Professional Documents
Culture Documents
Public Liability Insurance Act 1991
Public Liability Insurance Act 1991
INTRODUCTION:-
This act was enacted on January 22, 1991.This act was mainly brought up as a result of the fatal
Bhopal Tragedy that killed over 3000 people and injured many others. The 1991 act was framed
with provisions that required factory owners to insure against potential personal injury and
property damage in the surrounding communities.
The Public Liability Insurance Act 1991, provides for mandatory Public Liability Insurance.
Under the Act, companies need to take for installing, handling any hazardous substance notified
under the Environment Protection Act. 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 undertakings, but also members of the public in the vicinity.
Therefore, under Public Liability Insurance Act 1991, every owner, before starting to handle any
hazardous substance, have to take out one or more policies covering liabilities for providing
immediate relief on a specified scale to any person suffering injury or damage to property, in the
event of death, to the legal heirs of the deceased.
The Public Liability Insurance Act, 1991, has been enacted for providing immediate relief to the
persons affected by accidents, occurring while handling any hazardous substance and for other
incidental and connected matters.
To provide immediate relief to persons (other than workmen) affected by accidents occurring
while handling hazardous substances and for matters connected therewith or incidental thereto,
through the insurance amount paid by the owner of the hazardous substance.
It is the insurance covered against any hazardous substance / any other property by its owner and
the same is paid as relief or compensation to the claimant who has been injured / any damage
has been occurred due to that hazardous substance/property.
It ensures `No Fault Liability’ against the owners of hazardous substances. In other words, it
could be said that the owner of a hazardous substance must have insured so that any person
injured or died of any hazardous substance could claim compensation , without going into any
question of fault on the part of the owner.
An Act to provide for public liability insurance for the purpose of providing immediate relief to
the persons effected by accident occurring while handling any hazardous substance and for
matters connected therewith or incidental thereto, was introduced in 1991. The Act gives relief
on the principle of “No Fault”.
Every owner of any hazardous property, before handling that property, shall take one or more
insurance policies providing contracts of insurance whereby he is insured against the liability to
give relief claimed by the person injured or suffered any loss occurred due to that hazardous
substance.
Under the Public Liability Insurance Act an application for relief made by the applicant to the
Collector within 5 years of the accident, after giving notice to the owner and the insurer and
giving the parties an opportunity of being heard, shall make the award determining the amount of
relief payable. The victim will however be free to approach the Court for higher compensation.
b) The owner of the property to which the damage has been caused,
c) The legal representatives of the deceased, in case of death occurred as a result of the
accident and
The collector, after entertaining the application, shall issue notice to the parties and give
opportunity of being heard. Then, the collector holds an inquiry regarding the amount claimed
and determines a final amount to be settled as compensation.
The copy of the award delivered should be delivered to the parties within 15 days from the date
of delivery of the award.
The award is binding on the parties and the insurer who is liable to pay the amount mentioned in
the award, shall pay the amount within 30 days from the date of announcement of the award.
What is the procedure when the owner who is liable to pay the relief , is likely to dispose
the property to evade the payment of the relief
The collector may grant a temporary injunction to restrain such act under Order XXXIX of the
Code of Civil Procedure,1908.
Both imprisonment which extends from 3 months to 7 years and fine which extends from
Rs.1000 to Rs.1 lakh for non-compliance of a vide range of provisions of this act.
Section 7A of the Public Liability Insurance Act, empowers the Central Government to establish
Environment Relief Fund, by notification in the official Gazette, towards the utility of paying
relief under an award made by the collector under Section 7 of this Act.
Section 12, of the Public Liability Insurance Act 1991 empowers the Central Government to
issue directions in writing to any owner, officer, or agency. The directions also include the
prohibition or regulation of handling hazardous substances. Moreover, it also can control the
supply or stoppage of electricity.
The Public Liability Insurance Act 1991 provides for the penalties of non-compliance.
Furthermore, failure to comply with any direction issued with regard to prohibition or regulation
of the handling of any hazardous substance or stoppage of supply of electricity, water etc.
Punishable with an imprisonment for a minimum period of one year and six months but which
may extend to six years, or with fine, which shall not be less than one lakh rupees or with both.
For subsequent offences, the person shall be punishable with the minimum imprisonment of two
years. However, it can extend to seven years, with fine of not less than 1 lakh rupees.