PUBLIC LIABILITY INSURANCE ACT, 1991

The current order of the world has changed much since 1990s. Every country in the world is trying their best to woo the big corporations and industries to set-up their plants and open offices in their cities. The foreign investment which brings not only the money but also jobs to the people has made the governments to relax the licensing and check and balance system of the agencies. This foreign investment not only brings big bucks to the capital of the country but also brings jobs and infrastructure for the people. The big foreign companies, industries and corporations prefer the third-world countries as the ideal place to set-up their shops. The cheap labour, the need of investment and the political clout helps these companies and industries to get the permissions and other paperwork through with ease.

India is one of the best examples. After 1990s, with the change of world order, the economic policy since Independence was changed and the license raj (the long list of paperwork and permissions needed for setting up of industries by the foreign investors; the move to discourage the foreigners to come to India) was relaxed and the foreign investment was encouraged. This shift in the policy brought the economic boom and rise in the IT sector and creation of jobs in the cities. But the change is always hard. The relaxation of rules and laws made the corporations and industries negligent and careless in providing the safety to the workers and for the improvement of machinery. The growth of hazardous industries and 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. This behaviour of the industries and the casual attitude of the government have given India one of the biggest industrial disasters in the South-east Asia and in the world in the year 1987. The city of Bhopal, one of the magnificent cities in Northern India was the victim of this biggest and the deadliest disasters with the more than three thousand casualties and the injured numbering in the tens of thousands to hundreds of thousands of victims. The victims of this disaster were not rehabilitated. The compensation provided to the survivors and the injured was delayed for decades and was considered by many to be ‘peanuts’ and the families of the dead and injured had to stand in the long queue and had to wait for the court to decide on the liability and the compensation for the victims of this human disaster.

In the year 1991, the Parliament of India, after much deliberation and the orders of the Supreme Court, passed the ‘Public Liability Insurance Act, 1991’. This act provides for the mandatory Public Liability Insurance. Under the Act, the companies need to take for installing, handling any hazardous substance notified under the Environment Protection Act. Every owner, before starting to handle any hazardous substance, has 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 Act

The Public Liability Insurance Act, 1991 makes it obligatory upon the user industries handling 179 types of chemicals and compounds and other classes of flammable substances to subscribe a special insurance policy to cover the liabilities likely to arise on account of any chemical (industrial) disaster/accident and payable to those affected people who are not the workers on ‘no fault basis’ or ‘absolute liability’. Thus, a defendant is liable for accidental harms caused without any intention and negligence of his part. The Act lays down absolute duty on the owner to compensate all deaths, injuries and damages to property which resulted from accident. The entire burden of paying compensation is not to exceed the paying capacity of the owner. The Act establishes an Environment Relief Fund which is subscribed by all such user industries by an amount equal to the annual premium amounts of such insurance policies.

The Collector having the jurisdiction of the area where the accident/disaster has taken place, has the duty to provide the compensation on the application of relief. The Collector have all the powers of Civil Court for the purpose of taking evidence on oath and of enforcing the attendance of witnesses and of compelling the discovery and production of documents and material objects and for such other purposes. A claim for relief in respect of death of, or injury to, any person or damage to any property shall be disposed of as expeditiously as possible and every endeavour shall be made to dispose of such claim within three months of the receipt of the application for relief.

The insurer is required to pay the compensation awarded within thirty days. Where the insurer or the owner against whom the award is made fails to deposit the amount of such award within the period specified, such amount shall be recoverable from the owner, or as the case may be, the insurer as arrears of land revenue or of public demand. The Act provides for stiff penalties to the defaulting owners Rs. 1 lakh fine and up to 7 year imprisonment. These penalties are similar to that provided under the Environment Act, 1986. By the 1992 amendment to the Act, the liability of insurer has been limited to the amount premium (proportionate to the paid-up capital of the unity); in adding a similar amount (as of premium) has to be given by the owner to the Environment Relief Fund.

However, there are many cases where the owners have failed to subscribe PLI policies because of ignorance.

The amounts under the Act, as specified in the Schedule, were stipulated nearly two decades ago. The compensation under the Act is very meager and the families of victims’ who have died or suffered permanent disability, are entitled only to a maximum compensation of Rs. 25,000, in addition to a maximum of Rs. 12,500, as reimbursement for medical expenses.

For loss of wages due to temporary partial disability which reduces the earning capacity of the victim, a fixed monthly relief not exceeding Rs. 1,000 per month has been stipulated, up to a maximum of 3 months, provided the victim has been hospitalised for a period exceeding 3 days and is above 16 years of age. For any damage to private property, an amount of up to Rs. 6,000 is payable, depending on actual damage.

The Public Liability Insurance Act have enacted with the object of providing immediate relief to the victims as the Act clearly states. The provisions of the PLI Act has been construed as to provide the relief as quickly as possible to the victims without any wastage of time in formalities and knocking the doors of the courts and political corridors. With the principle of absolute liability, the victims don’t have the burden of proof for accidents which is of great benefit. But the amount of compensation provided is very small and cannot be said to enough for relief for the victims or can pay the bills of hospitals. The implementation of the Act has not been realised as the case of Vizag gas leak has shown. Many industries have not taken out the insurance policies or renewed them for quite some time or have failed put the funds due in Environment Relief Fund created by the Central government. The revision of the Schedule for amount of compensation and the better implementation is necessary for the Act to have some meaning.

The spirit of the Act is good but it is the implementation which will provide relief to the victims of the accidents/disasters.

REFERENCE :

  1. Public Liability Insurance Act, 1991

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

IF YOU ARE INTERESTED IN PARTICIPATING IN THE SAME, DO LET ME KNOW.

Do follow me on FacebookTwitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at secondinnings.hr@gmail.com

In the year 2021, we wrote about 1000 Inspirational Women In India, in the year 2022, we would be featuring 5000 Start Up Stories.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.