Govt should refrain from seeking more money from Union Carbide for the 1984 Bhopal gas tragedy
Why is the Government seeking additional compensation from Union Carbide for the 1984 Bhopal gas tragedy? Way back in 1989, there was an agreement which stipulated a payment of $470 million (Rs 715 crore at that time) by the American company. That was supposed to be the final settlement. If over three decades after reaching a settlement, India makes additional demands, what sanctity would be left in the pacts we make with other countries, big companies, or multilateral agencies? What impact would it have on the foreign direct investment that our leaders arduously seek? In fact, there are the questions someone in the Government must have raised when a decision was made to seek an amendment to the mutually agreed 1989 deal with Union Carbide; apparently, no one did. But the apex court asks questions and flags issues (this is the main reason why the Government is at loggerheads with the judiciary, but that’s another story). So, it was left to the five-judge Bench of Justices Sanjay Kishan Kaul, Sanjiv Khanna, Abhay S Oka, Vikram Nath, and JK Maheshwari to remind the Government about the far-reaching ramifications of the proposed move, one of which would be the impact on prospective investments by multinational corporations. The Bench is hearing a curative petition filed by the Centre. Saying that populism cannot be the basis of judicial review and the “sanctity of the settlement” would go away if the case is reopened, it also said that a Rs 50-crore sum of the compensation which remains unutilised even after so many years.
The Government’s move brings to mind the unedifying episode of retrospective taxation which brought a lot of embarrassment to the nation. The sordid saga of retrospective taxation began with the famous Vodafone case. Vodafone bought Hutchison’s mobile telephony business and other assets in India in 2007, on which the Indian tax officials demanded Rs 7,990 crore in capital gains and withholding tax from Vodafone. Vodafone legally challenged the demand notice, and won the case in the Supreme Court in 2012. The matter should have ended there, but taxmen managed to convince the then finance minister, Pranab Mukherjee, to disregard the highest court of the land and undo its ruling by bringing in an ordinance — which he did. Retrospective taxation was widely opposed, including by those within the ruling dispensation. Prime minister Manmohan Singh was convinced that the proposed amendment in the IT Act would impact FDI inflows into the country, Mukherjee wrote in his memoir, adding that Sonia Gandhi, Kapil Sibal, and P Chidambaram also expressed the apprehension that the retrospective amendments would create a negative sentiment for FDI. When the Bharatiya Janata Party came to power, it also continued with retrospective taxation; the Government did a somersault only when its position became absolutely untenable in the international arena. It should not do anything that brings more embarrassment to India.
