Supreme Court Asks Union If SHANTI Act Bars Courts From Fixing Nuclear Compensation

In a significant development that could reshape India's nuclear liability framework, the Supreme Court of India today called upon the Union of India to clarify whether the Civil Liability for Nuclear Damage Act, 2025—popularly known as the SHANTI Act—places any fetters on the power of constitutional courts to determine "fair and just" compensation in the event of a nuclear accident. A bench comprising Chief Justice Surya Kant, Justice Joymalya Bagchi, and Justice V Mohana issued notice to the Union and the Atomic Energy Regulatory Board (AERB) on two limited but pivotal aspects: the extent of constitutional courts’ power to fix compensation, and the validity of Section 17(4) of the Act, which governs the appointment of members to the AERB.

The order came during the hearing of a public interest litigation filed by former bureaucrat EAS Sarma and others, which challenges the SHANTI Act for capping the liability of private nuclear operators and the government for mishaps. The petitioners argue that the caps are grossly inadequate and violate constitutional principles of strict and absolute liability for hazardous industries, as laid down by earlier Constitution Bench decisions.

The Core Question: Can Courts Override the Cap?

The central issue before the Court is whether the statutory caps under the SHANTI Act—₹3000 crore for the largest plant operator and ₹4500 crore for the Union government’s residual liability—can stand in the way of constitutional courts awarding full and fair compensation to victims. Advocate Prashant Bhushan, appearing for the petitioners, contended that the caps are far too low to address the catastrophic consequences of a nuclear disaster. He drew comparisons with the Chernobyl and Fukushima accidents, noting that the actual costs of such disasters run into lakhs of crores—approximately 100 times the statutory cap.

"Only because Parliament imposed a cap, it does not bar the courts," the Chief Justice observed during the hearing, indicating that the apex court is inclined to read the Act harmoniously with the constitutional mandate to provide just compensation. Bhushan agreed but stressed that the very existence of a cap could incentivize operators to cut corners, knowing their liability is limited. "If there is a nuclear accident in the country, questions will be raised. And if those accidents are on account of corners cut by the plant operators, in the belief that their liability is capped at 100 crores to 3000 crores… it's a very very serious issue," he argued.

The Court noted that the cap appeared to be an attempt at incentivization. "That is the problem. Because you are incentivizing them to cut corners!" Bhushan replied. The Chief Justice then reiterated that courts are not powerless to grant just compensation in appropriate cases. However, Bhushan urged the Court to make a clear declaration that notwithstanding the statutory cap, a court can fix the liability of the supplier, the operator, and the government. Such a declaration, he argued, would serve as a deterrent and signal to operators and suppliers that they must not compromise safety.

A Regulatory Conundrum: AERB’s Independence

Another critical issue raised during the hearing was the independence of the Atomic Energy Regulatory Board. Bhushan pointed out that the AERB—the regulatory body meant to oversee nuclear safety—itself runs some power plants, creating a conflict of interest . "This is in violation of the principles laid down about the independence of the regulatory body by all international conventions," he submitted.

He further highlighted that members of the AERB are appointed on the recommendation of a committee formed by the Atomic Energy Commission (AEC), which is also the body that operates nuclear power plants. The Chief Justice observed that the AEC is normally headed by a renowned scientist and noted that having the Selection Committee headed by someone like a Cabinet Secretary could have its own implications. Bhushan countered that eminent nuclear scientists should not be allowed to control the selection panel for the Board. He drew an analogy with the Bar Council of India, which, he said, is running a law college while it cannot do so due to its regulatory role—pointing out that a petition on that issue is in the process of being filed.

The Solar Alternative

In a broader policy argument, Bhushan also questioned the necessity of pursuing nuclear energy given India's vast solar power potential. Responding to a query from the Court about what would happen