WHY ‘NO FAULT’ IS LIABILITY?

Liability, as is generally understood, is created when there is negligence (error or omission) and the person or organisation found responsible is held liable to pay compensation. When proving negligence, it is permissible to represent before the court contributory negligence, if any, on the part of the victim. Courts do penalize victims for contributory negligence and apportion a percentage of the claim amount to be suffered by the victim. At the same time courts are also clear that that in certain types of cases even if virtually there is no negligence the person causing the accident is to take the blame fully. For instance, if a child is hit by a motor vehicle, courts hold the vehicle owner is fully responsible in the belief that a child has no road sense, and it is the duty of the vehicle owner to stop the vehicle if necessary, to avoid the accident. There is also the principle of ‘res ipsa loquitur’, which means the matter speaks for itself when negligence is proved by the circumstances of the accident.

From the ancient concept of “you pay for your own losses”, tort law has evolved to redress a wrong done to a person, usually by awarding him/her monetary damages as compensation. It also sought for areas of strict liability where proving negligence is not a part of the requirement. However, the question as to whether fault was an essential element in tort liability or not, the law moved in cycles across history. Medieval law looked to causation, not fault. Gradually, however, the law in western countries began to pay heed to fault considerations. During the industrial revolution (in the late 18th and 19th centuries), however, there was a move to subordinate the security of individuals and give advantage to industrial units that were rising up and having inevitable accidents owing to the prevailing laissez faire theory. As time passed, however, conviction came in, that technology, however safe, is not infallible, and the fact that victims of mishaps, more often than not, are unable to pin down the accident-producing activity to ascertained the fault.

The theory of strict liability for hazardous activities can be said to have originated in the case Rylands v. Fletcher in 1866. The facts of the case are as follows: Rylands employed contractors to build a reservoir, playing no active role in its construction. When the contractors discovered a series of old coal shafts improperly filled with debris, they chose to continue work rather than properly block them up. The result was that shortly after being filled with water for the first time, Rylands's reservoir burst and flooded a neighboring mine, run by Fletcher, causing ￡937 worth of damage. Fletcher brought a claim under negligence, through which the case eventually went to the Exchequer of Pleas. The majority ruled in favour of Rylands; however, Bramwell B, dissenting, argued that the claimant had the right to enjoy his land free of interference from water, and that as a result the defendant was guilty of trespass and the committing of a nuisance. Bramwell's argument was affirmed, both by the Court of Exchequer Chamber and the House of Lords.

In cases where the principle of strict liability applies, the defendant has to pay damages for injury caused to the plaintiff, even though the defendant may not have been at any fault. The basis of the doctrine of strict liability is twofold (i) People who engage in particularly hazardous activities should bear the burden of the risk of damage that their activities generate and (ii) it operates as a loss distribution mechanism, the person who does such hazardous activity (usually an organisation) being in the best position to spread the loss via insurance and higher prices for its products.

The legal/social innovation created Rylands vs. Fletcher, had setbacks. The rule was progressively emasculated, until subsequently it almost became obsolete in England, because it may have been premature. However, there was a swing once again in favour of the principle of strict liability. The Bhopal Gas Tragedy, the Chernobyl nuclear disaster, the crude oil spill in 1988 on to the Alaska coast line from the oil tanker Exxon Valdez, and other similar incidents shocked the conscience of the whole world and have aroused thinkers to the dangers in industrial and other activities, in modern society. In the case M.C. Mehta And Anr vs Union Of India & Ors decided on 20/12/1986 Supreme Court observed: “The purpose of expansion (of the horizon of Art. 12) has not been to destroy the raison d'etre of creating corporations but to advance the human rights jurisprudence. The apprehension that including within the ambit of Art 12 and thus subjecting to the discipline of Art 21 those private corporations whose activities have the potential of affecting the life and health of the people, would deal a death blow to the policy of encouraging and permitting private entrepreneurial activity is not well founded.”

“An enterprise which is engaged in a hazardous or inherently dangerous industry which poses a potential threat to the health and safety of the persons working in the factory and residing in the surrounding areas owes an absolute non-delegatable duty to the community to ensure that if any harm results to anyone, the enterprise must be held to be under an obligation to provide that the hazardous or inherently dangerous activity must be conducted with the highest standards of safety and if any  harm results on account of such activity the enterprise must be absolutely liable to compensate for such harm irrespective of the fact that the enterprise had taken all reasonable care and that the harm occurred without any negligence on its part… If the enterprise is permitted to carry on an hazardous or inherently dangerous activity for its profit, the law must presume that such permission is conditional on the enterprise absorbing the cost of any accident arising on account of such activity as an appropriate item of its overheads. The enterprise alone has the resource to discover and guard against hazards or dangers and to provide warning against potential hazards. “

The Supreme Court in Union of India v. Prabhakaran (2008) (9) SCC 527, extended the principle to cover public utilities like the railways, electricity distribution companies, public corporations and local bodies which may be social utility undertakings not working for private profit. Rejecting the plea of the Railways in the case, the apex Court held that her "contributory negligence" should not be considered in such untoward incidents - the railways haves "strict liability". The court stated in the judgement that: Many jurists applaud liability without fault as a method for imposing losses on superior risk bearers. Their argument is that one who should know that his activity, even though carefully prosecuted, may harm others, and should treat this harm as a cost of his activity. This cost item will influence pricing, and will be passed on to consumers spread so widely that no one will be seriously affected (quoted from Article by Prof. Clarence Morris entitled 'Hazardous Enterprises and Risk Bearing Capacity' published in Yale Law Journal, 1952 p. 1172)”.

Section 3 of the Employee’s Act 1923 provides for compensation for injuries arising out of and in the course of employment, and this compensation is not for negligence on the part of the employer but is a sort of insurance to workmen against certain risks of accidents. The Employee's Compensation Act is intended for the benefit of an employee, and is quintessentially a no-fault liability. It is one of the oldest liability insurance policies in India which provide for structured compensation. Similarly, Section 124A of the Railways Act 1989, Sections 140 and 163A of the Motor Vehicles Act, 1988, the Public Liability Insurance Act, 1991 etc. incorporate the principle of strict liability.

No-Fault Liability is the bare minimum and is the first step in compensation. Tort law allows anyone who is victim of injury from a negligent act to sue further under the fault liability provisions available. It is possible that no-fault will widen and deepen in future so that society will be further protected against losses sustained by its members.