Introduction
A nuclear accident can cause consequences extending far beyond the immediate site of a nuclear installation. Death, injuries, property damage and long-term environmental consequences can potentially result in losses far exceeding the statutory liability of an individual operator. This has now raised an important constitutional question before the Supreme Court of India: can statutory limits on nuclear liability restrict a constitutional court from determining fair and just compensation for victims?
The issue arises from a challenge to the Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Act, 2025, commonly known as the SHANTI Act. The legislation replaced the earlier Atomic Energy Act, 1962 and Civil Liability for Nuclear Damage Act, 2010, creating a consolidated framework dealing with nuclear energy, regulation, safety and civil liability. The Act received Presidential assent on 20 December 2025.
On 17 August 2026, a Bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V. Mohana heard a constitutional challenge to provisions of the SHANTI Act. The Court issued limited notice to the Union Government and the Atomic Energy Regulatory Board (AERB) and sought clarification on whether the Act places any restriction on constitutional courts determining fair and just compensation following a nuclear accident. The Court also sought clarification concerning the appointment of members of the AERB under Section 17(4).
What Is the SHANTI Act?
The SHANTI Act creates a new statutory framework governing India’s civil nuclear sector. Among other things, it provides for nuclear safety and regulation, licensing, civil liability for nuclear damage and mechanisms for compensation following a nuclear incident.
The legislation also changes the structure of operator liability. Instead of a single operator-liability figure applicable across installations, the Second Schedule establishes graded liability based on the capacity and category of the nuclear installation. The highest category, involving reactors with thermal power above 3,600 MW, carries an operator-liability limit of ₹3,000 crore. Lower categories carry correspondingly lower limits.
The ₹3,000 crore figure therefore refers specifically to the statutory liability of the operator of the highest-category installation. It should not be described as an absolute ceiling on every amount that could potentially be available to victims under the entire statutory framework.
What Does Section 13 Provide?
Section 13 establishes the maximum amount of liability in respect of each nuclear incident at the rupee equivalent of 300 million Special Drawing Rights (SDRs), subject to the statutory framework and the power of the Central Government to specify a higher amount.
The provision operates alongside the operator-specific limits contained in the Second Schedule. Consequently, the Act creates a distinction between the liability attributable to the operator and the broader financial framework applicable to nuclear damage arising from an incident.
This distinction is important because describing the SHANTI Act simply as imposing a “₹3,000 crore cap on nuclear accident compensation” would be legally incomplete.
What Happens When Nuclear Damage Exceeds the Operator’s Liability?
The Act provides a mechanism for Central Government liability beyond the amount for which the operator is responsible under the Second Schedule.
Under Section 14, the Central Government assumes liability for nuclear damage to the extent that the damage exceeds the operator’s liability specified in the Second Schedule, subject to the provisions of the Act. The provision also deals with other circumstances in which Central Government liability can arise.
The statutory framework therefore does not operate on the basis that an operator’s liability of ₹3,000 crore necessarily represents the maximum amount that can ever be available following a nuclear incident.
This distinction becomes particularly important when considering the constitutional challenge before the Supreme Court.
Why Is the Liability Framework Being Challenged?
The petitioners have challenged various provisions of the SHANTI Act on constitutional grounds, including under Articles 14, 19 and 21 of the Constitution. They have argued that the statutory limits on liability could be inadequate in the event of a catastrophic nuclear accident and could leave victims without compensation proportionate to the actual losses suffered.
During the hearing, senior advocate Prashant Bhushan, appearing for the petitioners, referred to major nuclear accidents including Chernobyl and Fukushima to highlight the potentially enormous consequences of a nuclear disaster. He also argued that liability limits could affect incentives for maintaining stringent safety standards. These are arguments advanced by the petitioners, rather than findings made by the Supreme Court.
What Exactly Did the Supreme Court Ask?
The most significant development from the recent hearing concerns the relationship between the statutory liability framework and the constitutional powers of courts.
The Supreme Court sought clarification from the Union Government on whether anything in the SHANTI Act would prevent a constitutional court from determining fair and just compensation in the event of a nuclear accident.
Chief Justice Surya Kant indicated during the hearing that a statutory cap on an operator’s liability would not necessarily mean that a constitutional court was prevented from granting appropriate compensation. The Court nevertheless issued limited notice and sought the Union’s response on the issue.
The distinction between an oral observation during a hearing, a direction seeking clarification and a final judicial determination is important.
The Supreme Court has not, at this stage, struck down the SHANTI Act’s liability provisions. It has also not delivered a final ruling establishing that constitutional courts can automatically award compensation beyond the statutory framework.
Can a Statutory Liability Limit Restrict Constitutional Remedies?
Parliament can establish statutory liability regimes, including rules determining how responsibility and compensation are allocated following particular kinds of accidents. The SHANTI Act does precisely that for nuclear incidents.
At the same time, constitutional courts exercise powers under the Constitution and can grant appropriate remedies in cases involving violations of fundamental rights.
The Supreme Court’s present inquiry therefore raises a broader question: to what extent can a statutory liability framework govern the compensation available after a catastrophic event when constitutional remedies are invoked?
What About Liability of Suppliers?
The SHANTI Act also changes the earlier statutory position concerning an operator’s right of recourse against suppliers.
Under Section 16, an operator’s right of recourse is available where such a right is expressly provided for in a written contract or where the nuclear incident resulted from an individual’s intentional act or omission. The earlier statutory framework under the Civil Liability for Nuclear Damage Act, 2010 had expressly recognised an additional ground relating to defective equipment or material or sub-standard services supplied by a supplier. That specific statutory supplier-recourse ground is not retained in the same form under the SHANTI Act.
This is an important distinction from saying that “suppliers have no liability whatsoever.” The legal position is more precise: the SHANTI Act does not retain the earlier express statutory right of recourse against suppliers on the same basis, while contractual recourse can still be provided for under Section 16.
The petitioners have raised concerns about this change and its possible implications for nuclear safety. Those concerns remain part of the constitutional challenge and have not been judicially established as facts.
What About the Atomic Energy Regulatory Board?
The Supreme Court has also sought clarification concerning Section 17(4) of the SHANTI Act, which deals with the appointment of the Chairperson and members of the AERB.
The provision provides for appointments by the Central Government on the recommendation of a search-cum-selection committee constituted by the Atomic Energy Commission.
The petitioners have argued that this arrangement could raise a potential conflict-of-interest concern because of the relationship between institutions involved in promoting nuclear energy and the body responsible for nuclear regulation.
Importantly, this is an argument raised in the proceedings, not a finding by the Supreme Court that the appointment mechanism is constitutionally invalid. The Court has sought the Centre’s clarification on this limited issue.
Does the SHANTI Act Remove Nuclear Safety Obligations?
The liability framework should not be confused with the safety obligations imposed under the Act. The SHANTI Act establishes regulatory and safety requirements for nuclear activities and provides for the functioning of the AERB as the regulatory authority. The statutory framework continues to place safety and regulatory responsibilities on operators and other persons involved in nuclear activities.
The Act therefore does not mean that an operator can avoid safety obligations simply because its civil liability is subject to a statutory limit.
The constitutional challenge instead raises the question of what happens after a nuclear incident occurs, particularly when the resulting damage could exceed the statutory liability attributable to the operator.
Why Is the Supreme Court’s Proceeding Significant?
The significance of the present case extends beyond the ₹3,000 crore figure. At its core, the case involves a conflict between competing legal and policy considerations. The SHANTI Act seeks to create a predictable liability framework for the nuclear sector, while the petitioners argue that the consequences of a catastrophic nuclear accident could make statutory limits inadequate for victims.
The Supreme Court’s recent proceedings introduce another dimension: whether statutory limits can operate as a restriction on the constitutional court’s ability to determine fair and just compensation.
The Court is therefore examining not merely the amount of liability but the relationship between Parliament’s statutory framework and the judiciary’s constitutional remedial powers.
Has the Supreme Court Declared the SHANTI Act Unconstitutional?
The present position is that the constitutional challenge is pending. The Supreme Court has not struck down the SHANTI Act. It has not finally declared the operator-liability limits unconstitutional, nor has it conclusively held that courts can award compensation beyond the statutory framework in every nuclear-accident case.
On 17 August 2026, the Court issued limited notice and sought the Centre’s response on the specific issues concerning constitutional-court compensation powers and the AERB appointment mechanism.
Therefore, headlines suggesting that the Supreme Court has already “overruled” the SHANTI Act’s liability cap would overstate the present legal position.
What Could the Case Mean for Nuclear Liability in India?
The eventual decision could have significant implications for India’s nuclear sector. If the Court holds that statutory liability limits cannot prevent constitutional courts from granting appropriate compensation in cases involving fundamental rights, it could clarify the relationship between statutory compensation schemes and constitutional remedies.
If the Court upholds the challenged framework, it could reinforce Parliament’s ability to establish predictable statutory limits for nuclear liability while leaving the broader compensation mechanisms under the Act to operate according to their terms.
The case could therefore influence not only nuclear operators and regulators but also the legal position of victims, insurers, suppliers and other participants in the nuclear sector.
Conclusion
The SHANTI Act has introduced a new framework for nuclear energy, regulation and civil liability in India. Its Second Schedule places operator liability for the highest category of reactor at ₹3,000 crore, while Section 13 establishes a broader statutory framework for liability in respect of each nuclear incident and Section 14 provides for Central Government liability in specified circumstances.
The Supreme Court’s latest proceedings do not invalidate this framework. Instead, they raise an important constitutional question: can statutory limits on nuclear liability restrict a constitutional court from determining fair and just compensation when a nuclear accident causes catastrophic losses?
The Court has sought the Centre’s response and has also raised a separate issue concerning the appointment mechanism for the AERB under Section 17(4).
For now, the legal position remains under judicial consideration. What the Supreme Court ultimately decides could shape the balance between nuclear-sector investment, operator liability, regulatory independence, victims’ rights and constitutional remedies in India.
