Supreme Court Scrutinizes SHANTI Act's Nuclear Liability Caps: Constitutional and Environmental Rights at Stake

Indian Express - Explained · 24 May 2026 · 2 min read
Prelims · Polity Mains · GS2 Polity and constitution High relevance

The Supreme Court is examining constitutional challenges to the SHANTI Act's nuclear liability provisions, which cap operator liability and exempt suppliers, potentially violating Article 21 rights and environmental principles like Polluter Pays.

Key points

SHANTI Act replaces the 2010 Civil Liability for Nuclear Damage Act, introducing lower liability caps for operators (Rs. 100-3,000 crores based on reactor size) and removing mandatory supplier liability under Section 17(b).

Constitutional Challenge argues SHANTI violates Articles 14, 19, and 21 by capping liability arbitrarily and shifting financial burden to taxpayers when operator limits are exhausted.

Absolute Liability Doctrine from the 1987 Shriram Oleum Gas case is invoked, which holds hazardous enterprises fully liable for damages regardless of fault - a principle SHANTI allegedly undermines.

Polluter Pays Principle under Article 21 (established in Indian Council for Enviro-Legal Action, 1996) is violated as SHANTI transfers accident costs from private operators to public funds.

[GS3-Environment] The case tests judicial enforcement of environmental constitutionalism against legislative attempts to dilute liability frameworks for industrial hazards.

Strategic Context: SHANTI's liability structure resulted from foreign supplier pressure during India's 100 GW nuclear capacity push, prioritizing private investment over risk accountability.

Comparative Framework: The 2010 Act's no-fault regime and supplier recourse (Section 17(b)) aligned with international norms like the Convention on Supplementary Compensation, which SHANTI departs from.

Way Forward: India should establish independent nuclear safety regulators, mandate insurance pools for operators, reintroduce supplier liability for defects, and align liability caps with actual risk assessments rather than reactor size.

Key terms

Right of Recourse

Legal mechanism allowing nuclear plant operators to recover compensation payments from equipment suppliers if defects caused accidents. SHANTI narrows this to contractual terms or intentional damage, unlike the 2010 Act's Section 17(b) which covered latent defects - a key industry friction point.

Absolute Liability Doctrine

Established in M.C. Mehta v. Union of India (1987), this judicial principle holds enterprises engaged in inherently hazardous activities fully liable for any harm caused, irrespective of negligence. It expands Article 21's right to life to include protection against industrial hazards, forming the basis for environmental jurisprudence in India.

Polluter Pays Principle

A environmental law principle read into Article 21 by the Supreme Court in Indian Council for Enviro-Legal Action v. Union of India (1996), requiring that entities causing pollution bear the costs of remediation. It underpins India's environmental compensation regimes and is constitutionally non-derogable by legislation like SHANTI.

Special Drawing Rights (SDRs)

IMF-created international reserve assets used in nuclear liability treaties to standardize compensation ceilings across currencies. India's 2010 Act pegged liability to 300 million SDRs (≈₹2,100 crore), but SHANTI replaces this with fixed rupee amounts, reducing real value over time due to inflation.