Absolute Liability: The Dynamics of Changing ‘Business-Stakeholder’ Relations

During the period of industrialization, there were many industrial hazards that took place due to the faulty equipment and lack of safety. This costed many lives and there was no law enforced to protect the rights of the people associated with the factories. In a period, such as this, the case of Rylands v. Fletcher in 1868 brought about the rule of strict liability was established, which ensured that those industries which kept hazardous substances owed strict liability to the stakeholders of the factories, if those substances escaped leading to damages. However, this rule came with a lot of defences or exceptions available, and the factory owners exploited these defences to get away with the compensation. From the Indian perspective, the rule of strict liability was valid until the Bhopal gas tragedy in 1984. This disaster took away many lives due to criminal negligence. It was one of the darkest days experienced in the history of India. However, soon after this, the Oleum Gas Leak case occurred. This back-to-back instances of two major industrial hazards pressed the judiciary’s need for a more effective and stringent law in place; the rule of Absolute Liability. This rule came with no exceptions and the factory owners would be held absolutely liable for any negative consequences of the factories. This paper, therefore, tries to analyse the evolution of absolute liability from strict liability and the take of Indian jurists on the same from the judiciary’s perspective. It also aims to analyse the need of absolute liability rule in India and how that has affected the responsibility of businesses towards their stakeholders