An Overview of Public Liability Insurance Act 1991 -

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Do we all remember the purpose behind the enactment of the Environment

Protection act of 1986? Is there any reason or incident that is connected to
such enactment in India? Supreme Court of India played a huge role in the
environmental protection in India, and thanks to MC Mehta for filing a
much-needed PIL in the Oleum Gas Leak case, which enabled the judges of
the Supreme Court to draft a new environmental jurisprudence in India,
unlike in foreign jurisdiction. This article will give a brief overview of the
Public Liability Insurance act of 1991 and its connection with landmark
judgment in India, thereby concluding with a very recent case in India
relating to public liability.

Object and reason behind the act:

Before looking into a few of the important provisions of the act of 1991, let
us look into the preamble of the act to determine the purpose or objective
behind the enactment of this law. The preamble of the Public liability
Insurance act states that it is an act to provide public liability insurance to
ensure immediate aid to those persons who were affected due to the
accident caused by handling hazardous substances. This means that the
industries that tend to cause harm by using harmful substances are made
liable or have been transferred with the environmental liability for their
actions. This objective resembles the idea that forms the basis of the
polluter pay principle. On the other hand, a historic judgment delivered in
the Oleum gas leak case, which will be briefed in the latter part of this
article along with the Bhopal gas tragedy, also spoke about the importance
of the absolute liability principle and not the strict liability principle. Such
principle or the ratio of the judgment has resembled in the preamble of this
act of 1991.
Defines important terms:

Let us look into a few important definitions provided under the act to
further understand the application of provisions of the act.

Firstly, ‘Hazardous Substance’ has been defined under section 2(d), which
states that any substance or any preparation which has been noted to be
hazardous under the Environment protection act of 1986 and such
substance has exceeded the quantity as specified by the union government
from time to time.

Secondly, ‘insurance’ under section 2(e) has been provided as insurance

against the liability incurred due to the death or personal injury or any
kind of damage to property out of an accident as per section 2(1) of the act
of 1991. The definition excludes a worker who incurs damage under the
Employees compensation act of 1923.

Who can apply for a relief claim?

As per section 6 of the act, an application for relief can be filed by the
following persons.

The actual person who suffered the injury out of an accident,

The owner of the property who received the damages as per the act,
Thirdly, by one or all of the legal representatives of the person deceased
out of an accident,
Lastly, any authorized agent of the property owner whose property has
been damaged or agent of the deceased person as the case may be.

The act establishes Environmental Relief Fund:

Section 7A of the act of 1991 provides for establishing an environmental
relief fund. It empowers the central government to establish such relief
fund in the name of Environmental relief fund. Such funds shall be utilized
only for the purpose of paying and implementing the schemes under
provisions of the act. Such shall also be specified by the union government
under section 7 and also the manner in which such relief fund shall be
utilized.

Section 13 of the act allows the application to be made in the court for the
purpose of restraining the action of the owner of the property if such act is
in contravention to the interests of public good or under the act.

Penalties:

Section 14 to 18 provides penalties for various entities such as companies,

government by itself etc., in case of any violations that occurred due to
their actions.

Landmark and recent Judgments:

Having seen a few essential sections under the act of 1991, let us briefly
look into three main judgments in which the public liability has been
explicitly determined.

Firstly, in the year 1986 Supreme Court of India delivered a historic

judgment relating to the liability of Shriram Corporation, Delhi in MC
Mehta v. Union of India. The case related to the closure of units that dealt
with hazardous substances. Delhi High court case, later transferred to
Supreme Court of India in which court established the liability of Shriram
industries and came up with a new environmental principle of absolute
liability according to which suppose the entity or a person engaged in the
hazardous activity that would harm others in case of escape. In that
instance, the person or the entity shall be liable absolutely in case of the
same damages to the others and liable to pay compensation to all those who
got affected. It was the first and most crucial judgment ever in the history of
Indian environmental law jurisprudence in which judges actively
participated to ensure the public liability was imposed on violators.

This particular judgment was cited in the following case of Union Carbide
Corporation v. Union of India. The tragedy is still being spoken by many for
the twists that it witnessed as courts in India was allotted to reduce the
amount of compensation. In this case, Supreme Court considered the
importance of ensuring the duty vested on them both from humane
conditions as well as from judicial duty. The court referred the Oleum gas
leak case and made UCC liable for their settlement.

Recently, 2020 witnessed another toxic gas leakage in India at

Vishakapatnam in which Korean Firm LG polymers was the defendant. In
this case, National Green Tribunal issued orders as per the NGT act of 2010.
A compensation of around 50 crores was imposed on LG polymers. Even
though the Public liability insurance act was not the legislation involved,
the requirements were referred by the tribunal regarding the same.