Union of India vs M/s Union Carbide Corporation
Background
On the night of 2-3 December 1984, toxic gas leaked from the Union Carbide India Limited plant in Bhopal, causing what the Court itself called a disaster "unparalleled in its magnitude and devastation." A 1989 settlement, approved by the Supreme Court, required Union Carbide Corporation (UCC) to pay $470 million (about Rs. 750 crore) to compensate victims, and later review petitions challenging that settlement's adequacy were dismissed. Decades later, the Union of India filed curative petitions asking the Court to reopen the settlement and direct a "top-up" payment from UCC, arguing that the actual number of victims, injuries and clean-up costs turned out to be far higher than estimated in 1989.
Decision Breakdown
The Court held that a validly reached settlement can only be reopened on grounds such as fraud, which the Union did not plead here: its grievance was merely that the scale of harm exceeded original estimates, which is not a legally recognised ground to unsettle a compromise, especially one reached deliberately and expediently to ensure victims received urgent relief rather than face decades of uncertain litigation. The Court found that compensation actually disbursed had, in fact, exceeded what claimants would have received under ordinary law (nearly six times comparable motor-accident compensation), and that any shortfall in the corpus was due to the Union of India's own admitted failure to take out an insurance policy as earlier directed by the Court: a lapse for which UCC could not be blamed. Noting that Rs. 50 crore remained available with the RBI to satisfy any outstanding claims under the existing statutory scheme, and emphasizing the importance of finality in litigation, the Court dismissed the curative petitions, leaving the parties to bear their own costs.
Lesson Learnt
A concluded legal settlement, once validly reached and executed, cannot be reopened years later merely because the scale of harm or cost later proves greater than originally estimated. Courts require proof of fraud or similar vitiating grounds, and a party's own subsequent failure to fulfil its side of a court-approved arrangement (here, the government's failure to insure against shortfalls) cannot be used to shift blame onto the other side.