Question

A company, XYZ Corp., operates a large dam to generate electricity. Due to an unforeseen design flaw the dam suddenly bursts, causing massive flooding in a nearby town. The company had taken all standard safety measures and had no knowledge of the design flaw. The affected residents sue the company for damages.
Which of the following is applicable in this instance?

• A. The company is not liable because the flaw was unforeseen.
• B. The company is absolutely liable because the operation of the dam is inherently dangerous and the damages occurred regardless of the fault.
• C. The company is liable only if it is proven that they ignored warning signs of the flaw.
• D. The company is not liable because it followed all safety protocols.

Hint:

In hazardous industries, the rule of absolute liability means responsibility for damage exists even without fault or negligence.

Answer 1

The Correct Option is B

This case falls under the principle of Absolute Liability, which was established in India by the Supreme Court in the Oleum Gas Leak case (MC Mehta v. Union of India, 1987). According to this principle, if an enterprise engages in a hazardous or inherently dangerous activity and harm results to anyone, the enterprise is absolutely liable to compensate the affected persons, regardless of negligence, foreseeability, or precautions taken.
Option (A) is incorrect — absolute liability applies even if the flaw was unforeseen.
Option (B) is correct — the inherently dangerous nature of dam operation imposes absolute liability.
Option (C) is incorrect — fault or warning signs are irrelevant under absolute liability.
Option (D) is incorrect — compliance with safety norms doesn’t absolve liability under this rule.