Are courts precluded from granting fair, just compensation in nuclear accident: SC asks Centre
The SHANTI Act permits private companies to set up civil nuclear power plants but exempts them from liability beyond ₹3,000 crore in the event of any unfortunate incident
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Context
The Supreme Court has asked the Centre to clarify whether the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025, which caps private operator liability at ₹3,000 crore in nuclear accidents, precludes courts from awarding higher compensation. The Court is also examining potential conflicts of interest in the appointment process for the (AERB) under the Act.
UPSC Perspectives
Polity
The central constitutional issue raised by the petitioners is the alleged violation of fundamental rights, specifically (Right to Equality), (Protection of Certain Rights), and (Right to Life and Personal Liberty). The argument hinges on the premise that capping liability for private nuclear operators might compromise safety and unjustly limit the rights of victims in the event of an accident. The 's observation regarding its inherent power to grant 'fair and just compensation' despite a legislative cap touches upon the core doctrine of judicial review and the balance between parliamentary legislation and constitutional rights. UPSC aspirants should analyze this in the context of the Absolute Liability principle established in the M.C. Mehta vs. Union of India case (Oleum Gas Leak), where the Court ruled that an enterprise engaged in a hazardous activity is strictly and absolutely liable to compensate all those affected by an accident, without any exceptions.
Governance
A significant governance challenge highlighted in this case is the potential conflict of interest in regulatory appointments. The petition points out that the (AEC), which oversees the operation of atomic power stations, recommends members to the (AERB), the very entity meant to regulate those operations. The independence of regulatory bodies is a crucial theme in UPSC syllabus. A robust regulatory framework requires a clear separation between the operator/promoter (AEC/NPCIL) and the regulator (AERB) to ensure unbiased safety oversight. This situation provides a practical example of why structural reforms, such as making the AERB a statutory body entirely independent of the Department of Atomic Energy (as was proposed in the lapsed Nuclear Safety Regulatory Authority Bill), are frequently advocated by experts to enhance nuclear safety governance.
Economic
The Chief Justice noted that Parliament enacted the SHANTI Act to 'incentivise the project proponent and bring investment.' This highlights the classic tension between economic policy designed to attract foreign and private investment in capital-intensive sectors and the need for stringent liability frameworks. The SHANTI Act replaces the of 2010 (CLND Act), which had stringent supplier liability clauses that hindered international nuclear commerce with India. By capping liability at ₹3,000 crore for private operators, the government aims to de-risk investments and facilitate India's energy transition goals by expanding civil nuclear capacity. However, the economic rationale must be weighed against the potential externalized costs of a nuclear disaster, raising questions about the adequacy of a ₹3,000 crore cap and the ultimate financial burden on the state and affected citizens.