Thousands dead, their land poisoned. The sentence – just two years

More than a quarter of a century after tens of thousands of people were killed in one of the world's most notorious industrial accidents, activists in Bhopal reacted angrily when a court handed down jail terms of just two years to former officials who oversaw the pesticide plant that leaked clouds of poisonous gas.

Around 8,000 people died within hours of 40 tons of deadly methyl isocyanate gas being accidentally pumped into the air in the central Indian city in 1984. Perhaps double that perished in the subsequent months and years from a variety of diseases caused by the leak. Children there continue to be born with an unusually high incidence of abnormalities.

Yesterday, a court in Bhopal convicted seven former employees of an Indian subsidiary of Union Carbide, the US-based company that built and operated the pesticide plant. The officials, all of them Indian, were found guilty of death by negligence and sentenced to two years in jail but were released on bail, pending an appeal.

They were the first criminal convictions brought in association with the tragedy. Having fought for more than 25 years, survivors and activists said the sentences were insufficient. They condemned an earlier court decision to reduce the charges from "culpable homicide" and criticised the Indian government for not doing more to hold senior US officials to account.

"It's terrible," said Rachna Dhingra, of the Bhopal Group for Information and Action. "This is what comes after 25,000 deaths. This is an open invitation to multinational corporations to come and pollute and then leave without [responsibility]."

Tim Edwards of the UK-based Bhopal Medical Appeal (BPA), which raises money to help survivors, added: "This sets a very bad precedent. Today's decision is a disaster. It's the equivalent of a bad traffic rap."

It was five past midnight on 3 December 1984 when toxic chemicals poured into the air after water entered a holding tank and triggered a violent reaction. While the precise details of what went wrong are still disputed, there is convincing evidence that lack of maintenance and corrosion were factors. The plant had no adequate plan for dealing with such a disaster.

Within minutes, the gas engulfed the impoverished shanty communities next to the plant. Thousands of people died in their sleep, while at hospitals and clinics corpses piled up. Mass burials and cremations were organised.

The struggle for justice over the incident, the effects of which are still being suffered by the people of Bhopal in the form of contaminated water, birth defects and widespread respiratory problems, has been twisting and arduous, even by the slow standards of India's legal system.

In 1989, the federal government brokered a deal whereby Union Carbide paid $470m (£313m) in a "full and final" settlement that saw victims receive around $550 each. In 1998, the leased site of the plant in the heart of the city – which still contains hundreds of tons of rusting, contaminated debris and spilled chemicals – was returned to the Indian authorities.

In 2001, Union Carbide was taken over by the Dow Chemical Company. Belated efforts to extradite Warren Anderson, the chief executive of Union Carbide, and other US officials, failed.

Campaigners say successive Indian governments have declined to act more firmly against the US company because they do not want to frighten off potential overseas investors. In 2006, Dow wrote to India's ambassador in Washington seeking an assurance that the company would not be legally pursued.

Dow, which still has interests in India worth $500m, has always denied legal responsibility for what happened at Bhopal. A spokesman, Scott Wheeler, repeated the company's opinion that it never owned or operated the plant.

A spokesman for Union Carbide, Tomm Sprick, claimed that officials from its Indian subsidiary, in which it held a 51 per cent stake, were responsible for operating the plant. "All the appropriate people from Union Carbide India – officers and those who actually ran the plant on a daily basis – have appeared to face charges."

Last night, Amnesty International called on the Indian government to pursue legal action against Union Carbide officials in the US.