Saturday, May 30th, 2020

* Diluting Nuclear Supplier’s Liability - By Arun Jaitley

ARUN_JAITLEY_ENG_HQ{ Arun Jaitley  **}A news item appeared in the national newspaper “The Hindu” on September 3, 2013  to the effect that Government of India is planning to permit  the Nuclear Power Corporation of India Limited (NPCIL) to enter into arrangement with American  nuclear vendors wherein the written contract between the NPCL and the American vendors  would contain a clause to the effect that the operator NPCIL has abdicated and waived off the ‘right of recourse’ as provided  under section 17 of the Civil Liability  for Nuclear Damage Act.  The news item stated  that this stand was based on the opinion of the Attorney General for India,  to the effect that section 17 of the Act expressly provided for a contract in writing and it was the operator to choose an incorporation in such a contract which itself may exclude the ‘right to recourse’. 

             The Government of India under pressure from the nuclear vendors wanted to eliminate the ‘right of recourse’.  The original Bill as introduced in the Lok Sabha was referred to the Standing Committee contained a provision inr section 17 which made it mandatory  for the light of recourse to emanate from a willful act of gross negligence.  Section 17(b) as originally drafted made it a pre-requisite  for  the exercise of the right of recourse  that the act of the suppliers must be willful  act which resulted in a tort. This provision was referred to the Standing Committee.   The Government of India entered into negotiations with the Opposition parties and particularly with the principal Opposition party, the BJP.  A series of amendments were suggested by the BJP to the Government.  I was a privy to these discussions.

             Section 17(b) was re-written and a consensus language arrived at which introduced the principle of strict liability.  A willful act or gross negligence of the supplier was not necessary if it could be demonstrated that the equipment supplied by the supplier had a patent or latent defect or that the services rendered were sub-standard.  This altered language which was amongst various alternative suggestions  to the Government was much to the discomfort of the vendors.  Even though clauses 17(a) and 17(b) of the Bill were independent of each other -  one not being dependent on the other – without any discussion on the subject the word ‘and’ was introduced in the report of the Standing Committee.  It was a shabbily done  exercise where the word ‘and’ was not in the original draft of the Standing Committee report which was circulated to the members. It was added as a stapled page as an after-thought replacing the original page of the Standing Committee’s recommendations.  I had strongly objected to this on the ground that section 17(a) and 17(b) of the Bill were distinct from one another.  The exercise  of the operators right of recourse could not be made dependent on an agreement in writing if there was a patent or latent defect  in the equipment.  The efficacy and utility of clause 17(b)  was completely destroyed by the supplier if the right of recourse was dependent on an agreement in writing which could result in abdication of this right.

             The UPA Government’s bluff on this issue was called off.  The pressure of the ‘hidden hand’ of the nuclear vendors continued to remain.  The language  of section 17(b)  was again altered and a word ‘intent’ was smuggled into the provision of section 17(b) thereby eliminating the principle of strict liability and make it conditional on the defect being intentionally created by the supplier.  I again objected to the same and had it deleted.  Section 17(b)  which operates independent of the agreement in writing under section 17(a) was approved by both Houses of Parliament.  This distinction is adequately borne out in my speech in the RajyaSabha and the Minister’s reply.

             But a  leopard never changes its’ spots.  The Government’s intention to dilute the right of recourse  and make it dependent on an agreement  continued.  When the Rules under the Act were notified  such an intention as apparent in the language of Rule 24. Rule 24 deals with section 17(a) of the Act and  permitted  the contract to specify   the duration of initial licence.  The ‘product liability period’ is defined as a period for which the supplier has taken responsibility for a patent or latent defect in the product.  Even though  Rule 24   deals with section 17(a) of the Act,   the language of section 17(b) of the Act was lifted bodily and incorporated in the definition of the product liability period thereby creating an ambiguity  that clauses 17(a) and 17(b) would be read in conjunction with each other and not dis-conjunctively.  The fact that sections 17 (a) (b) and(c) are independent of each other is further apparent from the language of section 17(c) in which a right of recourse is even available for an act of omission or commission of causing nuclear damage.  Obviously, such an individual is a person other than the nuclear supplier.

             Having been associated in negotiations between the Government and the Opposition when the Bill was being drafted and re-drafted and having been a privy to the Parliament debate wherein  this Bill was legislated, I have not the least doubt that  for invoking section 17(b) of the Act the existence of an agreement in writing  under section 17(a)  of the Act is  not a condition precedent.  The  two provisions  operate independent of each other.  The repeated efforts of the Government at the drafting stage to dilute section 17(b) of the Act  had failed.  Contemporaneous media reports would evidence this.  Any attempt now to permit the NPCIL to abdicate the right given to an operator – a Govt. company, would be compromising with State revenue.  It would be a contract contrary to the provisions of section 17(b) of the Act.  If a Public sector company willfully enters into an agreement with a foreign vendor and abdicates its’ right to recourse  which section 17(b) otherwise provides for its’ benefit, it would not only be violating the provisions of the  Civil Liability for Nuclear Damages Act  but also section 13(1)(d) of the Prevention of Corruption Act wherein a wrongful loss would be caused to the revenue of a Public Sector company.


Enclosures 'A'  -     Initial Suggestions to the Draft Bill.

Enclosure 'B'’ -     Objection to the use of the word ‘and’ between clause 17(a) and 17(b)

Enclosure 'C'‘ -     Alternatives for deletion delete the word ‘intent’ in clause 17 (b).

Enclosure 'D' -   Brief talking points of my speech in the RajyaSabha on 30/08/2010.


ARUN_JAITLEY_ENG_HQ**  Arun Jaitley  -  Leader of Opposition  Rajya Sabha


**Disclaimer: The views expressed by the author in this feature are entirely his own and do not necessarily reflect the views of INVC



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