A company, XYZ Corp., operates a large dam to generate electricity. Due to an unforeseen design flaw the dam suddenly bursts, causing massive flooding in a nearby town. The company had taken all standard safety measures and had no knowledge of the design flaw. The affected residents sue the company for damages.
Which of the following is applicable in this instance?

Question

“In India, the government can be held liable for tortious acts of its servants and can be ordered to be paid compensation to the persons suffering as a result of the legal wrong. Article 294(b) of the Constitution declares that the liability of the Union Government or the State Government may arise “out of any contract or otherwise”. The word otherwise implies that the said liability may arise for tortious acts as well. Article 300 enables the institution of appropriate proceedings against the government for enforcing such liability. … Even prior to the commencement of the Constitution, the liability of the Government for tortious acts of its servants or agents were recognised vide Peninsular & Oriental Steam Navigation Co. v. Secy. of State, (1868-69) 5 Bom HCR APP 1. After the commencement of the Constitution, there have been several cases in which the Union of India and State Governments were held liable for tortious acts of their employees, servants and agents. All those cases were not necessarily by invoking the writ jurisdiction of the Supreme Court and the High Courts. Though, the Government is liable for tortious acts of its officers, servants or employees, normally, such liability cannot be enforced by a Writ Court. An aggrieved party has the right to approach the competent court or authority to seek damages or compensation in accordance with the law of the land.
... But if fundamental rights have been violated, and if the court is satisfied that the grievance of the petitioner is well founded, it may grant the relief by enforcing a person’s fundamental right. Such relief may be in the form of monetary compensation/damages”.
[Extracted from: Kaushal Kishore v. State of Uttar Pradesh, Writ Petition (Criminal) No. 113 of 2016, decided on January 3, 2023.]

Answer 1

This situation is governed by the principle of Absolute Liability, as established in India by the Supreme Court in the Oleum Gas Leak case (MC Mehta v. Union of India, 1987). This principle dictates that an enterprise undertaking hazardous or inherently dangerous activities is strictly liable for any resulting harm, irrespective of fault, predictability, or preventative measures. Option (A) is incorrect as absolute liability applies even if the defect was not foreseeable. Option (B) is correct because the inherently dangerous nature of operating a dam establishes absolute liability. Option (C) is incorrect; under absolute liability, fault or warning signs are irrelevant. Option (D) is incorrect; adhering to safety standards does not exempt an entity from liability under this doctrine.

Show Hint

The Correct Option is B

Solution and Explanation

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