The concept of absolute liability has to be analyzed. When we say in simple terms, absolute liability means rule of strict liability minus its exceptions. The Supreme Court took a bold decision holding that it was not bound to follow the nineteenth century rule of English law, and could evolve a rule which is more suitable to the socio economic conditions of the present Indian. It evolved the rule of absolute liability as a part of Indian law by giving preference to the rule of strict liability which was laid down in Rylands v Fletcher case. It is also held that the new rule is not subjected to any exceptions as mentioned under the case law, Rylands v Fletcher.
One of the important case law that has to be looked into here is, Union Carbide Corp v Union of India (1984) which is commonly known as Bhopal Gas leak disaster case. Here in Union Carbide Corp v Union of India, a mass disaster was caused by the leakage of methyl iso cynide and other toxic acid from the plant set up by UCIL for the manufacture of the pesticides in Bhopal. It was a subsidiary of UCC an MNC registered in USA. The disaster resulted in the death of at least three thousand people and around six lack people were seriously injured as result of this disaster. The peculiar problem regarding the claim for compensation was involved because of such large numbers of people were affected and most of them belonged to the lower economic strata of the society. Large number of cases was registered in Bhopal and in USA on behalf of the victims. The government of Indian then proclaims an ordinance thereby conferring an exclusive right on the central government to represent and act in place of every person who has made a claim. The Union of Indian filed a case on behalf of all claimants against the UCC in the district court of New York. The case was dismissed and they filed a case on the district court of Bhopal. The court ordered UCC to pay an interim compensation of rupees three fifty crore. Then the Madhya Pradesh High Court reduced the amount to two hundred crores. They devised a new strategy by UCC for direct settlement to the victim. After 4 years also there were settlements between the Union of India and UCC. Then the Supreme Court ordered in 1989 to pay an amount of rupees seven fifty crores.
M C Mehta v Union of India is an important case that has to be analyzed. In M C Mehta v Union of India, in 1985 a leakage of oleum gas arises from one of the units of Shree ram food and fertilizers industry Delhi. As a consequence an advocate died and several others were affected. The action was brought as a PIL; under Article 32 of the Indian constitution. This was the second case regarding large scale leakage of deadly gas. If the rule of strict liability is applied then those who establish hazardous and inherently dangerous industries in and around thickly populated areas could escape the liability by pleading the exceptions. The Supreme Court evolved a new rule of absolute liability for the harm caused by the dangerous substances. Therefore the enterprise completely vests with an obligation to provide that the hazardous and inherently dangerous activities are conducted with highest standards of safety and if any harmful result occurs, then the enterprise must be absolutely liable to compensate for such harm and the enterprise cannot escape from the liability by pleading that they have taken reasonable care or the harm caused without any negligence on their part. Here the court gave two reasons justifying this new rule. They were, the enterprise carrying on such hazardous and inherently dangerous activity for private profit has a social obligation to compensate those sufferings caused thereby and the enterprise alone has the resource to protect against such hazards and danger.
Therefore we have analyzed the concept of absolute liability and two related and important case laws.
