Bhopal Tragedy a Huge Learning For Indian Industry: CII, Bhopal Gas Tragedy Lesson For Indian Industry, Bhopal Gas Tragedy

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SME Times News Bureau | 24 Jun, 2010
There are huge lessons for India and Indian Industry in the Bhopal Gas Tragedy, said CII President, Hari Bhartia in a press release issued in New Delhi on Wednesday.

An industrial accident, which turns into a human tragedy, and involves compensation for the affected, clearing of the site, addressing environment issues, etc, of the scale that Bhopal represents is a call to action for everybody, said the CII President.

CII has said that in such cases it is imperative to ensure that there is action on all fronts – reaching adequate compensation to the affected, addressing issues of clearing up the site and effectively dealing with the environmental impact. Our systems need to learn to react swiftly in such cases, and it is important that compensation is commensurate with the scale of the tragedy.

At the same time it is important to ensure that there is accurate accountability and responsibility determined and the guilty are punished. The law of the land has to be conducive to facilitate this, CII said.

CII would be setting up a special Task Force which would look at the prevalent laws, regulations and compliance issues pertaining to Safety, Health and Environment in a comprehensive manner in the light of developments that led to the Bhopal tragedy and its outcome, Bhartia said.

Risk assessment and mitigation is one of the key responsibilities of the management of the company. Hopefully, the report of the Task Force would provide additional levers to ensure that the Boards of companies are better equipped to deal with this aspect effectively. This is the need of the hour in order to ensure that Industrial accidents are avoided in the country and the Indian Industry are better prepared to deal with accidents, should they occur in the future, the CII President said.

Reacting to the sentencing of Keshub Mahindra in the Bhopal Gas tragedy case, Bhartia has yet again requested the Government to treat non executive members of the Board including Non Executive Chairmen, differently when it comes to Directors’ liabilities. CII has said that it has taken note that Mr Mahindra, a former non-executive director of Union Carbide, was charged under the same sections as the officers-in-default namely the Managing Director, Executive Director, Works Manager and others directly involved in the day-to-day running of the company.

While as board members, independent and non-executive directors have the same legal duties and obligations as executive directors, however, because of their limited involvement in the day-to-day running of the company, it is undesirable for the law to expose them to personal liability, feels CII. Unfortunately, the Companies Act 1956 does not differentiate between different categories of directors in terms of liabilities - there is no distinction made within the liability of the director, whether he or she is independent, non-executive or executive —they are all commonly liable.

CII has strongly recommended that the law regarding the potential liability of non-executive and independent directors needs to undergo a change. Non-executive directors cannot be made to undergo the ordeal of a trial for offence of non-compliance with a statutory provision unless it can be established prima facie that they were liable for the failure on part of the company.

Bhartia went on to say that today, large companies operate in several jurisdictions and are required to comply with various legal and regulatory requirements. It is therefore necessary to expressly exempt non-executive directors from vicarious criminal liability under the applicable statutes. Otherwise, the industry would witness a scenario, where good Independent Directors would be reluctant to join the board of companies, owing to disproportionately high liabilities.

CII strongly recommends that a non-obstante clause be incorporated in the Companies Bill 2009 to exclude non-executive directors from any vicarious criminal liability for offences committed by the company. This provision should have overriding effect on all other laws, the CII release said.