Why SHANTI Act’s nuclear liability limits are under Supreme Court scrutiny

The central issue revolves around the balance between legislative policy and fundamental rights under Article 21 (Protection of Life and Personal Liberty) and Article 14 (Equality before Law). The petitioners argue that the SHANTI Act infringes on Article 21 by effectively limiting compensation for victims of a nuclear disaster, conflicting with the absolute liability doctrine established in the Shriram Oleum Gas Case (M.C. Mehta v. Union of India, 1987). This doctrine dictates that enterprises engaged in inherently dangerous activities are strictly liable for damages, without exemptions. Furthermore, the arbitrary capping of compensation based on reactor size (ranging from Rs. 100 crores to Rs. 3,000 crores) is challenged under Article 14 as lacking a rational nexus to the potential scale of harm. The Court's scrutiny focuses on whether a statutory cap can constitutionally restrict a court's inherent power to award adequate compensation, a crucial aspect of judicial review.

• UPSC Application: Evaluate the extent to which the state can limit fundamental rights in pursuit of economic policy or infrastructure development. How does the SHANTI Act challenge the doctrine of absolute liability?

The SHANTI Act represents a significant shift in India's environmental jurisprudence by potentially undermining the Polluter Pays Principle, a cornerstone of environmental law read into Article 21 via the Indian Council for Enviro-Legal Action case (1996). The Act mandates that once an operator's liability cap is reached, the Central Government (and thus, the taxpayer) absorbs the remaining costs up to a specified ceiling. This effectively shifts the financial burden of a hazardous, commercial activity from the polluter to the public, diluting environmental accountability. The removal of the statutory right of recourse against suppliers (previously under Section 17(b) of the 2010 Act) further weakens the framework, as manufacturers of defective equipment are no longer independently liable unless explicitly stated in a contract. This prioritizes investment over robust environmental safeguards and corporate accountability.

• UPSC Application: Discuss the implications of the SHANTI Act on the Polluter Pays Principle. Analyze the environmental risks associated with limiting supplier and operator liability in the nuclear sector.

The SHANTI Act is driven by the government's ambitious goal of achieving 100 GW of nuclear capacity by 2047, a target deemed unachievable without significant private and foreign participation. Foreign reactor manufacturers (e.g., from the US and France) had long lobbied against the stringent supplier liability clauses of the Civil Liability for Nuclear Damage Act, 2010, arguing it made the Indian market commercially unviable. The SHANTI Act serves as a pragmatic, albeit controversial, economic policy choice to foster a conducive investment climate by capping operator liability and largely shielding suppliers. However, this raises critical questions about socialized risk and privatized profit. By capping total liability (operator + government) at under Rs 4,000 crores, the Act potentially creates an unfunded liability; if damages exceed this cap, there is no mechanism for payment, leaving victims vulnerable. Additionally, Section 39 of the Act, which allows the government to classify nuclear information, restricting transparency under the Right to Information Act, is challenged under Article 19(1)(a) as it impedes victims' ability to make informed claims.

• UPSC Application: Analyze the trade-off between attracting foreign direct investment (FDI) in critical infrastructure and ensuring adequate liability frameworks. How does capping liability impact the economic risk assessment of nuclear energy?