Are courts precluded from granting fair, just compensation in nuclear accident: SC asks Centre
The Supreme Court is hearing a challenge to provisions of the SHANTI Act that cap compensation payable in the event of a nuclear accident, and has asked the Centre to clarify whether courts are precluded from awarding fair and just compensation beyond the statutory cap
The Act permits private companies to set up and operate civil nuclear power plants, but caps operator liability at a maximum of ₹3,000 crore for the largest category of reactors, with lower tiers of ₹100 crore and ₹300 crore for smaller facilities
The Centre has argued before the Court that the liability structure is a matter of legislative and economic policy, while the Court has described the liability cap as a "sensitive" policy question that touches upon the country's approach to energy security and industrial investment
The case raises the question of whether a statutory compensation ceiling can override the constitutional guarantee of adequate remedy for violation of the right to life under Article 21, an issue with precedent in earlier liability-cap litigation
From CLNDA 2010 to the SHANTI Act, 2025 — Evolution of India's Nuclear Liability Regime
India's Civil Liability for Nuclear Damage Act (CLNDA), 2010 was the original statute governing compensation for nuclear accidents, capping operator liability at ₹1,500 crore under Section 6(2), with the Central Government covering additional liability up to Special Drawing Rights (SDR) 300 million under Section 7. The SHANTI Act, 2025 (Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India), enacted with Presidential assent in December 2025, replaces both the Atomic Energy Act, 1962 and the CLNDA, 2010 with a unified framework that, for the first time, opens nuclear power generation to private-sector participation under license from the Central Government and safety authorisation from the nuclear regulatory board.
Key Details
- CLNDA 2010, Section 6(2): operator liability capped at ₹1,500 crore for reactors of 10 MW or more; Section 7: Central Government liable for the gap up to the Convention on Supplementary Compensation (CSC) ceiling
- SHANTI Act, 2025: graded liability structure — ₹100 crore (reactors ≤150 MW), ₹300 crore (150-750 MW), up to ₹3,000 crore (largest reactors, above 3,600 MW), with the Centre covering amounts beyond the operator's share up to the SDR ceiling
- The SHANTI Act changes the supplier-liability regime: recourse against equipment suppliers is now governed by contract terms under the Act rather than by the automatic statutory right of recourse that existed under CLNDA Section 17(b)
- The comparable US framework, the Price-Anderson Act, sets a liability pool of over ₹1.5 lakh crore equivalent — more than 50 times India's SHANTI Act cap — a comparison raised in the litigation
The Supreme Court's questions go to the constitutionality of the graded ₹100 crore-₹3,000 crore cap structure carried over and expanded in the SHANTI Act, and whether it can validly limit compensation available to accident victims regardless of the actual scale of harm suffered.
Absolute Liability Doctrine and Statutory Liability Caps — Constitutional Tension
The Supreme Court's own jurisprudence on hazardous industries has historically favoured uncapped, no-fault liability for the enterprise causing harm. This creates a doctrinal tension with statutory caps like those in CLNDA/SHANTI, which the Court is now being asked to reconcile with Article 21's guarantee of the right to life, which the Court has held includes a right to a remedy commensurate with the harm suffered.
Key Details
- M.C. Mehta v. Union of India (1987) — arising from the Shriram Foods oleum gas leak in Delhi, the Supreme Court evolved the doctrine of "absolute liability," holding that an enterprise engaged in an inherently hazardous activity owes an absolute, non-delegable duty to the community and cannot claim any exception (going beyond the English rule in Rylands v. Fletcher)
- Charan Lal Sahu v. Union of India (1989) — the Supreme Court upheld the constitutional validity of the Bhopal Gas Leak Disaster (Processing of Claims) Act, 1985, which allowed the Union Government to act as sole representative (parens patriae) for victims and to settle claims, including a capped settlement, against Union Carbide
- The Public Liability Insurance Act, 1991 introduced a no-fault, capped-but-supplementary compensation scheme for victims of accidents involving hazardous substances, running alongside (not replacing) the right to seek fuller compensation through civil suits
- Article 21 jurisprudence (from Maneka Gandhi v. Union of India, 1978 onwards) has read "life" expansively to include the right to a clean environment and, in later cases, a right to adequate compensation for its violation
The Court's question — whether courts are "precluded" from awarding fair and just compensation beyond the SHANTI Act cap — directly tests whether a statutory ceiling, similar in structure to the one narrowly upheld for Bhopal victims in Charan Lal Sahu, can constitutionally limit awards where the absolute-liability doctrine from M.C. Mehta would otherwise apply.
- SHANTI Act, 2025 liability tiers: ₹100 crore (≤150 MW), ₹300 crore (150-750 MW), up to ₹3,000 crore (largest reactors, above 3,600 MW)
- CLNDA 2010 operator liability cap (superseded): ₹1,500 crore under Section 6(2)
- SHANTI Act received Presidential assent: 21 December 2025
- Comparable US Price-Anderson Act liability pool: over ₹1.5 lakh crore (over 50 times India's cap, as cited in arguments before the Court)
- M.C. Mehta v. Union of India (absolute liability doctrine): 1987
- Charan Lal Sahu v. Union of India (Bhopal Act upheld): 1989