Legal Current Affairs

Summary of latest bill and acts passed or pending in 2019 in Parliament of India with their salient features and issues for Current Affairs 2019 preparation for various examinations such as UPSC, SSC, State Civil Services, CLAT, Judicial Services etc.

NGT Order of Vizag Gas Tragedy: What is Strict Liability Vs Absolute Liability?

The National Green Tribunal recently passed an order regarding the Vizag Gas Tragedy. Under the order, the LG Polymers, where the gas leak occurred was held liable according to the Principle of “Strict Liability” of 19th century English law.

Strict Liability Principle

According to Strict Liability Principle, a company or a party is not liable and does not require to pay compensation in case hazardous substance leaks out from its premises. The leakage is considered accident. The strict liability evolved in 1868 and provides exemptions from assuming liability.

What is the issue?

In the Vizag Gas tragedy, the NGT has used the term “strict liability”. Legal experts claim that the term “absolute liability” should have been used. The NGT has ruled to deposit an initial amount of Rs 50 crore. It has also formed a fact-finding committee.

What is Absolute Liability?

In 1986, the Supreme Court while ruling Oluem Gas leak held that strict liability was inadequate to protect the citizens. Hence, it replaced with absolute liability. According to absolute liability principle, the supreme court held that a company operating a hazardous industry cannot claim any exemption. The company has to mandatorily pay compensation. The fact that the tragedy was caused by its negligence or not does not matter.

The principle of “Absolute Liability” is considered as part of Article 21 (Right to Life).

SC places Cooperative banks under SARFAESI Act

The Supreme Court of India recently pronounced its judgement that cooperative banks shall be placed under SARFAESI Act.

Highlights

The Supreme court has upheld the GoI notification dated January 28, 2003 under which the cooperative societies have come under SARFAESI Act. The Apex court has also ruled that the Cooperative Banks have also come under the definition of banks under Banking Regulation Act, 1949.

The Court has also ruled that under Sarfaesi Act, the Parliament has powers to provide procedures for recovery of loans under the act.

Sarfaesi Act

Sarfaesi Act is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. The banks utilize the act as tool to reciver bad loans, especially the non-performing assets.

The act provides procedures to transfer Non-Performing Assets for reconstruction of assets. It also enforces security interests of the banks without intervention of the court. In order to recover a debt, the act empowers the financial institutions in India to take over immovable property.