Why SHANTI Act’s nuclear liability limits are under Supreme Court scrutiny

The Supreme Court of India is examining a public interest petition challenging the constitutional validity of provisions of the Sustainable Harnessing and Ad...

What Happened

The Supreme Court of India is examining a public interest petition challenging the constitutional validity of provisions of the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025, which came into force in December 2025.
Petitioners have challenged the Act under Article 32 of the Constitution, alleging violations of fundamental rights under Articles 14 (equality), 19 (freedoms), and 21 (right to life and personal liberty).
A central concern is the graded liability cap structure under the SHANTI Act, which sets maximum operator liability at Rs. 3,000 crore for large nuclear plants — petitioners argue this is grossly inadequate to compensate victims in the event of a major nuclear accident.
The Supreme Court described the matter as a "very sensitive legislative policy issue," expressing reluctance to strike down the legislation, while simultaneously voicing concern: "Our concern is that if an unfortunate event or any accident takes place and any person suffers an injury or damage, do we have a robust compensatory mechanism for that purpose."
Petitioners rely on the Supreme Court's own judgment in M.C. Mehta v. Union of India (Oleum Gas Leak Case, 1986), which established the doctrine of absolute liability — holding that enterprises engaged in hazardous activities are absolutely liable for all harm caused, without any exceptions or liability caps.
The SHANTI Act, 2025 repealed two earlier nuclear laws: the Atomic Energy Act, 1962, and the Civil Liability for Nuclear Damage Act, 2010 (CLND Act), consolidating India's nuclear regulatory and liability architecture into a single statute.

Static Topic Bridges

SHANTI Act, 2025 — India's New Nuclear Framework

The Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025 represents a comprehensive overhaul of India's nuclear legal framework, designed to enable private sector participation in nuclear power and align India with international nuclear liability norms.

Repealed: Atomic Energy Act, 1962 (which restricted nuclear energy to public sector); Civil Liability for Nuclear Damage Act, 2010 (CLND Act).
Key reform: Opens India's nuclear energy sector to private domestic companies and foreign entities for the first time.
Liability structure: Replaces the flat Rs. 1,500 crore cap under CLND Act with a graded (tiered) framework:
Small Modular Reactors (SMRs): from Rs. 100 crore
Large-scale nuclear plants: up to Rs. 3,000 crore (maximum)
The Rs. 3,000 crore cap (approximately 300 million Special Drawing Rights) is calibrated to align with the Convention on Supplementary Compensation for Nuclear Damage (CSC).
Insurance requirement: Private operators must maintain mandatory insurance or financial security to cover nuclear liability; central government-owned installations are exempt.
Strategic context: India's nuclear power expansion ambition — targeting 100 GW nuclear capacity by 2047 as part of the 500 GW clean energy goal — requires private capital and foreign partnerships that the Atomic Energy Act, 1962 precluded.

Connection to this news: The constitutional challenge directly targets the graded liability cap — petitioners argue that capping private operator liability at Rs. 3,000 crore insulates private nuclear investors at the cost of potential victims' constitutional right to life and adequate compensation.

Civil Liability for Nuclear Damage Act, 2010 (CLND Act) — Background and Controversies

The CLND Act, 2010, which the SHANTI Act repealed, was itself heavily contested — primarily by the United States and other nuclear supplier nations who objected to the operator's right of recourse against equipment suppliers in the event of an accident.

Section 46 of CLND Act: capped total operator liability at Rs. 1,500 crore (approximately $200 million); additional state liability covered up to SDR 300 million (~Rs. 2,100 crore) under international pooling.
Section 17(b): The most controversial provision — gave the nuclear operator the right to seek recourse (sue) equipment suppliers if defects in their supplies caused or contributed to a nuclear accident. Foreign suppliers, especially US companies, opposed this as inconsistent with the international "channelling" principle (all liability channelled to operator, not suppliers).
Section 17(b) was a key sticking point in operationalising the India-US Civil Nuclear Agreement (2005–2008) and held back US nuclear equipment sales to India for years.
SHANTI Act resolves the supplier liability impasse — a key incentive for private foreign nuclear investment.
India ratified the Convention on Supplementary Compensation for Nuclear Damage (CSC) in 2016, which provides additional international pooling of compensation beyond operator liability.

Connection to this news: The SHANTI Act's revised liability framework — replacing CLND Act's flat cap with a graded structure and removing supplier liability — is exactly what the Supreme Court is being asked to scrutinise for constitutional validity.

Absolute Liability Doctrine — M.C. Mehta v. Union of India (1986)

The petitioners' primary constitutional argument rests on the doctrine of absolute liability articulated by the Supreme Court in the Oleum Gas Leak Case — a doctrine that goes beyond even strict liability (which has exceptions) to impose unconditional liability on hazardous enterprises.

M.C. Mehta v. Union of India (Oleum Gas Leak Case, 1986): A public interest litigation filed after a gas leak from the Shriram Foods and Fertilisers plant in Delhi. The Supreme Court, in a landmark ruling, held that enterprises engaged in inherently dangerous or hazardous activities are absolutely liable for any harm caused — without the exceptions permitted under the Rylands v. Fletcher "strict liability" principle (which allows defences like Act of God, consent, etc.).
The absolute liability doctrine: (1) there are no exceptions; (2) the measure of damages must be correlated to the magnitude and financial capacity of the enterprise; (3) larger enterprises owe larger liability.
Petitioners argue: nuclear power generation is inherently dangerous; the SHANTI Act's statutory cap contradicts the absolute liability doctrine because it limits compensation regardless of the scale of harm.
Counter-argument: Parliament is competent to legislate on nuclear energy (Entry 7, List I — Union List: industries declared by Parliament as necessary for defence or prosecution of war), including setting liability frameworks; courts should defer to legislative policy.

Connection to this news: The constitutional tension is between the M.C. Mehta absolute liability doctrine (no caps, full compensation) and the SHANTI Act's statutory caps (legislatively determined limits). The Supreme Court's reluctance to intervene reflects the doctrine of judicial deference to legislative economic and energy policy.

Convention on Supplementary Compensation (CSC) and International Nuclear Liability Norms

Nuclear liability in international law is governed by a web of conventions that generally adopt the "channelling" principle — concentrating all liability on the operator and limiting it to fixed caps.

Paris Convention on Third Party Liability in the Field of Nuclear Energy (1960): Covers OECD member states; operator liability channelled; limited caps.
Vienna Convention on Civil Liability for Nuclear Damage (1963): Broader international coverage; also channels liability to operator.
Convention on Supplementary Compensation for Nuclear Damage (CSC, 1997): Provides supplementary state funding beyond operator liability through international pooling; India ratified CSC in 2016 — a prerequisite for operationalising civil nuclear partnerships.
Under CSC, the minimum operator liability threshold is SDR 150 million; India's Rs. 3,000 crore cap (~SDR 300 million) exceeds this, aligning India with CSC requirements.
Key principle in all conventions: liability is channelled exclusively to the operator, not to equipment manufacturers or designers — the principle CLND Act Section 17(b) had undermined.

Connection to this news: The SHANTI Act's liability framework was deliberately designed to align India with CSC norms, making the Rs. 3,000 crore cap internationally defensible even if domestically contested. The Supreme Court must weigh international treaty commitments against constitutional rights.

Key Facts & Data

SHANTI Act, 2025: full name — Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025; came into force December 2025
Repealed: Atomic Energy Act, 1962 and Civil Liability for Nuclear Damage Act, 2010 (CLND Act)
Liability caps under SHANTI Act: Rs. 100 crore (SMRs) to Rs. 3,000 crore (large plants); graded by plant size/type
Earlier CLND Act cap: flat Rs. 1,500 crore operator liability; Section 17(b) supplier recourse — major sticking point with US nuclear suppliers
India ratified CSC (Convention on Supplementary Compensation for Nuclear Damage): 2016
CSC minimum operator liability threshold: SDR 150 million (~Rs. 1,050 crore); SHANTI Act exceeds this
Petitioners' constitutional basis: Article 32 petition; Articles 14, 19, 21 violations; M.C. Mehta absolute liability doctrine
M.C. Mehta v. Union of India (Oleum Gas Leak Case): Supreme Court, 1986; absolute liability — no exceptions, no caps for inherently hazardous industries
India nuclear power target: 100 GW nuclear capacity by 2047; current installed capacity: ~7.5 GW (22 reactors as of 2026)
Nuclear energy listed in: Entry 7, List I (Union List) — exclusive Parliamentary domain
SHANTI Act key innovation: private sector and foreign participation in nuclear power — first time since Atomic Energy Act, 1962