Question

The Supreme Court observed, Where an enterprise is engaged in a hazardous or inherently dangerous activity and harm results to anyone on account of an accident in the operation of such hazardous or inherently dangerous activity resulting, for example, in escape of toxic gas the enterprise is strictly and absolutely liable to compensate all those who are affected by the accident and such liability is not subject to any of the exceptions which operate vis-a-vis the tortious principle of strict liability. In such a case, the measure of compensation must be correlated to the magnitude and capacity of the enterprise because such compensation must have a deterrent effect. The larger and more prosperous the enterprise, the greater must be the amount of compensation payable by it for the harm caused on account of an accident in the carrying on of the hazardous or inherently dangerous activity by the enterprise. - Name the case.

• A. Subhash Kumar Vs State of Bihar 1991
• B. Rural Litigation and Entitlement. Kendra Vs State of U.P. 1985
• C. M.C. Mehta Vs Union of India 1986
• D. Union Carbide v Union of India, 1984

Hint:

Be able to clearly distinguish between 'Strict Liability' (from the English case \textit{Rylands v. Fletcher}, which has exceptions) and 'Absolute Liability' (from the Indian case \textit{M.C. Mehta}, which has no exceptions). This is a very common and important topic in both Tort and Environmental Law.

Answer 1

The Correct Option is C

The passage in the question is the Supreme Court's own words laying down absolute liability, an even stricter version of strict liability that leaves no room for defences like an Act of God or a stranger's act. The task is to match the quote to its source case.

1. Subhash Kumar Vs State of Bihar 1991: known for holding that the right to a clean environment flows from Article 21, not for a rule about hazardous industry compensation.
2. Rural Litigation and Entitlement Kendra Vs State of U.P. 1985: the Doon Valley mining case, remembered for shutting down limestone quarries harming a hill ecosystem, not for an absolute liability formula.
3. M.C. Mehta Vs Union of India 1986: arose after the oleum gas leak from Shriram Foods and Fertilisers in Delhi. The bench held that an enterprise doing hazardous work owes an absolute duty to prevent harm, has no defence once harm occurs, and must pay compensation scaled to its size and capacity so the penalty actually deters it. That is exactly the wording used in the question.
4. Union Carbide v Union of India, 1984: the Bhopal litigation, which was about jurisdiction and settlement, not about framing the absolute liability test itself.

The quoted rule belongs to the M.C. Mehta case, so the correct answer is M.C. Mehta Vs Union of India 1986.

Answer 2

A useful way to answer this is to line up the four cases on a timeline of Indian environmental litigation and see which one sits at the exact point where the absolute liability rule was born.

1. Rural Litigation and Entitlement Kendra Vs State of U.P. 1985: the earliest of the four, this is where the Supreme Court first used a letter as a writ petition to stop illegal quarrying in the Doon valley. It set the stage for environmental PILs but did not touch enterprise liability for accidents.
2. Union Carbide v Union of India, 1984: although the tragedy happened in December 1984, the important Supreme Court rulings in this matter came later, dealing with whether the government could sue on behalf of victims and what settlement amount was fair. It never itself lays down the absolute liability test in the words used in the question.
3. M.C. Mehta Vs Union of India 1986: the very next year, a gas leak inside Delhi from Shriram Foods and Fertilisers gave the same court a fresh chance to fix a clear rule for hazardous industry. This time the court did not just award compensation, it announced a new standard: absolute liability, no exceptions, and damages tied to how big and profitable the enterprise is. That is the passage quoted in the question.
4. Subhash Kumar Vs State of Bihar 1991: the latest of the four, decided years later on a complaint about slurry pollution, and remembered for linking a clean environment to the right to life rather than for any liability formula.

Placed in sequence, only the 1986 M.C. Mehta ruling is where the exact rule quoted in the question was announced.

Therefore, the correct answer is M.C. Mehta Vs Union of India 1986.