India may ask its courts to examine if Dow Chemical is liable for damages after it bought over the firm blamed for one of the world's worst industrial accidents that killed thousands of people, a minister said.

"We will pursue the case against Dow Chemical (in court) to find out about (its) liability," a minister on a government panel dealing with the accident told reporters on condition of anonymity on Monday.

Dow Chemical, which owns Union Carbide whose plant in Bhopal city leaked a poisonous gas 26 years ago, denies any responsibility, saying it bought the company a decade after Union Carbide had settled its liabilities in 1989 by paying $470 million for the victims.

The accident killed some 3,500 people by official estimates. Activists say 25,000 people died in the immediate aftermath and ensuing years and about 100,000 people who were exposed to the gas continue to suffer today from sicknesses that range from cancer, blindness to birth defects.

The first convictions in the disaster came this month, partly due to India's slow-moving justice system. The verdict - two years jail and small fines for Union Carbide's seven Indian employees - has sparked outrage in India. In the light of public outrage after the verdict, the government set up a ministerial panel to look into issues of compensation, justice and pursuing the extradition of then Union Carbide Chairman Warren Anderson.

A second minister on the government panel said on Thursday it was also recommending seeking the extradition of Anderson, who lives in the U.S. and has been classified as an absconder in the case by an Indian court. A previous extradition request for Anderson was turned down by the U.S.

The Indian government panel had also recommended fresh compensation of about $22,000 dollars to the family of each dead.