Court case(1989) 1 SCC 674

On the night of 2-3 December 1984 about forty tonnes of methyl isocyanate escaped from the pesticide plant of Union Carbide India Ltd at Bhopal, a subsidiary of the American Union Carbide Corporation. Several thousand people died and lakhs were injured in the world's worst industrial disaster. Parliament passed the Bhopal Gas Leak Disaster (Processing of Claims) Act 1985, giving the Union of India the exclusive right to represent the victims. A suit filed in New York was dismissed on the ground of forum non conveniens; the Union then sued in the District Court at Bhopal for about three billion dollars, and interim compensation orders of that court and of the Madhya Pradesh High Court came before the Supreme Court in appeal.

On 14 and 15 February 1989 a Constitution Bench headed by Pathak CJ recorded a settlement under which Union Carbide paid 470 million US dollars in full settlement of all claims, past, present and future, and all civil and criminal proceedings were to stand quashed. In its reasons of 4 May 1989 the Court explained that the overriding need was immediate relief to the victims, that the figure had been reached after considering the likely number of deaths and injuries, and that the Court's power under Article 142 enabled it to do complete justice. The constitutionality of the 1985 Act was upheld in Charan Lal Sahu v. Union of India (1990). On review, in Union Carbide Corporation v. Union of India (1991), the Court upheld the settlement but set aside the quashing of the criminal prosecutions and directed the Union to make good any shortfall in compensation.