Court case(1996) 3 SCC 212

Five chemical units at Bichhri village in Udaipur district, Rajasthan, among them Hindustan Agro Chemicals Ltd, began in 1987 to manufacture H-acid (an intermediate for dyes) and other chemicals without licences or effluent treatment. Their toxic sludge and untreated effluents, estimated at about 2,400 tonnes, were dumped in and around the village and seeped into the soil and the aquifers, turning the wells red and poisoning the water of sixty wells; crops failed and the land became unfit for cultivation. An environmental organisation filed a public interest petition under Article 32. The units closed down but did nothing to remove the sludge.

Jeevan Reddy J. held the industries "absolutely liable to compensate for the harm caused by them to the villagers in the affected area, to the soil and to the underground water", and hence "bound to take all necessary measures to remove the sludge and other pollutants" and to defray the cost of the remedial measures. The Court applied the absolute liability rule of M.C. Mehta, holding it to be the law of the land and declining to re-examine it, and adopted the "polluter pays" principle, under which "the responsibility for repairing the damage is that of the offending industry". The Central Government was directed to determine the amount under ss. 3 and 5 of the Environment (Protection) Act 1986 and to recover it from the industries, attaching their factories if necessary. Later orders (2011) imposed compound interest for the decades of delay.