The Supreme Court on Tuesday said the decision to cap the liability of private players in the event of a nuclear tragedy is a matter of “fiscal policy” that courts cannot second-guess, even as it agreed to examine in July a challenge to the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act, 2025.
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A bench headed by Chief Justice of India (CJI) Surya Kant said, “When the state, based on its own policy, decides to cap the liability of private entities under the Act, we are not here to second-guess it.”
The court was hearing a public interest litigation (PIL) filed by a group led by former bureaucrat EAS Sarma, which raised concerns over public safety due to provisions in the SHANTI Act capping the liability of private operators at as low as ₹100 crore and limiting the government’s residual liability to USD 300 million (around ₹3,000 crore).
Appearing for the petitioners, advocate Prashant Bhushan argued that such provisions could encourage private suppliers to compromise on safety standards. He referred to laws in foreign jurisdictions where the liability of private entities is unlimited.
The bench, also comprising justices Joymalya Bagchi and Vipul M Pancholi, said, “This Act is limiting the liability of persons who are coming to invest. That does not take away the power of constitutional courts to determine the compensation payable to a victim.”
Observing further, the court said, “We want to ensure people are safe and secure. Unfortunately, if an accident takes place and if a citizen suffers injury, our concern is do we have a robust compensatory mechanism. The Act does not say constitutional courts cannot do that.”
The bench also observed that nuclear energy is a necessity and that hardly any developed country does not harness this untries that have moved away from nuclear-based plants. He argued that setting up a nuclear plant costs 20-30 times more than establishing a solar power plant.
“Sitting here, we cannot command the government. If Parliament, in furtherance of its foreign direct investment (FDI) goals, runs the risk of limiting liability of suppliers and states that the remaining burden will be shared by the state, it is a matter of fiscal policy,” the bench observed.
Bhushan contended that public safety was jeopardised because even the state’s liability had been capped. He said earlier laws governing the sector did not impose such limits. “You cannot question the validity of a law based on motive,” the bench told Bhushan, while agreeing to hear the matter in July and assuring the petitioners, “We will clarify your apprehensions.”
The petition referred to the 1986 Chernobyl nuclear disaster in the erstwhile Soviet Union, where losses were estimated between USD 235 billion and USD 700 billion, and the 2011 Fukushima Daiichi nuclear power plant accident in Japan, where damages were estimated at USD 400-445 billion.
Citing these examples, the petition said, “SHANTI Act, 2025 caps the liability of the largest plant operator in India at a mere ₹3,000 crores amounting to less than 0.1% of the cost of damage caused by the accidents at Chernobyl or Fukushima.”
This is the second time the court has indicated that capping liability under the nuclear law is a policy decision aimed at attracting investment.
The petition also challenges the Act on other grounds, including an alleged “conflict of interest” in the Atomic Energy Regulatory Board (AERB), which performs regulatory functions. It said the selection, appointment and removal of the board’s chairperson and members remain under government control, contrary to India’s obligations under the Convention for Nuclear Safety, ratified in 2005, which requires meaningful separation of regulatory functions.
The Act also empowers the Centre to exempt nuclear power stations from the provisions of the Right to Information (RTI) Act, 2005, and exempts operators from liability for damage caused by natural disasters. The petition argued that these provisions violate the principles of “absolute liability” and “polluter pays” evolved through Supreme Court judgments.
