Supreme Court: Courts not bound by govt’s N-liability cap

The Supreme Court ruled that courts are not bound by the liability cap set by the government under the nuclear liability framework, asserting judicial author...

What Happened

The Supreme Court ruled that courts are not bound by the liability cap set by the government under the nuclear liability framework, asserting judicial authority to award compensation beyond the legislatively prescribed ceiling in the event of nuclear accidents.
The ruling arose in the context of a constitutional challenge to the SHANTI Act, 2025 (Sustainable Harnessing and Advancement of Nuclear Energy Act), which replaced the earlier Civil Liability for Nuclear Damage (CLND) Act, 2010.
Under the SHANTI Act, operator liability for nuclear incidents is capped and graded according to the installed capacity of nuclear plants — with the central government liable for compensation beyond those caps.
Petitioners, including public interest litigants, had challenged the liability cap as violative of Article 21 (right to life), arguing that a fixed ceiling on compensation could not adequately address the catastrophic scale of nuclear accidents.
The Supreme Court bench characterised the issue as "very sensitive legislative policy" while simultaneously affirming that courts retain independent power to determine adequate compensation for victims.

Static Topic Bridges

SHANTI Act, 2025 — India's New Nuclear Liability Regime

The Sustainable Harnessing and Advancement of Nuclear Energy Act, 2025, enacted on 21 December 2025, is the most sweeping reform of India's nuclear energy regime. It repealed both the Atomic Energy Act, 1962 and the Civil Liability for Nuclear Damage Act, 2010 (CLND Act).

The SHANTI Act opened the nuclear sector to private players for the first time, enabling private ownership of nuclear power plants alongside government entities.
Operator liability is capped and graded (detailed in the Second Schedule), linked to the installed capacity of a nuclear installation rather than the extent of damage caused.
The central government remains the residual insurer — liable for compensation exceeding the operator's cap.
Supplier liability under the SHANTI Act is limited to contractual recourse only (no statutory right of recourse), removing a key barrier to foreign reactor companies entering India.
Nuclear installations owned by the central government are exempted from the mandatory insurance obligation.

Connection to this news: The Supreme Court's ruling challenges a core design feature of the SHANTI Act — the liability cap — by asserting that courts may award compensation beyond the statutory ceiling, creating potential tension between legislative policy and judicial power in nuclear accident scenarios.

Civil Liability for Nuclear Damage Act, 2010 (CLND Act) — The Predecessor Regime

The CLND Act prescribed a maximum operator liability of ₹1,500 crore per incident, with the government covering amounts beyond that limit up to 300 million Special Drawing Rights (SDRs, approximately ₹4,100 crore at the time). It imposed strict and no-fault liability on operators.

Under the CLND Act, operators had a right of recourse against nuclear suppliers — a provision that made foreign reactor vendors reluctant to invest in India due to open-ended liability exposure.
The SHANTI Act removed this statutory supplier recourse right, addressing a long-standing barrier to the India-US nuclear deal's commercial implementation.
India signed the Convention on Supplementary Compensation for Nuclear Damage (CSC) in 2010.

Connection to this news: The CLND Act's cap structure is the conceptual precursor to the SHANTI Act's graded caps — the Supreme Court's ruling that courts can override such caps has implications for both regimes and for future nuclear accident litigation.

Article 21 and Compensation Jurisprudence

Article 21 of the Constitution guarantees the right to life and personal liberty. The Supreme Court has consistently expanded its scope to include the right to a clean environment, the right to livelihood, and the right to adequate compensation for state-caused harm.

In Oleum Gas Leak Case (M.C. Mehta v. Union of India, 1986), the Supreme Court enunciated the "absolute liability" doctrine — enterprises engaged in hazardous activities owe absolute (not merely strict) liability and cannot rely on statutory caps to limit compensation.
The Bhopal Gas Tragedy (1984) exposed the inadequacy of liability caps and led to prolonged litigation over the ₹3,786 crore settlement.
The "polluter pays" principle underpins environmental compensation jurisprudence in India.

Connection to this news: The Supreme Court's position that courts are not bound by the government's nuclear liability cap aligns with the absolute liability doctrine established in the Oleum Gas Leak case — reinforcing that no statutory ceiling can insulate hazardous enterprises from full judicial compensation.

India's Nuclear Energy Programme

India's civil nuclear programme is managed by the Nuclear Power Corporation of India Limited (NPCIL) under the Department of Atomic Energy. India has 22 operational nuclear reactors with an installed capacity of approximately 7,480 MWe (as of 2025).

India's nuclear doctrine includes a "No First Use" (NFU) policy and a credible minimum deterrence posture.
India is not a signatory to the Nuclear Non-Proliferation Treaty (NPT) but has a clean safeguards record with the IAEA.
The India-US Civil Nuclear Agreement (123 Agreement, 2008) and the Nuclear Suppliers Group waiver (2008) opened international nuclear commerce for India.
India aims to expand nuclear capacity to 22,480 MWe by 2031.

Connection to this news: The SHANTI Act and the ongoing Supreme Court litigation directly affect the viability of India's nuclear energy expansion plans, particularly the participation of private players and foreign vendors.

Key Facts & Data

The SHANTI Act, 2025 came into force on 21 December 2025.
The previous CLND Act, 2010 capped operator liability at ₹1,500 crore per nuclear incident.
The SHANTI Act's new graded liability caps are specified in its Second Schedule, linked to installed plant capacity.
The central government acts as the residual insurer for damages exceeding the operator's cap.
India has 22 operational nuclear reactors; target is 22,480 MWe nuclear capacity by 2031.
The Absolute Liability doctrine (M.C. Mehta v. Union of India, 1986) holds that no statutory cap can limit compensation for victims of hazardous enterprise accidents.
India signed the Convention on Supplementary Compensation for Nuclear Damage (CSC) in 2010.
India's nuclear programme falls under the Department of Atomic Energy, established under Article 53 of the Constitution read with the Atomic Energy Act.