The Supreme Court of India has asserted the importance of maintaining a favorable atmosphere for investment while exercising judicial review of laws. During preliminary hearings on a public interest litigation presented by E A S Sarma, the court emphasized the need to balance national interests against potential hypothetical concerns surrounding legislative measures. The bench, comprising Chief Justice Surya Kant and Justice Joymalya Bagchi, made these remarks in New Delhi on Friday.

Concerns Raised Over Nuclear Liability Regulations

During the hearing, the counsel for Sarma, Prashant Bhushan, raised objections regarding the liability placed on private companies managing nuclear power facilities under the Sustainable Harnessing and Advancing of Nuclear Energy for Transforming India (SHANTI) Act, which was enacted by Parliament in December. Bhushan pointed out that the liability for private operators is limited to 3,000 crore Indian rupees, a figure he argued is inadequate considering the potential damage from a nuclear incident, which could amount to hundreds of thousands of crores. He referenced historical nuclear accidents in Chernobyl and Fukushima to underline his concerns.

Government’s Liability and Investor Sentiment

Bhushan also noted that while private entities are permitted to operate within the nuclear energy sector, they are shielded from comprehensive civil liability. He highlighted that the government’s own liability is similarly capped at 4,500 crore. In response, Chief Justice Kant emphasized the necessity of fostering an investment climate where investors feel secure and motivated to commit capital, stating that “there must be an atmosphere in the country where investors feel encouraged to invest.”

Balancing Energy Strategies and Legal Frameworks

According to Chief Justice Kant, current trends are steering away from coal-based power generation, leading to an increased reliance on nuclear energy. He articulated the importance of striking a balance between national priorities and speculative fears associated with nuclear legislation. “We should not create an atmosphere where people will fear to invest in India because courts here interfere in everything,” he cautioned, noting that prolonged litigation can render investment projects unfeasible despite substantial financial commitments.

Call for Comparative Regulatory Analysis

Justice Bagchi remarked on the character of energy policy decisions, questioning the constitutionality and impartiality of existing frameworks. He requested that the bench be provided with examples of civil nuclear liability regulations used in countries such as the United States, those in Europe, and Japan. As cross-border electricity trading becomes increasingly relevant, he stated that it is critical for India’s regulatory measures to align with international standards. The hearing was adjourned to next month after the bench instructed Bhushan to gather detailed information regarding nuclear liability regimes in other countries.

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