The Supreme Court on Monday clarified that statutory provisions governing liability for nuclear accidents do not prevent a constitutional court from determining fair and just compensation, while hearing a challenge to the nuclear liability framework under the SHANTI Act.
A Bench comprising Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana heard the matter. The petition has been filed by E.A.S. Sarma, former bureaucrat and former Secretary to the Government of India. Senior Advocate Prashant Bhushan appeared for the petitioners, who have challenged provisions of the SHANTI Act dealing with the liability of nuclear plant operators and suppliers.
The petitioners contend that the legislation imposes an unreasonably low ceiling on liability and completely excludes suppliers from liability in the event of a nuclear accident.
Bhushan submitted that the liability of even the largest nuclear plant operator is capped at Rs 3,000 crore, while the Central Government’s residual liability is limited to Rs 4,500 crore. He argued that these limits were disproportionate to the potentially catastrophic consequences of a nuclear accident.
Relying on the Supreme Court’s jurisprudence concerning hazardous industries, Bhushan submitted that the statutory framework was inconsistent with the principles of strict and absolute liability.
Arguing that the legislation directly contradicts Supreme Court Constitution Bench rulings, Bhushan contended that hazardous industries must not be allowed to avoid accountability through statutory spending caps. He further highlighted that the law grants full immunity to suppliers.
Bhushan clarified that the petitioners were not opposed to nuclear power or private participation in the nuclear sector. Their challenge, he said, was primarily directed against the statutory capping of liability, the exclusion of supplier liability and the ceiling on total liability. He submitted that the consequences of a nuclear accident could far exceed the statutory limits, referring to disasters such as Chernobyl and Fukushima.
During the hearing, the Supreme Court clarified that the statutory liability framework would not restrict the constitutional jurisdiction of the Court to determine appropriate compensation. The court clarified that, regardless of what the Act states, constitutional courts still retain full authority to decide fair and just compensation.
Bhushan further sought a clarification that liability could, depending on the circumstances of a nuclear accident, be imposed on both the supplier and the operator. The Court, however, observed that the legal position on this aspect was already settled.
The petitioners have also questioned the independence of the nuclear regulatory mechanism. They argued that the existing framework creates a potential conflict of interest because the Atomic Energy Commission, which has a role in the operation of nuclear power plants, is also involved in the appointment of members of the regulatory body.
Bhushan pointed to the statutory mechanism under which the Chairperson and members of the regulatory board are appointed by the Central Government on the recommendation of a search and selection committee constituted by the Atomic Energy Commission.
He argued that a regulator overseeing nuclear power plants must be institutionally independent of the body involved in their operation. He also emphasised the potentially far-reaching consequences of limiting liability in the nuclear sector, stating, the consequence of a nuclear accident is so serious.
The Court, however, was not inclined to issue any further clarification on the issue of the independence of the regulatory mechanism.
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