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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Environment

Kaveri Paper Mills Ltd caused a toxic spill that harmed nearby villagers. The Board asks which principle the National Green Tribunal may apply in fixing liability, given that the mill had followed all prescribed norms and argues it was not negligent. Which is correct?

The absolute liability principle, developed by Indian courts, applies. An enterprise carrying on a hazardous activity must compensate for harm caused regardless of negligence or compliance with norms, with no exceptions, so the mill's argument of having followed norms does not excuse it.

  1. AUnder absolute liability, as developed by Indian courts, an enterprise engaged in a hazardous activity is liable to compensate for harm regardless of fault or exceptionsCorrect
  2. BLiability arises only if the mill is proved to have been negligent
  3. CLiability is limited to the penalty stated in the company's articles
  4. DOnly the directors personally, not the company, can be held liable

Explanation

Indian courts developed absolute liability for hazardous industries, which is stricter than strict liability and admits no exceptions. Compliance with norms or lack of negligence is therefore no defence. The NGO Act-based or articles-based limits are irrelevant, and the company itself is liable.

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