SUPREME COURT ON NUCLEAR COMPENSATION UNDER SHANTI ACT

Why In News?

The Supreme Court sought responses from the Union government and Atomic Energy Regulatory Board (AERB) on whether the SHANTI Act, 2025 restricts constitutional courts from awarding "fair and just" compensation to nuclear accident victims.  

What Is the SHANTI Act?

Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India (SHANTI) Act 2025 replaced the old Atomic Energy Act 1962 and the Civil Liability for Nuclear Damage Act 2010 to modernize India's nuclear sector and support clean-energy goals.

Objective: The Act aims to promote nuclear power and non-power applications of ionising radiation in healthcare, agriculture, food, industry, water and research, while strengthening safety and security.  

Private Participation: It allows companies and joint ventures to obtain Central Government licences for building, owning, operating and decommissioning nuclear facilities, subject to safety authorisation.

Nuclear Target: The Act supports India’s Nuclear Energy Mission, which targets 100 GW nuclear capacity by 2047 compared with about 8.78 GW currently.

• The Nuclear Energy Mission provides ₹20,000 crore for indigenous Small Modular Reactor (SMRs) development, targeting at least five SMRs by 2033.

It gives statutory recognition to the Atomic Energy Regulatory Board, strengthening the institutional framework for nuclear safety regulation.

Nuclear Liability: The Act introduces a graded liability framework of ₹100 crore–₹3,000 crore, depending on the type of nuclear installation, and aligns India more closely with the international nuclear-liability regime.

Sovereign Control: Sensitive activities such as enrichment, isotopic separation, spent-fuel management and heavy-water production remain under exclusive Central Government control.

Strategic Significance: The Act seeks to combine private capital + public-sector expertise + stronger regulation + nuclear expansion, helping India pursue energy security, decarbonisation and the 2070 net-zero goal.

What Is the Core Legal Issue?

Liability Cap: The SHANTI Act replaced the earlier ₹1,500-crore operator cap with a tiered ₹100–₹3,000 crore framework, while excess nuclear-damage liability remains linked to the statutory compensation mechanism.

Compensation: The Supreme Court is examining whether statutory limits can constrain constitutional courts’ power under Articles 32 and 226 to grant adequate public-law compensation for fundamental-right violations.

Article 21: A nuclear accident can directly implicate life, health and personal liberty, raising the question whether statutory compensation can adequately remedy a constitutional injury.

Article 14: A rigid liability ceiling could face scrutiny if its operation produces manifestly disproportionate compensation compared with the scale of actual nuclear damage.

Article 19(1)(a): Nuclear safety information can engage the right to receive information, particularly where disclosure is necessary for citizens to assess risks affecting life and health.

Judicial Review: The core separation-of-powers question is whether Parliament can prescribe statutory compensation limits while constitutional courts retain remedial powers to enforce fundamental rights under Articles 32 and 226.

Existing Constitutional Principle: The Supreme Court has recognised monetary compensation under Articles 32/226 as a public-law remedy distinct from private damages, particularly where fundamental rights are violated and compensation is the practicable remedy.

What Are the Major Challenges?

Safety–Expansion Balance: India targets rapid nuclear expansion, but the ₹100–₹3,000 crore operator-liability range creates concern that commercial incentives could weaken safety incentives.

Compensation Adequacy: The Supreme Court is examining whether constitutional courts can still award fair and just compensation beyond statutory limits after a nuclear accident.

Long-Term Harm: Nuclear accidents can create prolonged health, environmental and displacement costs, making a fixed ex-ante liability ceiling difficult to reconcile with uncertain lifetime damages.

Supplier Accountability: SHANTI removes defective equipment/materials as an independent ground for operator recourse, potentially weakening supply-chain safety incentives.

Regulatory Independence: AERB appointments involve a search-cum-selection committee constituted by the Atomic Energy Commission, raising concerns because the AEC is also involved in operating nuclear facilities.

Insurance Capacity: Operators must maintain insurance or other financial security, but catastrophic risks require sufficient insurance capacity and credible government backstop mechanisms.

Public Trust: The liability debate directly affects public confidence because communities need assurance that victims will receive adequate compensation and safety oversight will remain independent.

Information Transparency: SHANTI permits withholding of restricted information on national-security/public-interest grounds, while requiring planned public outreach on nuclear safety.

Regulatory Capacity: Private participation expands the number of potential operators, making licensing, inspection, safety authorisation and continuous monitoring more demanding for regulators.

Intergenerational Risk: Nuclear liability must account for harm extending beyond the immediate accident, including contamination, land-use restrictions and long-term health monitoring.

Way Forward

Adequate Compensation: Retain statutory liability caps for investment certainty but explicitly preserve constitutional courts’ power to grant fair and just compensation where fundamental rights are affected.

Supplier Accountability: Restore a calibrated supplier-recourse mechanism for proven design, manufacturing or material defects, while avoiding unlimited commercial exposure.

Independent Regulator: Strengthen AERB independence through transparent appointments, fixed tenure, technical expertise and conflict-of-interest safeguards.

Insurance Pool: Operationalise a robust nuclear liability fund + insurance/financial-security architecture so catastrophic costs do not automatically shift to taxpayers.

Polluter Pays: Make operators and other responsible entities bear the maximum legally attributable cost, with public funds acting primarily as a last-resort safety net.

Safety Audits: Mandate periodic independent safety audits, stress tests and emergency exercises, particularly before scaling private nuclear capacity.

Public Disclosure: Publish non-sensitive safety indicators, inspection outcomes and emergency-preparedness information to build risk-informed public trust.

Community Preparedness: Strengthen off-site emergency plans, local health surveillance and disaster-response capacity around nuclear installations.

Long-Term Monitoring: Create dedicated mechanisms for health, groundwater, soil and ecological monitoring after any nuclear incident.

Regulatory Learning: Use lessons from Fukushima and Chernobyl to strengthen severe-accident preparedness, evacuation planning and long-term remediation.

Nuclear Insurance Reform: Develop deeper domestic reinsurance capacity and risk-pooling arrangements as private participation expands.

Balanced Principle: India should pursue “nuclear expansion + independent regulation + credible supplier accountability + adequate victim compensation”, rather than treating investment certainty and safety as competing objectives.

Conclusion

The Supreme Court's scrutiny of the SHANTI Act affirms that statutory liability caps cannot limit constitutional courts from granting just compensation, prioritizing victims' fundamental rights over investor-focused statutory ceilings.

Source: THEHINDU