SHANTI Act’s Liability Absurdly Low: Plea in SC

Why in News?

The Supreme Court recently heard a Public Interest Litigation (PIL) challenging provisions of the SHANTI Act, 2025. The petition argues that the law caps liability for nuclear accidents at an absurdly low level of around ₹3,000 crore. This potentially undermines the citizens’ right to life and adequate compensation in case of a nuclear disaster. 

What is the SHANTI Act, 2025?

• The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025, is a landmark legislation that replaced the Civil Liability for Nuclear Damage (CLND) Act, 2010. 
• It marks a significant policy shift by allowing private-sector and foreign corporations to set up and operate civil nuclear power plants in India, a sector that was dominated exclusively by NPCIL (public sector entity) earlier.

The Act is part of India’s broader energy transition strategy, aiming to scale up nuclear power capacity to achieve 500 GW of non-fossil fuel capacity by 2030.

The Legal Challenge: 

A Public Interest Litigation (PIL) was filed in the Supreme Court, which challenges several provisions of the SHANTI Act as unconstitutional, with the primary grievance being the allegedly inadequate capping of nuclear liability.

Key Provisions of the SHANTI Act under challenge: 

• Liability Cap: The SHANTI Act caps the liability of the largest plant operator in India at ₹3,000 crore (less than ₹4,000 crore as referenced in some provisions). The petitioner contends this is “absurdly low” compared to actual damages witnessed in global nuclear disasters. The Act also caps the residual liability of the government, limiting even sovereign accountability.

• Supplier Exemption: Unlike the repealed CLND Act, 2010, which expressly provided for the operator’s right of recourse against the supplier, the SHANTI Act allegedly dilutes or removes this provision. This, the petitioner argues, incentivises foreign suppliers to cut corners on safety, knowing they face no financial consequences for defects in equipment or technology.
• Private Sector Entry: For the first time, private and foreign corporations are permitted to own and operate nuclear plants in India. The petitioner argues that extending such rights while simultaneously capping liability creates an asymmetric and dangerous risk environment for Indian citizens.

Arguments Before the Supreme Court: 

• Inadequacy of cap: Nuclear accident damages run into hundreds of times ₹3,000 crore, as seen in Chornobyl (1986) and Fukushima (2011), both of which caused damages exceeding ₹10 lakh crore.
• Article 21 violation: The right to life cannot be sacrificed on the altar of economic policy.
• Absolute liability doctrine. The Supreme Court’s own judgment in the Shriram Oleum Gas Leakage case (1986) held that enterprises engaged in hazardous activities are strictly and absolutely liable for damages, regardless of fault.

Key Constitutional and Legal Dimensions: 

1. Absolute Liability Doctrine (M.C. Mehta v. Union of India, 1987: Oleum Gas Leak Case)

• The Supreme Court, in this landmark judgment, evolved the doctrine of absolute liability (as distinct from strict liability under Rylands v. Fletcher).
• It held that enterprises engaged in inherently dangerous or hazardous activities are absolutely liable for any harm caused, with no exceptions such as act of God or third-party fault.
• Crucially, the court held that the larger and more prosperous an enterprise, the greater must be the compensation.
• The petitioner argues that capping liability under the SHANTI Act directly contradicts this settled constitutional principle.

2. Article 21: Right to Life

• Article 21 has been interpreted by the Supreme Court to include the right to a clean environment, the right to livelihood, and the right to live with dignity.
• The petitioner contends that allowing hazardous nuclear installations to operate with a low liability ceiling effectively subordinates the right to life to investor interests.

3. Article 12: Definition of State

• The 1986 Oleum gas case extended Article 12 to include private corporations engaged in hazardous activity, bringing them within the purview of fundamental rights enforcement under Article 21.
• This becomes relevant since private entities operating nuclear plants could now be held accountable under constitutional provisions.

4. Separation of Powers and Judicial Review: 

• The bench raised the classic tension between judicial review of legislative policy and the constitutional principle of separation of powers.
• Courts are generally reluctant to strike down economic legislation unless it is manifestly arbitrary or violates fundamental rights.
• The Supreme Court’s framing of the issue as one requiring a “robust compensatory mechanism” rather than a challenge to the cap per se suggests it may be exploring a middle path.

5. Comparative International Framework: 

• The liability cap in the United States is approximately ₹1.54 lakh crore, more than 100 times India’s cap. 
• Countries like Japan and Germany have moved away from nuclear energy and impose no cap on liability. 
• The international benchmark, especially the Vienna Convention on Civil Liability for Nuclear Damage (1997) and the Paris Convention, generally require higher minimum liability thresholds and channel liability primarily to operators, but also preserve state backstop responsibilities.

Supreme Court’s Observations:

• The bench described the matter as a “very sensitive legislative policy issue” touching upon economic policy, in which courts should be cautious about second-guessing Parliament.
• The court acknowledged that higher caps may discourage foreign investors, and questioned who would bring nuclear technology to India if liability were uncapped.
• The bench emphasised that the State retains residual compensatory responsibility. The courts and tribunals still retain the power to award compensation to victims beyond the capped liability.

Significance for India’s Nuclear and Energy Policy:

• India currently has 22 operational nuclear reactors with an installed capacity of approximately 7,480 MW (as of 2024), contributing around 3% of total electricity generation.
• The government has announced plans to expand nuclear capacity to 100 GW by 2047 under its Viksit Bharat vision.
• The SHANTI Act is seen as a critical enabler of this vision by attracting foreign technology partners such as Westinghouse (USA), EDF (France), and Rosatom (Russia).

Also Read: https://anantamias.com/current-affairs/transforming-indias-nuclear-energy-landscape/ 

India’s civilian nuclear programme operates under the framework of the India-US Civil Nuclear Agreement (2008) and the India-specific safeguards agreement with the IAEA.

Capping liability was long seen by foreign suppliers as a precondition for participation, as the CLND Act’s right-of-recourse provision had deterred Western companies from entering the Indian market.