CHAPTER23

PUBLIC LIABILITY INSURANCE ACT, 1991

The Parli~ent of I~dia en_acted the Public Liability Insurance Act in the year
199 1. 1 The obJect of this Act 1s:
_ "To provide immediate relief to persons affected by accident occurring
while handling any hazardous substance."
This Act provides for immediate relief through Public Liabitty Insurance to
victims of accidents occurring while handling any hazardous substance.
23.1 NO FAULT LIABILI'1:Y
The most significant feature of the Public Liability Insurance Act is that it im-
poses liability to give relief on principles of "no fault". 2 According to Section 3 of
the Act, if death or injury or damage to property is caused to any person (other
than a workman of that industry) as a3 result of an accident caused while handling
hazardous suostance, then, the owner shall be liable to give relief as specified in
the Schedule of the Act.
In U.P. State Electricity Board· v. District Magistrate, Dehradun4 the issues
whether electricity is a hazardous substance and whether the Electricity Board is
liable to provide relief to victims of accident;S were raised. The case was regard-
ing the claim for relief under the Public Liability Insurance Act made to the Dis-
trict Magistrate in connection with the 'death of a person who came into contact
with an high tension electric wire which had been hanging at a low height of 10
feet. -
It was .alleged by the U.P. State Electricity Board that the claim petition was
not legally maintainable under the 1991 act as electricity was not a 'hazardous'
substance. It was alleged that electricity does not come within the definition of
~azar~ous sub,stance given in the Environment (Protectic;m) Act, 1986 as electric-
ity has no chemical or physico-chemical properties .
.The Court observed that there can hardly be any doubt that electricity is 'haz-
ard?us' sin~e it can injure or even kill people if no~ properl_y _h~dl~d. Hence; the
~ain question is whether electricity is a 'subs~ce . E!ectnctty 1s simple flo~ of
ee electrons in a particular direction at a parbcular moment. An elec~on 1s a
very small particle of the matter with a negative electric charge and certam other

2I. Act No.6 of 1991.

3· See Section 3 of the Public Liability Insurance Act, 1991. . •
· A Person who owns, or has control over handling any hazardous substance at the time of accident
4 : ~ee Section 2 ("' Public Liability Insurance Act, I 991.
' ruR 1998 AIL I.

345
346 PUBLIC LIABILITY INSURANCE ACT, 1991

. s·mce electrons are material, particles

properttes. having specific physic0--chelllica1
.
properties, the electricity is clear1Ya substance' ·
The Court further observed tha~ th~ Public_ Liability Ins~ranc Act, is
b 7 interp
fi · l l ·slati'on for social ob1ective and It should be given hberat 1991
ene 1c1a eg1 .J f f bl' h reta.a
, •
t
tion. Thus if two views are possib~~• ~e(l~Ieb?'l.tm a~~ur rift) ~c s ou]d be Pre-
ferred. The Act places 'strict liab1hty. Ia 11 Y WI ou u in _cases of accj.
dents due to hazardous substances. It is_ not necessary for the claimant to Plead
that death/injury was caused due to neghgenc~ of any perso~. Further, the owner (I
cannot escape liability on the ground that no msurance pohcy was taken by the
owner handling hazardous substances. 1

23.2 QUANTUM OF RELIEF5

The victims of accidents occurring while handling hazardous substance shall be
eligible for the following monetary relief:
1. Reimbursement of medical expenses incurred up to a maximum of Rs.
12,500 in e.ach case.
2. 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.
3. For permanent total or permanent partial disability or other injury or
sickness, the relief will be (a) reimbursement of medical expenses in-
curred, if any, up to a maximum of Rs. 12,500 in each ·case and (b)
cash relief on the basis of percentage of disablement as certified by ail
authorised
Rs. 25,000.physician. The relief for total permanent disability will be

4. For loss of wages due to temporary partial disability which reduces

the earning capacity of the victim, there will be a fixed monthly relief
not ~xceeding ~s_. 1000 per m.onth up to a maximum of 3 m~nths:
provided the victim has been hospitalized for a period exceedmg 3
days and is above 16 years of age.
5. U~ to Rs.
pnvate 6,000 depending on the actual damage, for any damage to
property.

23.3 PROCEDURE
ACT FOR CLAIMING RELIEF UNDER THE PLI
Who can apply ?
6
The following persons are authorised to make an application claiming relief
under tl1e Public Liability Insurance Act. They are:
1. Any person who has sustained injury due to an accident occurring
while handling hazardous substance;
2. Any owner of the property which has been damaged by an accident
occurring while handling hazardous substance;

5. See Section 3(1) and the Schedule of the Public Liability Insurance Act 1991.
6. See Section 6(1 ), Public Liability Insurance Act, 1991. '
 PROCEDURE FOR CLAIMING RELIEF, ETC. 347

_ AnY or all of the legal _representatiyes of ~e deceased where death has

3 resulted from the accident occumng while handling hazardous sub-
stance; or
.4. AnY agent _duly authorised by such person or all or any of the legal
representatl'ves of the deceased can make an application for claim for
relief. ·
lfholll they should apply?
0
1' 'fhe applic_ati<:m ~eekin~ relief shc:mld be made to the District Collector of the
concerned D_1stnct m V.:hich the fcc1d~nt took place. _The application seeking re-
lief shall ?e 1~ a prescnbed form ~d 1t should c~ntam all necessary information.
fhe apphcauon should be subrrutted along with the relevant and prescribed
8
docurnents such as:
I. Certificate of an authorised physician regarding disability or injury or
illness· caused by the accident; ·
2. Death Certificate and/or post-mortem report in the case of a fatal acci-
dent;
3. Certificate of the employer regarding loss of wages, due to temporary
or partial disability, with proof of hospitalization for a period exceed-
ing three days;
4. · Certificate about the date of birth or age of victim;
5. Medical bills and receipts;
6. Certificate of cost of repairs ·or.replacement of private property dam-
aged by the acciden~;
7. Any .other documents which may have relevance to the claim.
When should they apply?
The application for reli~f shall be made to the J?isti:ict Collec~or within 5 years
of the date of occurrence of the accident. No apphcatJ.on for-relief shall be 9enter-
tained if it is made after 5 years from the date of occurrence of the accident.
10
What is the procedu,r e for award of relief?
. (?n receipt of the claim application, the Collec~or shall ,hold _an i~quiry after
givmg due notice to the owners as well as the applicants. At the mqmry, the Col-
lector shall give the parties t!n opportunity for being heard.
_In holding the inquiry, the Collector may foll_ow such summary proce~ll!e as he
thinks fit. Moreover, the Collector is vested with all the po~ers of a C\vil Court
fo_r the purpose of taking evidence on oath and of en.forcmg the attendance of
: 1?1esses and of compelling the discovery and production of documents and ma-

nal objects anct•for such other purposes.

A cla· f . · d' d as expeditiously as possible and in any case
With· 1m ?r relief shall be . tspose f •pt of the application for relief.
IIl a penod of 3 months from the date o recei .

7 s · . L' bTty Insurance Rules 1991.

s· ,a 11
Form I, prescribed in Rule 3, Toe Pubhc 199
i1e '
· Rule 4, The Public Liability Insurance Rules,199 1.
it Section 6(3), Public Liability Insurance Act,
Id, Section 7.
1. ·
348 PUBLIC LIABILITY INSURANCE ACT, 1991
[Cl-JAp
After the inquiry, the Collector may make an award d~termining the · 23.
reiief and specify the person to whom such amount of relief shall be Pai~ollnt Of
When the Collector ~akes an award, the insurer and the owner sha{,
that amount within a penod of 30 days of the date of announce~ent of t dePosit
Meanwhile, the Collector shall arrange to pay the amount of rehef frolll he awc\rd.
ronmental Relief Fun4, in terms of such award . the Envj.
If the insurer or the owner, against whom the award is made, fails t
the amount specified in the award, then such amount shall _be recovered °n,dePosit
owner or the insurer as arrears _of land re~enue or of .p~blic, dellland. \Vh~lll the
owner is likely to remove or dispose of his property with tile object of evre ~e
payment by him of any amount of the award, the Collector may grant a te ading
. . . to restrrun
tnJunctJ.on . sue h act .11 . tnporan,
-,

23.4 RIGHT TO CLA™ COMPENSATION

Where death or injury to any person (other th~ a wor~an of that indus
damage to any property has resulted from an accident while handling any
12
or
ous substance, the victim is entitled to the Right to claim relief under the Pu~~-
h!i)
Liabilities Insurance Act, 1991. , c
1

This Right to claim relief under the Public Liabilities Insurance Act is in addi-
tion to any other right to claim13compensation in respect thereof under any other
law for the time being in force.
Where the owner, liable to give claim for relief under Section 3(1) of the Pub-
lic Liabilities Insurance Act is also liable to pay compensation under any other
law, then the amount of relief paid under the PLI Act shall be deducted from the
amount of such compensation.

23.5 DUTY OF OWNER TO TAKE INSURANCE POLICIES:

Every person who.owns or has control over handling any hazardous substance
shall take out one or more insurance policies providing for contracts of insur~ce
before he starts handling any hazardous substance, whereby he is insured agamst
liability to give relief under Section 3 of the Act.
Any owner handling hazardous substance immediately before the c.ommence-
ment of this Act shall take out such insurance policy or policies as so,)n as may
be and in any case within a period of one year from such commencemen;.
Every owner shall get the insurance policy renewed from time to time before
expiry of the period of validity of such insurance policy.
~e owner fails to take out insurance policy of fails tp renew ~e insurf°:
pohcy tlten he shall be punishable with imprisonment for a term which sbal ~th
be less than one year and six months but which may extend up to 6 years, or w
fine which shall not be less than 1 lakh rupees, or with both. 14 ·

, . .
I 1. See Section 7(8), Public Liability Insurance Act, 1991 ; See also Rules I to 4 of Order
xxXIX of
the first schedule lo the Code of Civil Procedure 1908.
12. See Section 3(1 ), Public Liability Insurance Act' 1991
13. Section 8, id. ' ·
14. · Section 14, Public Liability Insurance Act, 1991.
 ENVIRONMENTAL RELIEF FUND 349

who·is already convicted for not taking out or renewing insurance

aJIY perso\ted for the second time for the same offence or any offence sub-
[cy, is c:;i second 'offence, he shall be punishable with imprisonment for a
l'°q11ent ~\ hall not be less than 2 years but which may extend to s(,ven years
ser..., whicfi s which shall·not be less than one lakh rupees.
te '"with ne ..
aJld tral Government may exempt- .
rheCen
_ the Central Government;
_ the State Government;
_ any ~orporation owned or controlled by the Central or State · Go;em-
ment; or
_ any local authority;
from taking insurance policies prescribed under the Public Liability Insurance
Act, 1991. ·
23.6 AMOUNT FOR WHICH INSURANCE POLICY IS TO BE
TAKEN · · ·
Every owner, before he starts handling hazardous substance shall take or renew
insurance policy for an amount not less than the amount of the 'paid up capital'
of the undertaking. In case of an owner not being a company, 'paid-up capital'
means th~ market value of all assets and stocks of the undertaking on the date of
contract of insurance.
23.7 ENVIRONMENTAL RELIEF FUND
The Central Government ma~ by notification, establish a fund to be known as
the Environmental Relief Fund. 5 The Environmental Relief fund shall be utilized
for paying the relief amount under the award made by the Collector.
The Central Government may, by notification make a scheme specifying the
authority in which the Environmental Relief Fun\! shall vest, the manner in which
the Relief Fund shall be administered, the form and the manner in which money
shall be drawn from the Relief Fund and for all other matters connected with or
fincidental to the administration of the Relief Fund and the payment of relief there
rom. · _

wtery
11 owner handling hazardous substance shall pay to the insurer together
e . the amount of premium, such fui;ther amount not exceeding the sum
quivalent to the amount of premium, for being credited to the Relief Fund. 16
am~~e insur~r shall remit to the Authority in whic~ the Relief Fu_nd shall v_est, the
mann~t rece1v~. from the owner. for being cre~ted to the Rehef F';ffid m su~h
to re and Wtthin such period as may be prescnbed and where the ~nsurer fails
reve rnit that amount it shall be recoverable from the insurer as arrears of land
nue or of public demand} 7

IS . --:.- - - - - - - - -
16. Section 7A ·ct
17' Section 4 , I .
· Sectio (2 c), Public Liability Insurance Act, 1991.
n 4 (2d), id.
r
PUBLIC LIABILITY INSURANCE ACT, 1991
t 350

23.8 POWERS OF THE CENTRAL GOVERNMENT

The Central Government vested with the following powers under th
Liability Insurance Act, 1991: e Public
18
1. Power to call for infonnation .-An~ ~rson a~thorised by the
Government may require any owner to subnut mf?rma~on t_o ascertain .;entra)
any requirements of the Act of any rule or any directton given under thihether
have been complied. s Act
19
2. Power of entry and inspection .-Any person authorised by the
Government shall have the right to enter any place, premises or vehicleCeitra]
hazardous substance is handled at all reasonable times, for the Purpose of: ere
mining whether any provisions of this Act or of any rule or of any direction ~ter.
under this Act is being complied with. In case of entry and inspection the 0given
is bound to.render all assistance to such person. If the owner obstructs 'any Wner
from entering and inspecting, he shall be punished with imprisonment uf
months or fine up to Rs.10,000 or with both.
·3. Power of Search and Seizure1°.-If a person authorised by the Central
Government 'has reason to believe that handling of hazardous substance is takin
place in any place or premises or vehicle without talcing insurance policies h!
may enter into and search such place. '
. As a result_ of !he search, any handling.of hazardous substance without taking
msurance policy 1s found, then,·he may seize such hazardous substance, and other
things, which in his opinion will be useful or relevant to any proceeding under
this Act Where it is not practicable to seize any substance, he may order the
owner that the owner shall not remove or deal with the hazardous substance
without prior permission.
If he has reason to believe that it is expedient to prevent an accident, he may
dispose of the hazardous substance seized and he can recover the expenses in-
curred by him for disposal of hazardous substance from the owner as arrears of
land revenue. ·
1
4. Power to give directions2 .-The Central Government is vested with the
powers to issue such directions in writing as it may deem fit for the purposes of
this Act, including the power to direct -
1. prohibition or regulation of the handling of any hazardous substance;
or
2. stoppage or regulation of the supply of electricity, water or any otber
service.
Any owner or any person, ~fficer, authority or agency to whom/which th ~r~;
rections are given shall be bound to comply with such directions. If an~ 0 ~ 0 ris·
any person.fails to comply with any direction, he shall be punishable wit ::ich
onment for a term which shall not be less than one year and 6 months k~ rupees
may extend to six years or with fine which shall not be less than one la
or with both.

18. Section 9, id.

19. Section 10, id.
20. Section 11, id.
2 I. Section 12, id.

~ I
 COGNIZANCE OF OFFENCES -351

power to make appli~tion to courts for restraining owner from ban-

?· hazardous substance -~If the Central Government has reason to believe
dliJ17tny owner ~as been ~andling any hazardous substance in contravention of
wat f the provis1~ns of this Act then, the Government may make an application
allY ~ourt not infenor to_ tI:mt of a Metropolitan Magistrate 9r a Judicial Magistrate
tof a first class for restrammg such O\Vner from such handling.
oa 23

6. p0 wer to make ~les .-The Central Government is vested with the power
to inake rules for carrymg out the puq,oses of this Act and specifically for pre-
scribing:
1. the maximum amount for which an insurance policy may be taken by
an owner; -
2. the amount required to be paid by every owner for being cre<Jited to the
Relief fund;
3. the form of application and the particulars to be given therein and the
documents to accompany such application;
4. the procedure for holding an inquiry;
5. the manner in which notice of the offence and of the intention to make
a complaint to the Central Government shall be given; etc.

23.9 ADVISORY COMMITTEE

The Central Government may constitute an Advisory Committee on the matters
24
relating to the insurance policy. The Advisory Committee shall consist of:
- 3 officers representing the Central Government;
- 2 persons representing the insurers;
- 2 persons representing the owners; and /
- 2 persons from among the experts of insurance of hazardous sub-
stances to be appointed by the Central Government.
/ .

23.10 COGNIZANCE OF OFFENCES

25
No court shall take cognizance of any offence under this Act, except on a
complaint made by: · .
-:- the Central Government or any officer authorised by the Central Gov-
ernment; or
- any person who h~ given notice of not less. ~an 60_days in the manner
prescribed of the alleged offence and of hi~ mtention to make _a com-
plaint tc:i the Central Government or authonty or officer authonsed by
the Central Government.

ii: Section 13, id.

4 Section 23 id
~ · Section 2 I: id:
s. Section 18, id.
 352 PUBLIC LIABILITY INSURANCE ACT, 1991
(CJt\p. 23
23.11 OFFENCE ~y COMPANIES
Whe~ any offence under this Act h~ been c~mmitted b~ a compan ·
person who, at the time of the offence was comnutted, was_ dtrectly in c?• every
and respopsible to, the company for the conduct of the busmess of the co!ge of,
as well as the company, shall be deen_ied to be g~lty of the offence and shi)any,
liable to~ proceeded against and pumshed accordmgly. · I be
How~ver, if such person _proves that _~e. offence was committed Withou .
knowledge or that he exercised all due ddigence to prevent the commis . t his
such offence, he shall not be liable to any punishment under this Act. 26 sion of
_ i ~l

23.12 OFFENCES BY GOVERNMENT DEPARTMENTS

Where an offence under this Act has been committed. by any Department
Government, the Head of the Department shall be deemed to be guilty of the of 11

fence and shall be liable to be proceede~ against and punished accordingly.21 of.
However, if such Head of the Department proves that the offence was com-
mitted. w!thout his knowledge or that he exerci_sed all due diligence to prevent the
. comnuss1on of such offence, he shall not be bable to any punishment under this
Act.

S1
ion
of a,
~tl
or e1
lido
leatl

26. Section 16, id.

27. Section 17, id.