Atomic risk

On 27 February, the Supreme Court heard a petition challenging several sections of India’s new nuclear energy law, the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025 (SHANTI Act). Within two days, IAEA Director General Rafael Grossi warned that a possible radiological release cannot be ruled out in the wake of sudden Middle East hostilities — with consequences serious enough to require evacuating major cities. The coincidence could not have been more stark.

It is an unsettling backdrop against which to read a petition asking the Court a deceptively simple question: if a nuclear power plant is damaged — by accident, natural disaster, design flaw, or hostile action — who is actually liable?

The petition, argued by advocate Prashant Bhushan on behalf of ex-civil servant E.A.S. Sarma and five former civil servants and eminent scientists – before a Bench of the Chief Justice Surya Kant and Justice Joymalya Bagchi – targets a law Parliament passed last December with barely a week of debate. The SHANTI Act throws open India’s nuclear power sector to private and foreign companies for the first time, repealing the Atomic Energy Act of 1962 and replacing the Civil Liability for Nuclear Damage Act, 2010 (CLNDA) — a narrower law dealing only with accident compensation. Both had held the field since 2010. The SHANTI Act replaced them with a single consolidated framework.

What is harder to defend, the petitioners say, is what the government quietly tucked into the fine print.

The first concern is the liability cap. Section 13(1) caps maximum compensation at the rupee equivalent of 300 million Special Drawing Rights — approximately ₹3,900 crore. Even when nuclear operations were carried out exclusively by the government, this was manifestly insufficient; its continuance despite a shift to profit-driven private operators is unreasonable, arbitrary, and violates settled principles of absolute liability and polluter pays. To buttress this, the petition cites a 2009 article by the late former Attorney General Soli J. Sorabjee, who argued that capping compensation would be contrary to the Court’s own judgements.

Equally troubling is what happens after disaster strikes. Section 17(b) of the CLNDA expressly provided for the right of recourse — the operator’s entitlement to recover compensation paid to victims from a supplier whose defective equipment caused the incident. That provision is conspicuous by its absence in the corresponding Section 16 of the SHANTI Act, even though design defects have historically caused accidents, including at Three Mile Island and Chernobyl.

There is a further temporal problem. Defence analyst G. Balachandran told the Supreme Court Observer, “Unless you say ‘irrespective of the licence period’, this right would be meaningless.” His argument is grounded directly in Section 15 of the SHANTI Act, which is silent on post-licence coverage. Nuclear damage claims can be brought up to 20 years from notification of the incident, (under Section 67(b) of the Act for personal injury) but if the licence has lapsed by then — because the operator was stripped of it after the accident, the plant decommissioned, or the licence simply ran its term — Section 15 contains no obligation requiring continued insurance cover.

Balachandran also flagged an insurance gap: under the US Price-Anderson Act, the retrospective premium backing primary insurance is calculated per reactor; under Section 15, a single policy covers an entire operator regardless of reactor count. At a multi-reactor plant, if an earlier incident exhausts that policy, victims of a subsequent accident at the same site could be left without remedy.

The structural concerns extend beyond liability. The petition challenges the governance framework, arguing that under Section 17(4), appointments to the nuclear regulator are made on the recommendation of a committee constituted by the very Atomic Energy Commission that also promotes nuclear expansion — a structural conflict of interest. Section 39, also under challenge, empowers the government to declare wide categories of nuclear information “restricted” and exempt from the RTI Act, with no appeal mechanism and no public interest override.

The Bench’s observations during the brief hearing may not signify much; the issues can get clearer as the matter returns to Court on 2 April.