Question

The Supreme Court observed, Where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results to anyone on account of an accident in the operation of such hazardous or inherently dangerous 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. In such a case, the measure of compensation must be correlated to the magnitude and capacity of the enterprise because such compensation must have a deterrent 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 the carrying on of the hazardous or inherently dangerous activity by the enterprise. - Name the case.

• A. Subhash Kumar Vs State of Bihar 1991
• B. Rural Litigation and Entitlement. Kendra Vs State of U.P. 1985
• C. M.C. Mehta Vs Union of India 1986
• D. Union Carbide v Union of India, 1984

Hint:

Be able to clearly distinguish between 'Strict Liability' (from the English case \textit{Rylands v. Fletcher}, which has exceptions) and 'Absolute Liability' (from the Indian case \textit{M.C. Mehta}, which has no exceptions). This is a very common and important topic in both Tort and Environmental Law.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The passage quoted in the question is the classic articulation of the principle of Absolute Liability. This principle was evolved by the Indian Supreme Court as a more stringent standard than the English principle of Strict Liability (from \textit{Rylands v. Fletcher}). The key feature of absolute liability is that it does not permit any of the exceptions available under strict liability (like Act of God, plaintiff's consent, etc.).
Step 2: Detailed Explanation:
This principle was laid down by the Supreme Court in the case of M.C. Mehta v. Union of India, AIR 1987 SC 1086. This case is also known as the Oleum Gas Leak case.
Following a leak of oleum gas from a plant of Shriram Food and Fertilisers Ltd. in Delhi, the Supreme Court, under the leadership of Chief Justice P.N. Bhagwati, formulated this new rule. The Court stated that an enterprise engaged in a hazardous or inherently dangerous activity owes an absolute and non-delegable duty to the community to ensure that no harm results. If harm does occur, the enterprise is absolutely liable to compensate, and the quantum of compensation should be correlated to the size and capacity of the enterprise to have a deterrent effect.
This principle was a departure from the rule in \textit{Rylands v. Fletcher} and was considered more suitable for a modern industrialised society.
- The \textit{Union Carbide} case is related to the Bhopal Gas Tragedy, but the principle of absolute liability was formally established and articulated in the \textit{M.C. Mehta} case that followed. The year 1986 in the option refers to when the case was filed and heard, with the main judgment delivered in early 1987.
Step 3: Final Answer:
The case that established the principle of absolute liability as described in the passage is M.C. Mehta Vs Union of India.

Answer 2

This question quotes the exact words the Supreme Court used to lay down the rule of absolute liability, and asks which case that rule came from. Since all four options are well known environmental and tort law cases, the fastest way in is to match each name to the specific legal principle it stands for, then see which one matches the quoted passage.

1. Subhash Kumar Vs State of Bihar 1991: This case is remembered for reading the right to a pollution-free environment into Article 21 of the Constitution, allowing a public interest litigation against water pollution from slurry discharged by iron and steel industries. It does not deal with a rule of enterprise liability for hazardous activity, so the compensation-linked-to-enterprise-size language in the question does not belong here.
2. Rural Litigation and Entitlement Kendra Vs State of U.P. 1985: Also called the Doon Valley case, this matter concerned illegal limestone quarrying damaging the ecology of the Mussoorie hills, and it is chiefly remembered as India's first environmental PIL leading to closure of mines. It did not evolve a compensation formula tied to the size of the enterprise.
3. M.C. Mehta Vs Union of India 1986: This is the Oleum Gas Leak case, arising from a leak at Shriram Foods and Fertilisers in Delhi. Chief Justice Bhagwati's bench went further than the English rule in Rylands v. Fletcher and held that an enterprise running a hazardous or inherently dangerous activity owes an absolute, non-delegable duty to the community, with no defence of an Act of God, a third party's act, or the plaintiff's own fault available to it. The court also said the amount of compensation must scale with the size and profitability of the enterprise so that it acts as a real deterrent. This is exactly the principle quoted in the question.
4. Union Carbide v Union of India, 1984: This is the litigation that grew out of the Bhopal gas tragedy, dealing mainly with jurisdiction, the government's right to represent victims under the Bhopal Gas Leak Disaster Act, and the eventual settlement amount. The rule of absolute liability itself was not framed in this litigation; it was borrowed from the M.C. Mehta ruling that came shortly before it.

Only the M.C. Mehta case ties the two ideas the question quotes together: absolute liability with no exceptions, and compensation proportional to the enterprise's capacity. The other three cases each stand for a different, narrower principle in environmental law.

So the correct answer is M.C. Mehta Vs Union of India 1986.