Public Liability Insurance Act, 1991

The inadequacy of the Indian law to provide adequate relief to the victims of
Oleum Leak Gas case 1 and Bhopal Gas Leak case 2 had been proved beyond
reasonable doubt. Consequently, the Indian Parliament enacted the Public
Liability Insurance Act, 1991. As regards liability to give relief in certain cases on
principle of no fault. The Public Liability Insurance Act, 1991 was enacted for the
purpose of providing immediate relief to the persons affected by accidents
occurring while handing any hazardous substance and for other incidental and
connected matters. The growth of hazardous industries, processes and
operations in India has been accompanied by growing risks of accidents, not only
to the workmen of such of such understandings but also members of the public
in the vicinity. Whereas the workers are generally protected under the
Workmens Compensation Act and the Employees State Insurance Act, members
of the public who public who may be the victims are not assured of any relief
except through long-drawn legal process. Considering that majority of the affect
people belong to the weaker sections of the society and very limited resources
available with them to go through legal proceedings. This act provides for
Mandatory Public Liability Insurance to be taken by companies for installations
handling any hazardous substance notified under the Environment Protection
Act.

Every owner, before starting handling any hazardous substance, have to take
out one or more polices to cover the liability of providing immediate relief on a
specified scale to any person who suffers injury or damages to property or, in
the event of death to the legal heirs of the deceased.

1
1987 SCR (1) 819
2 1990 AIR 273, 1989 SCC (2) 540
 Definitions:
Section 2 of the Act contains definitions of the terms used in the Act. The
definitions of important terms are given below:

Accident: Section 2(a) defines the term accident as to mean an accident

involving an accidental or sudden or unintentional occurrence while handling
any hazardous substance resulting in continuous, irregular or repeated exposure
to death of, or injury to, any person or damage to any property but does not
include an accident by reason only of war or radio-activity.

Hazardous Substance: Hazardous Substance has been defined under Section

2(d) means any substance or preparation which, by reason of its chemical or
physic-chemical properties is liable to cause harm to human life, plant life,
animals life or property.

Handling in relations to hazardous substance: Handling in relations to

hazardous substance has been defined under Section 2(c) to include
manufacture, processing, treatment, package, storage, transportation by
vehicle, use, collection, destruction, conversion, offering for sale, transfer or the
like of such hazardous substance.

Owner: Owner under section 2 (g) means a person who owns or has control
over handling any hazardous substance at the time of accident and include
partners of a firm, members of an association and in the case of a company, its
directors, managers, secretaries, or other officers who is directly incharge of an
dos responsible to the company for the conduct of its business.
 Liability to give Relief
Liability to give Relief: Section 3 3 of the Act incorporates the principle of
liability without fault and imposes on the owner liability to give relief in case of
death or injury to any person or damage to any property, resulting from an
accident occurring while handling any hazardous substance. Injury includes
permanent total or permanent partial disability or sickness resulting out of an
accident.

Section 3 of the Act provides:

(1) Where death or injury to any person other than a workman or damage to
any property has resulted from an accident, the owner shall be liable to give
such relief as is specific in the Schedule for such death, injury or damage.4

(2) In any claim for relief, the claimant shall not be required to plead and
establish that eh death, injury or damage in respect of which the claim has been
made was due to any wrongful act, neglect or default of any person. The
amount of compensation fixed in the Schedule is as follows:

(i) Reimbursement of medical expenses incurred to a maximum of Rs.12,500

in each case.
(ii) For fatal accidents the relief will be Rs.25,000 per person in addition to
reimbursement of medical expenses, if any, incurred on the victim up to a
maximum of Rs.12,500.
(iii) For permanent total or permanent partial disability, or other injury or
sickness the relief will be:

3
U.P. State Electricity Board... vs District Magistrate And Ors.
4
Sunita Tiwari vs State Of U.P. & Others
(a) Reimbursement of medical expenses incurred, if any, upto a maximum of
Rs.12,500 in each case and
(b) Cash relief on the basis of percentage of disablement as certified by an
authorized physician. The relief for total permanent disability will be Rs.25,000.
(iv) For loss of wages due to temporary disability, which reduces the earning
capacity of the victim, there will be fixed monthly relief not exceeding Rs. 1000
per month upto a maximum of 3 months provided the victim has been
hospitalized for a period exceeding 3 days and is above 16 years of age.
(v) Upto Rs.6,000, depending on the actual damage, for any damage to
private property.

It may, however, be noted that the courts of states where multinational

corporations operate possess jurisdiction over such corporations and then, i.e.
in respect of their properties situated in the host state. If the acts of such
corporation cause loss to the person or property of citizens of the state, then
action can be taken against the Corporation according to the law of that state.
 Compulsory Insurance: Section 4
Compulsory Insurance: Section 45 requires the owner to take out one or more
insurance policies, before starting the handling of hazardous substance. Such
insurance policy should provide for contract of insurance, whereby he is insured
against liability to give relief under Section 3(1) of the Act.

Every owner shall get the insurance policy, renewed from time to time before
the expiry of the period of validity thereof so that the insurance policies may
remain in force throughout the period during which such handling is continued.

The amount of insurance policy should not be less than the amount of paid up
capital of the undertaking handling any hazardous substance and more than the
amount, not exceeding rupees fifty crore, as may be prescribed.

5
Machindranath Kernath Kasar vs D.S. Mylarappa & Ors
Verification and Publication of Accident:
Section 5 of the Act requires the collector to verify, whenever it comes to his
notice that an accident has occurred at any place within his jurisdiction, the
occurrence of such accident and cause publicity to be given in such manner as
he deems fit for inviting applications for claim for relief.

Applications for claim for Relief:

Section 6 deals with manner of making application for claim for relief and
provides that an application for claim for relief may be made by the person who
has sustained injury, by owner of the property to which damage has been caused
and in the case of death resulting from accident by all or any of the legal
representatives of the deceased or any agent duly authorized by such person or
owner of such property. Every application is required to be submitted to
collector in the prescribed form along with prescribed documents. No
application for relief shall be entertained unless it is made within five years of
the occurrence of the accident.

Award of Relief:
Section 7 of the Act requires the collector, on receipt of application for claim for
relief to hold an inquiry into the claim or each of the claims, after giving notice
of application to owner and after giving the parties an opportunity of being
heard and made an award determining the amount of relief payable to person
or persons. The Collector shall arrange to deliver copies of the award to the
parties concerned expeditiously and in any case within a period of fifteen days
from the date of the award. The insurers to deposit, within 30 days from the
date of announcement of the award the amount in such manner as specified by
the collector. The collector than arrange to pay from the relief fund to the
person or persons such amount in such manner as may be specified in the
scheme.

Establishment of Environment Relief Fund:

Section 7A of the Act empowers the Central Government to establish
Environment Relief Fund, by notification in the official Gazette, to be utilized for
paying relief under the award made by the collector under Section 7 of the Act.
Provisions as to other right to claim compensation for death, etc:
Section 8: The right to claim relief under Section 3(1) is in addition to any other
right to claim compensation in respect of death, injury or damages under any
other law for the time being in force. Under certain circumstances, the amount
of relief paid under this Act shall be liable to deduction.

Power to Call for Information:

Section 9: The owner of hazardous installation has been put under obligation to
submit to a person authorized by the Central Government such information as
that person reasonably thinks necessary for the purpose of ascertaining whether
any requirements of the Act, rule or directions made thereunder have been
complied with.

Power to Entry and Inspection:

Section 10: Any person authorized by the Central Government can rightfully,
enter at all reasonable times with the necessary assistance, any place premises,
or vehicle where hazardous substance is handled for determining whether any
provision of the Act, rule or direction made thereunder has been complied with.
The owner must render all assistance to such persons.

Power of search and seizure:

Section 11: Besides if a person authorized by the Central Government has
reason to believe that handling of any hazardous substances is taking place in
any place, premises or vehicle contravening the provisions of Section 4(1) of the
Act, he may search such place, premises or vehicle, and may seize such
hazardous substance, the handling of which have been found to have taken
place. Such authorized person may also dispose of seized hazardous substances,
if in his opinion it is expedient to prevent an accident. The expenses incurred in
disposing of such hazardous substances shall be recoverable from the owner.
Power to Give Directions:
Under Section 12 the Central Government has been empowered to issue
directions in writing as it may deem fit to any owner or any person, officer,
authority or agency. The power of the Central Government to give directions
may include the power to direct prohibition or regulation of the handling or any
hazardous substance or stoppage or regulations of the supply of electricity
water or any other services.

Power to make application to Courts for restraining owner from handling

hazardous substances:
Under Section 13 on receipt of an application from the Central Government or
the person authorized in this behalf, a Metropolitan Magistrate or a Judicial
Magistrate of the First Class can make any order to restrain the owner from
handling any hazardous substance in contravention of any of the provisions of
this Act; and may recover any expenses incurred as arrears of land revenue or
on public demand.
 OFFENCES AND PENALTIES:
Section 14 to 18 deal with offences, penalties and procedural provisions
connected therewith:
Section 14 specifies the penalties, in the case of serious lapses like contravention
of any provisions of Sub-section (1), (2) of Section 4 not taking insurance policies
or failure to comply with any direction issued under Section 12 in regard to
prohibition or regulation of the handling of any hazardous substance or
stoppage of supply of electricity, water, etc. are imprisonment for a minimum
period of one year and six months but within may extend to six years, or with
find, which shall not be less than one lakh rupees or with both. For second and
subsequent offences the person shall be punishable with the minimum
imprisonment of two years but which may extend to seven years and with find
which shall not be less than one lakh rupees.
Section 15 specifies Additional lapses like default, incompliance with the
directions issued under Section 9 or failure to comply with orders issued under
Sub section (2) of Section 11 or creating obstruction to any person in discharge
of his duties under Section 10 or Sub Section (1) or Sub-Section (3) of Section 11
shall be punishable with imprisonment which may extend to three months or
with fine which may extend to rupees ten thousand or with both.

Offences by companies:
Section 16: “company” means anybody corporate, and includes a firm or other
association of individuals; and “director” in relation to a firm means a partner in
the firm.
(1) Where an offence under this Act has been committed by a company,
every person who at the time the offence was committed was in charge of, and
was responsible to the company for the conduct of, the business of the
company, shall be deemed to be guilty of the offence and shall be liable to be
proceeded against and punished accordingly. Any such person shall not be liable
to any punishment provided in this Act if he proves that the offence was
committed without his knowledge for that he exercised all due diligence to
prevent the commission of such offence.
(2) Where an offence under this Act has been committed by a company and
it is proved that the offence has been committed with the consent or connivance
of, or is attributable to any neglect on the part of, any director, manager,
secretary or other officer of the company, such person shall also be deemed to
be guilty of that offence and shall be liable to be proceeded against and
punished accordingly.
Offences By Government Departments:
According to Section 17 if any offence is committed by any department of
government, the head of that department shall be deemed to be guilty ad shall
be liable to be proceeded against and punished accordingly. If the head of the
department proves that the offence was committed without his knowledge or
that he exercised all due diligence to prevent the commission then he shall not
be rendered liable.

Cognizance of offence:
Section 18 explains that for setting the criminal law in motion, a complaint is to
be filed either by the central government or by any authority or officer
authorized in this behalf. Subject to a 60 days’ notice to the central government
or to the authorized authority or officer, a private person can also file a
complaint.

Power to delegate:
According to section 19 the central government may, by notification, delegate,
subject to such conditions and limitations as may be specified in the notification,
such of its powers and functions under this act except the power under section
23 as it may deem necessary or expedient to any power including any officer,
authority or other agency.

Protection of action taken in good faith:

Section 20 provides that the government, the person, the officer, the authority,
or other agency shall be protected from being sued, prosecutes or legally
proceeded against for anything in good faith done or intended to be done in
pursuance to this act, rules, orders or directions, etc.
Section 21: Advisory Committee:
(1) The Central government may, from time to time, constitute an
Advisory committee on the matters relating to the insurance policy
under this act.

(2) The advisory committee consists of:

a. three officers representing the central government;

b. two persons representing the insurers;
c. two persons representing the owners; and
d. two persons from amongst the experts of insurance or hazardous
substance, to be appointed by the central government.

(3) The chairman of the advisory committee shall be one of the members
representing the central government, nominated in this behalf by the
government.

Effect of other laws:

Section 22: The provisions of this act and any rules made there under shall
override any other law even if there is any in consistency therein.
 Bibliography

 Public Liability Insurance Act, 1991

 Wikipedia
 Google
 Lawyerslaw.org
 Acknowledgement
The following project on ‘Public Liability Insurance Act, 1991’ is a sincere effort
by me. The success and final outcome of this project required a lot of guidance
and assistance from many people and I am extremely fortunate to have got
this all along the completion of my project report. Whatever I have done is
only due to such guidance and I would never forget to thank them.

I am thankful to and fortunate enough to get constant encouragement,

support and guidance throughout the completion.
I am very much thankful to Prof. SUPREET Ma’am, for her support and
guidance, without which I won’t be able to accomplish this project work. I am
thankful to my friends who helped me in collection of material.
Lastly and most importantly, I would like to thank my parents and the almighty
for moral support and constant supervision.

Stanzin Lakshat
 INDEX
S. NO. CONTENTS PAGE NO.
1. INTRODUCTION 1
2. DEFINITIONS 2
3. SECTION- 2 2
4. SECTION- 3 3
5. SECTION- 4 5
6. SECTION- 5 6
7. SECTION- 6 6
8. SECTION- 7 6
9. SECTION- 7A 6
10. SECTION- 8 7
11. SECTION- 9 7
12. SECTION- 10 7
13. SECTION- 11 7
14 SECTION- 12 8
15. SECTION- 13 8
16. SECTION- 14 9
17. SECTION- 15 9
18. SECTION- 16 9
19. SECTION- 17 10
20. SECTION- 18 10
21. SECTION- 19 10
22. SECTION- 20 10
23. SECTION- 21 11
24. SECTION- 22 11
25. BIBLIOGRAPHY 12
SUBMITTED TO: - SUBMITTED BY: -

PROF. SUPREET MA’AM. STANZIN LAKSHAT

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SECTION– A SEMESTER- 8TH
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