(1991) 4 SCC 584


Justice R.S. Pathak, Justice R. Mishra, Justice E.S. Venkataramiah, Justice N.D. Ojha and Justice M.N. Venkatachalliah


In the year 1934 American Industrial Giant Union Carbide with the Union of India incorporated Union Carbide India Limited (UCIL) in India, in which the Union Carbide was the majority shareholder (51%). UCIL was incorporated for the manufacture of chemicals, batteries, pesticides and other industrial products.


In the year 1970 in densely populated region of Bhopal, Madhya Pradesh, a new pesticide plant was incorporated. Despite repetitive complaints regarding the safety measures of the pesticide plant by the agronomic engineer of the plant, no attention was given to it.

Thus as a result, on the night of 2nd December 1984 there was a gas leak from the plant of Methyl Iso – cynate unlashing havoc upon the people of Bhopal. The gas leak was so devastating that it killed almost 2600 people immediately and thousands of them left injured and displaced.

Final count showed that almost 20,000 people had died because of gas leak and more than 60,000 were left affected. It was also found out that not only the flora and fauna, even the life in the womb of mother was affected.

Union of India immediately to provide speedy justice to the victims enacted Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985 (the Bhopal Act) making the Union of India representative.  

However, the validity of this act was challenged in Supreme Court in Union Carbide Corporation v. Union of Indiaon the ground that since the Union of India was also owner of minority shareholders, they are also responsible for the disaster. However, the court by applying CharanlalSahu v. Union of India ruled in favor of the union of India and held that the state is obligated to protect the interests of its citizens across the globe. 

However, the Union of India, decided to litigate the csae in foreign courts instead of the Indian Courts. Therefore, all appeals against the Union Carbide were clubbed into a single file and were presented before the Judge Keenan. But, the American court dismissed the case on the view that it comes under the jurisdiction of the Indian Courts.

Thus, in September 1986 Union of India started proceedings against the Union Carbide in the Bhopal District Court. As a result, the District Court asked the Union Carbide to give a sum o 350 millions as interim compensation for the damages which had been caused by the gas leak.

The Union Carbide reached High Court and the compensation sum was reduced to 250 millions. Then they finally put an appeal in the Supreme Court. The Supreme Court ordered the Company to pay 470 million to the government. But the people were not satisfied as they received less amount of money as they were promised.

Thus a petition was filed in the Supreme Court in which it was stated that, the settlement amount was too low and it would be unfair to drop the criminal proceedings against the Union Carbide.


  • Whether the settlement amount was justifiable or not?
  • Is dropping of criminal proceedings against the Union Carbide justified?


  • The Supreme Court held that the dropping of criminal proceedings is not justified and thus it quashed the earlier order and directed that criminal proceedings shall be initiated as soon as possible.
  • The Supreme Court also held that the amount compensated is adequate, reasonable and fair; in case if any deficiency arises in rehabilitation of victim, the government will take care of that.