... should not be allowed

to be emasculated in their application by a narrow and con-

structed judicial interpretation. The Courts should be

anxious to enlarge the scope and width of the fundamental

836

rights by bringing within their sweep every authority which

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is an instrumentality or agency of the Government or through

the corporate personality of which the Government is acting,

so as to subject the Government in all its myriad activi-

ties, whether through natural persons or through corporate

entities to the basic obligation of the fundamental rights."

In this case the Court also set at rest the controversy as

to whether the manner in which a corporation is brought into

existence had any relevance to the question whether it is a

State instrumentality or agency. The Court said that it is

immaterial for the purpose of determining whether a corpora-

tion is an instrumentality or agency of the State or not

whether it is created by a Statute or under a statute: "the

inquiry has to be not as to how the juristic person is born

but why it has been brought into existence. The corporation

may be a statutory corporation created by statute or it may

be a Government company or a company formed under the Compa-

nies Act, 1956 or it may be a society registered under the

Societies Registration Act, 1860 or any other similar stat-

ute". It would come within the ambit of Article 12, if it is

found to an instrumentality or agency of the State on a

proper assessment of the relevant factors.

It will thus be seen that this Court has not permitted

the corporate device to be utilised as a barrier ousting the

constitutional control of the fundamental rights. Rather the

Court has held:

"It is dangerous to exonerate corporations from the

need to have constitutional conscience, and so that inter-

pretation, language permitting, which makes governmental

agencies whatever their main amenable to constitutional

limitations must be adopted by the court as against the

alternative of permitting them to flourish as an imperium in

imperio". Som Prakash v. Union of India, [1981] 1 SCC 449.

Taking the above exposition as our guideline, we must

now proceed to examine whether a private corporation such as

Shriram comes within the ambit of Article 12 so as to be

amenable to the discipline of Article 21.

In order to assess the functional role allocated to

private corporation engaged in the manufacture of chemicals

and fertilisers we need

837

to examine the Industrial Policy of the Government and see

the public interest importance given by the State to the

activity carried on by such private corporation.

Under the Industrial Policy Resolution 1956 industries

were classified into three categories having regard to the

part which the State would play in each of them. The first

category was to be the exclusive responsibility of the

State. The second category comprised those industries which

would be progressively State owned and in which the State

would therefore generally take the initiative in establish-

ing new undertakings but in which private enterprise would

also be expected to supplement the effort of the State by

promoting and development undertakings either on its own or

with State participation. The third category would include

all the remaining industries and their future development

would generally be left to the initiative and enterprise of

the private sector. Schedule B to the Resolution enumerated

the industries.

Appendix I to the Industrial Policy Resolution, 1948

dealing with the problem of State participation in industry

and the conditions in which private enterprise should be

allowed to operate stated that there can be no doubt that

the State must play a progressively active role in the

development of industries. However under the present condi-

tions, the mechanism and resources of the State may not

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permit it to function forthwith in Industry as widely as may

be desirable. The Policy declared that for some time to

come, the State could contribute more quickly to the in-

crease of national wealth by expanding its present activi-

ties wherever it is already operating and by concentrating

on new units of production in other fields.

On these considerations the Government decided that the

manufacture of arms and ammunition, the production and

control of atomic energy and the ownership and management of

railway transport would be the exclusive monopoly of the

Central Government. The establishment of new undertakings in

Coal, Iron and Steel, Aircraft manufacture, Ship building,

manufacture of telephone telegraph and wireless apparatus

and mineral oil were to be the exclusive responsibility of

the State except where in national interest the State itself

finds it necessary to secure the co-operation of private

enterprise subject to control of the Central Government.

The policy resolution also made mention of certain

basic industries of importance the planning and regulation

of which by tile Cent-

838

ral Government was found necessary in national interest.

Among the eighteen industries so mentioned as requiring such

Central control. heavy chemicals and fertilisers stood

included.

In order to carry out the objective of the Policy Reso-

lution the Industries (Development and Regulation) Act of

1951 was enacted which, according to its objects and rea-

sons, brought under central control the development and

regulation of a number of important industries the activi-

ties of which affect the country as a whole and the develop-

ment of which must be governed by economic factors of all

India import. Section 2 of the Act declares that it is

expedient in the public interest that the Union should take

under its control the industries specified in the First

Schedule. Chemicals and Fertilisers find a place in the

First Schedule as Items 19 and 18 respectively.

If an analysis of the declarations in the Policy Resolu-

tions and the Act is undertaken, we find that the activity

of producing chemicals and fertilisers is deemed by the

State to be an industry of vital public interest, whose

public import necessitates that the activity should be

ultimately carried out by the State itself, in the interim

period with State support and under State control, private

corporations may also be permitted to supplement the State

effort. The argument of the applicants on the basis of this

premise was that in view of this declared industrial policy

of the State, even private corporations manufacturing chemi-

cals and fertilisers can be said to be engaged in activities

which are so fundamental to the Society as to be necessarily

considered government functions. Sukhdev v. Bhagat Ram,

Ramanna Shetty and Ajay Hasia (supra).

It was pointed out on behalf of the applicants that as

Shriram is registered under the InduStries Development and

Regulation Act 1951, its activities are subject to extensive

and detailed control and supervision by the Government.

Under the Act a licence is necessary for the establishment

of a new industrial undertaking or expansion of capacity or

manufacture of a new article by an existing industrial

undertaking carrying on any of the Scheduled Industries

included in the First Schedule of the Act. By refusing

licence for a particular unit, the Government can prevent

over concentration in a particular region or over-investment

in a particular industry. Moreover, by its power to specify

the capacity in the licence it can also prevent over-devel-

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opment of a particular industry if it has already reached

target capacity. Section 18 G of the Act empowers the Gov-

ernment to control the supply, distribution, price etc. of

the articles manufactured by a scheduled

839

industry and under Section 18A Government can assume manage-

ment and control of an industrial undertaking engaged in a

scheduled industry if after investigation it is found that

the affairs of the undertaking are being managed in a manner

detrimental to public interest and under Section 18AA in

certain emergent cases, take-over is allowed even without

investigation. Since Shriram is carrying on a scheduled

industry, it is subject to this stringent system of regis-

tration and licensing. It is also amenable. to various

directions that may be issued by the Government from time to

time and it is subject to the exercise of the powers of the

Government under Sections 18A, and 18G.

Shriram is required to obtain a licence under the Facto-

ries Act and is subject to the directions and orders of the

authorities under the Act. It is also required to obtain a

licence for its manufacturing activities from the Municipal

authorities under the Delhi Municipal Act, 1957. It is

subject to extensive environment regulation under the Water

(Prevention and Control) of Pollution Act, 1974 and as the

factory is situated in an air pollution control area, it is

also subject to the regulation of the Air (Prevention and

Control of Pollution) Act, 1981. It is true that control is

not exercised by the Government in relation to the internal

management policies of the Company. However, the control is

exercised on all such activities of Shriram which can jeop-

ardize public interest. This functional control is of spe-

cial significance as it is the potentiality of the fertiliz-

er industry to adversely affect the health and safety of the

community and its being impregnated with public interest

which perhaps dictated the policy decision of the Government

to ultimately operate this industry exclusively and invited

functional control. Along with this extensive functional

control, we find that Shriram also receives sizable assist-

ance in the shape of loans and overdrafts running into

several crores of rupees from the Government through various

agencies. Moreover, Shriram is engaged in the manufacture of

caustic soda, chlorine etc. Its various units are set up in

a single complex surrounded by thickly populated colonies.

Chlorine gas is admittedly dangerous to life and' health. If

the gas escapes either from the storage tank or from the

filled cylinders or from any other point in the course of

production, the health and wellbeing of the people living in

the vicinity can be seriously affected. Thus Shriram is

engaged in an activity which has the potential to invade the

right to life of large sections of people. The question is

whether these factors are cumulatively sufficient to bring

Shriram within the ambit of Article 12. Prima facie it is

arguable that when the States' power as economic agent,

economic entrepreneur and allocator of economic benefits is

subject to the limitations of fundamental rights. (Vide

840

Eurasian Equipment and Chemicals Ltd. v. State of West

Bengal, (1975) 2 SCR 674, Rashbehari Panda v. State, [1983]

3 SCR 374, Ramanna Shetty v. International Airport Authori-

ty, (supra) and Kasturilal Reddy v. State of Jammu & Kash-

mir, [1980] 3 SCR 1338) why should a private corporation

under the functional control of the State engaged in an

activity which is hazardous to the health and safety of the

community and is imbued with public interest and which the

State ultimately proposes to exclusively run under its

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industrial policy, not be subject to the same limitations.

But we do not propose to decide this question and make any

definite pronouncement upon it for reasons which we shall

point out later in the course of this judgment.

We were during the course of arguments, addressed at

great length by counsel on both sides on the American doc-

trine of State action. The learned counsel elaborately

traced the evolution of this doctrine in its parent country.

We are aware that in America since the Fourteenth Amendment

is available only against the State, the Courts, in order to

thwart racial discrimination by private parties, devised the

theory of State action under which it was held that wherever

private activity was aided, facilitated or supported by the

Slate in a significant measure, such activity took the

colour of State action and was subject to the constitutional

limitations of the Fourteenth Amendment. This historical

context in which the doctrine of State action evolved in the

United States is irrelevant for our purpose especially since

we have Article 15(2) in our Constitution. But it is the

principle behind the doctrine of State aid, control and

regulation so impregnating a private activity as to give it

the colour of State action that is of interest to us and

that also to the limited extent to which it can be Indian-

ized and harmoniously blended with our constitutional juris-

prudence. That we in no way consider ourselves bound by

American exposition of constitutional law is well demos-

trated by the fact that in Ramanna Shetty, (supra) this

Court preferred the minority opinion of Douglas, J. in

Jackson v. Metropolitan Edison Company, 42 L.ed. (2d) 477 as

against the majority opinion of Rehnquist, J. And again in

Air India v. Nargesh Mirza, [1982] 1 SCR 438 this Court

whilst preferring the minority view in General Electric

Company Martha v. Gilbert, 50 L.ed. (2d) 343 said that the

provisions of the American Constitution cannot always be

applied to Indian conditions or to the provisions of our

Constitution and whilst some of the principles adumbrated by

the American decisions may provide a useful guide, close

adherence to those principles while applying them to the

provisions of our Constitution is not to be favoured, be-

cause the social conditions in our country are different.

The learned counsel for Shriram stressed the inapposite-

841

ness of the doctrine of State action in the Indian context

because, according to him, once an authority is brought

within the purview of Article 12, it is State for all in-

tents and purposes and the functional dichotomy in America

where certain activities of the same authority may be cha-

raterised as State action and others as private action

cannot be applied here in India. But so far as this argument

is concerned, we must demur to it and point out that it is

not correct to say that in India once a corporation is

deemed to be 'authority', it would be subject to the consti-

tutional limitation of fundamental rights in the performance

of all its functions and that the appellation of 'authority'

would stick to such corporation, irrespective of the func-

tional context.

Before we part with this topic, we may point out that

this Court has throughout the last few years expanded the

horizon of Article 12 primarily to inject respect for

human-rights and social conscience in our corporate struc-

ture. The purpose of expansion has not been to destroy the

raison d'eter of creating corporations but to advance the

human rights jurisprudence. Prima facie we are not inclined

to accept the apprehensions of learned counsel for Shriram

as well-founded when he says that our including within the

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ambit of Article 12 and thus subjecting to the discipline of

Article 21, those private corporations whose activities have

the potential of affecting the life and health of the peo-

ple, would deal a death blow to the policy of encouraging

and permitting private entrepreneurial activity. Whenever a

new advance is made in the field of human rights, apprehen-

sion is always expressed by the status quosits that it will

create enormous difficulties in the way of smooth function-

ing of the system and affect its stability. Similar appre-

hension was voiced when this Court In Ramanna Shetty's case

(supra) brought public sector corporations within the scope

and ambit of Article 12 and subjected them to the discipline

of fundamental rights. Such apprehension expressed by those

who may be affected by any new and innovative expansion of

human rights need not deter the Court from widening the

scope of human rights and expanding their reach ambit, if

otherwise it is possible to do so without doing violence to

the language of the constitutional provision. It is through

creative interpretation and bold innovation that the human

rights jurisprudence has been developed in our country to a

remarkable extent and this forward march of the human rights

movement cannot be allowed to be halted by unfounded appre-

hensions expressed by status quoists. But we do not propose

to decide finally at the present stage whether a private

corporation like Shriram would fall within the scope and

ambit of Article 12, because we have not had sufficient time

to consider and reflect on this question in depth- The

hearing of this case before us

842

concluded only on 15th December 1986 and we are called upon

to deliver our judgment within a period of four days, on

19th December 1986. We are therefore of the view that this

is not a question on which we must make any definite pro-

nouncement at this stage. But we would leave it for a proper

and detailed consideration at a later stage if it becomes

necessary to do so.

We must also deal with one other question which was

seriously debated before us and that question is as to what

is the measure of liability of an enterprise which is en-

gaged in an hazardous or inherently dangerous industry, if

by reason of an accident occurring in such industry, persons

die or are injured. Does the rule in Rylands v. Fletcher

apply or is there any other principle on which the liability

can be determined? The rule in Rylands v. Fletcher was

evolved in the year 1866 and it provides that a person who

for his own purposes being 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 falls 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 keeps 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 Laws of England, Vol. 45 para 1305. Considerable

case law has developed in England as to what is natural and

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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 parameters of this rule because in a modern industrial

society with highly developed scientific knowledge and

technology where hazardous or inherently dangerous indus-

tries are necessary to carry out 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 this context of a totally different kind of

843

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 chal-

lenge 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 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 up our own jurisprudence and we cannot countenance

an argument that merely because the new law does not recog-

nise the rule of strict and absolute liability in cases of

hazardous or dangerous liability or the rule as laid down in

Rylands v. Fletcher as is developed in England recognises

certain limitations and responsibilities. We in India cannot

hold our hands back and I venture to evolve a new. principle

of liability which English courts have not done. 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 hazardous or inherently dan-

gerous industries which are concommitant to an industrial

economy, there is no reason why we should hesitate to evolve

such principle of liability merely because it has not been

so done in England. We are of the view 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 nondelegable 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. The enterprise must be

held to be under an obligation to provide that the hazardous

or inherently dangerous activity in which it is engaged must

be conducted with the highest standards of safety and if any

harm results on account of such 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 a position to

isolate the process of operation from the hazardous prepara-

tion of substance or any other related element that caused

the harm must be held strictly liable for causing such harm

as a part of the social cost for carrying on the hazardous

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or

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inherently dangerous activity. If the enterprise is permit-

ted to carry on an hazardous or inherently dangerous activi-

ty for its profit, the law must presume that such permission

is conditional on the enterprise absorbing the cost of any

accident arising on account of such hazardous or inherently

dangerous activity as an appropriate item of its over-heads.

Such hazardous or inherently dangerous activity for private

profit can be tolerated only on condition that the enter-

prise engaged in such hazardous or inherently dangerous

activity indemnifies all those who suffer on account of the

carrying on of such hazardous or inherently dangerous activ-

ity 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 dangers and to provide warning against

potential hazards. We would therefore hold that where an

enterprise is engaged in a hazardous or inherently dangerous

activity and harm results to anyone on account of an acci-

dent in the operation of such hazardous or inherently dan-

gerous activity resulting, 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 subject to any of the exceptions which

operate vis-a-vis the tortious principle of strict liability

under the rule in Rylands v. Fletcher (supra).

We would also like to point out that the measure of

compensation in the kind of cases referred to in the preced-

ing paragraph must be co-related to the magnitude and capac-

ity of the enterprise because such compensation must have a

deferent effect. The larger and more prosperous the enter-

prise, the greater must be the amount of compensation pay-

able by it for the harm caused on account of an accident in

the carrying on of the hazardous or inherently dangerous

activity by the enterprise.

Since we are not deciding the question as to whether

Shriram is an authority within the meaning of Article 12 so

as to be subjected to the discipline of the fundamental

right under Article 21, we do not think it would be justi-

fied in setting up a special machinery for investigation of

the claims for compensation made by those who allege that

they have been the victims of oleum gas escape. But we would

direct that Delhi Legal Aid and Advice Board to take up the

cases of all those who claim to have suffered on account of

oleum gas and to file actions on their behalf in the appro-

priate court for claiming compensation against Shriram. Such

actions claiming compensation may be filed by the Delhi

Legal Aid and Advice Board.within two months from

845

today and the Delhi Administration is directed to provide

the necessary funds to the Delhi Legal Aid and Advice Board

for the purpose of filing and prosecuting such actions. The

High Court will nominate one or more Judges as may be neces-

sary for the purpose of trying such actions so that they may

be expeditiously disposed of. So far as the issue of reloca-

tion and other issues are concerned the writ petition will

come up for hearing on 3rd February, 1987.

A.P.J. Petition dis-

posed of.

846