Industrialist Keshub Mahindra, found guilty of criminal laxity with six others in the Bhopal gas disaster, Wednesday found support from an apex chamber that wanted changes in the liabilities of non-executive directors in such incidents.
‘The law regarding potential liability of non-executive and independent directors needs to undergo a change,’ said a statement issued by the Confederation of Indian Industry (CII), quoting its president Hari Bhartia.
‘Non-executive directors cannot be made to undergo the ordeal of a trial for offence of non-compliance with a statutory provision unless it can be established prima facie that they were liable for the failure on part of the company.’
What is more, the chamber also strongly recommended a non-obstante clause in the pending Companies Bill, 2009 to exclude such non-executive directors from any vicarious criminal liability for offences committed by the company.
‘This provision should have overriding effect on all other laws.’
The lobby group said it will set up a task force to look at prevalent laws, regulations and compliance issues pertaining to safety, health and environment in a comprehensive manner, in the light of developments that led to the Bhopal tragedy and its outcome.
The chamber said taking into account the verdict on Mahindra in the Bhopal gas tragedy, the government has again been requested to treat non-executive members of the Board, including non-executive chairmen, differently when it comes to liabilities.
A former non-executive director of Union Carbide, Mahindra was charged under the same sections as officers-in-default — managing director, executive director, works manager and others directly involved in the day-to-day running of the company, CII said.
On the intervening night of Dec 2-3 1984, poisonous methyl-iso-cyanate gas leaked from the Union Carbide pesticide plant in Bhopal, killing thousands immediately and many more over the years and maiming numerous others.
A Bhopal trial court June 7 held seven Union Carbide officials guilty of criminal negligence in the gas leak and sentenced them to two years’ imprisonment. They were immediately granted bail.
The court also imposed a fine of Rs.100,000 on the seven convicted, including Mahindra, who then headed the Union Carbide’s India unit.