Shriram Foods and Fertiliser Plant was situated in Delhi among the population of about 200,000 people. It manufactured products such as technical hard oil and glycerin soap. M.C. Mehta (petitioner) files a writ petition in the Supreme Court seeking for a direction for closure of the plant and relocation of the plant to an area where it does not harm the safety and health on the people. 

However during the pendency of the petition, there was a leakage of oleum gas at one of its units, which caused severe damage and affected the health of many people. All the workers and public were severely affected. It took lives of many people.

After this incident, M.C Mehta filed a Public Interest Litigation (PIL) under Article 21 and 32 and sought closure or relocation of the Shriram Plant situated in a densely populated area of Delhi.

• Whether such hazardous plants and industries be allowed to operate in such densely populated area.
• If they are allowed, then any regulating mechanism should be involved or not.
• How should the liability and compensation be determined

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CJ Bhagwati was deeply concerned about the safety of the people of Delhi after this incident. He clearly stated that the closure of such industries was not an option because such plants provide chemicals which are required to improve the quality of life. For instance, chlorine manufactured here is used to maintain the quality of drinking water in Delhi. 

He stated that the risk or hazard to the community could be reduced by taking necessary steps such as relocating the industries, which would cause less risk to the health of the public. Hence clearly the Bench was of the opinion that total ban on the industries would affect the developmental activities of the country. It was also observed that closure of such industries would therefore result in the unemployment of the workers. The court also suggested that a national policy will have to be evolved by the Government for relocation of such industries.

The bench held that any industry, which is engaged in any kind of dangerous activity, is ‘absolutely’ liable to compensate all the people who are affected by the incident. The court directed the Shriram Industry to deposit Rs.20 Lakhs and to furnish a bank guarantee for Rs. 15 Lakhs for the compensation claims of the victims of oleum gas leak. Further, the industries can not save themselves from the responsibility by showing that they were not negligent with the hazardous substance or took proper measures and safety.