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Public Liability Insurance Act, 1991
Introduction
With the growth of hazardous industries, risks from accidents processes and operations, not only to the persons employed in such undertakings but also to the public who may be in vicinity, have increased. The people who are affected by accidents in the hazardous installations are, very often, economically weaker sections and suffer great hardships because of delayed relief and compensation. While the workers and employees of hazardous installations are protected under separate laws, members of the public are not assured of any relief except through long legal process. To ameliorate the sufferings of members of the public due to accidents which take place in hazardous installations it was found essential to provide for mandatory Public Liability Insurance. To achieve this objective the Public Liability Insurance Bill was introduced in the Parliament. The Public Liability Insurance Act 1991 is in consonance with the spirit of principle 13^1 of the Rio Declaration, in as much as it aims at providing for public liability insurance for the purpose of providing immediate relief to persons affected by accident occurring while handling any hazardous substance or matters connected therewith or incidental thereto. (^1) 1. Principle 13 of the UN Declaration on Environment and Development proclaims that States shall develop national laws regarding liability and compensation for the victims of pollution and other environmental damage
WHAT IS PUBLIC LIABILTY INSURANCE?
Liability insurance is something that is purchased when insurance is needed in case someone gets hurt in your place of business. Places such as shopping centers, night clubs, and theaters need this type of insurance to protect them. Public Liability Insurance is designed to pay compensation which can include loss of earnings, future loss of earnings and damages awarded to the claimant in addition to your legal cost in defending the claim and the claimants' legal costs that you incur if you are found to be at fault. Public Liability Insurance provides cover against claims made by members of the public who have suffered injury or damage to property in connection with the business. If a member of the public is injured on your property you may be held responsible. Public Liability Insurance covers the individual or the company in the event of an accident on your premises or their premises. Imagine one of the following scenarios - A small-scale wedding business has just opened its first shop in a small shopping centre. When trying on a selection or wedding dresses, a lady trips on one of the wedding dresses that has been left on a chair, trailing on the floor, breaking her wrist. Public Liability Insurance would cover any expenses incurred should the lady pursue a claim against the business. Out on location for magazine photo shoot, a freelance photographer leaves one of his tripods lying down on the floor. A member of the public walks by and falls over the tripod and injures her arm. Public Liability Insurance will ensure that the photographer was covered if the member of the public claimed against them. STATEMENT OF OBJECTS AND REASONS
ENACTMENT OF PUBLIC LIABILITY INSURANCE ACT, 1991
[22nd January 1991] An Act to provide for public liability insurance for the purpose of providing immediate relief to the persons affected by accident occurring while handling any hazardous substance and for matters connected therewith or incidental thereto. It was enacted by Parliament in the Forty-first Year of the Republic of India. Section 1 of the act talks about title and commencement. The sub sections to section 1 read as: (1) This Act may be called the Public Liability Insurance Act, 1991. (2) It shall come into force on such date as the Central Government may, by notification, appoint. Most Important Reason For enforcement of this act: Bhopal Gas Leak Case : This Act has been enacted subsequent to the Bhopal Gas leak disaster where MIC leaked from the plant of Union Carbide India Ltd. and caused the death of over 3000 persons and serious injuries to a large number of others. The government of India responded to the tragedy with a number of concrete legislative measures. Most notable was the umbrella Environment Protection Act 1986 which materially expanded the Central government’s powers to enter, inspect and close down facilities that had formerly under inadequate supervision. The Factories Act 1987 and the Hazardous Wastes (Management and Handling Rules) 1989 also imposed various responsibilities on such industries. The innovative Public Liability Insurance Act of 1991 required factory owners to insure against potential personal injury and property damage in surrounding communities. Provisions of Public Liability Insurance Act, 1991:
Following are some of the relevant provisions of the act-
2. Definitions - In this Act, unless the context otherwise requires, - 1(a) "accident" means an accident involving a fortuitous or sudden or unintended occurrence while handling any hazardous substance resulting in continuous or intermittent 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; (c) "handling", in relation to any hazardous substance, means the manufacture, processing, treatment, package, storage, transportation by vehicle, use, collection, destruction, conversion, offering for sale, transfer or the like of such hazardous substance; (d) "Hazardous substance" means any substance or preparation which is defined as hazardous substance under the Environment (Protection) Act, 1986 (29 of 1986), and exceeding such quantity as may be specified, by notification, by the Central Government; (e) "Insurance" means insurance against liability under sub-section (1) of section 3; (^3) [(g) "Owner" means a person who owns, or has control over handling, any hazardous substance at the time of accident and includes - (I) in the case of a firm, any of its partners; (ii) In the case of an association, any of its members; and (iii) in the case of a company, any of its directors, managers, secretaries or other officers who is directly in charge of, and is responsible to, the company for the conduct of the business of the company;] 3. Liability to give relief in certain cases on principles of no fault - (1) Where death or injury to any person (other than a workman^4 ) or damage to (^3) 3.Subs. for clause (a) by Act No.11 of 1992, section 2(ii), (w.e.f. 31-1-1992) (^4) 4. ( i) "workman" as in the Workman's Compensation Act, 1923 (8 of 1923) includes any person (other than a person whose employment is of a casual nature and who is employed otherwise than for the purposes
(^6) [2A) No insurance policy taken out or renewed by an owner shall be for an amount less than the amount of the paid-up capital^7 of the undertaking handling any hazardous substance and owned or controlled by that owner, and more than the amount, not exceeding fifty crore rupees, as may be prescribed. (2B) the liability of the insurer under one insurance policy shall not exceed the amount specified in the terms of the contract of insurance in that insurance policy. (2C) every owner shall also, together with the amount of premium, pay to the insurer, for being credited to the Relief Fund established under section 7A, such further amount, not exceeding the sum equivalent to the amount of premium, as may be prescribed. (2D) The insurer shall remit to the authority specified in sub-section (3) of section 7A the amount received from the owner under sub-section (2C) for being credited to the Relief Fund in such manner and within such period as may be prescribed and where the insurer fails to so remit that amount, it shall be recoverable from the insurer as arrears of land revenue or of public demand]. (3) The Central Government may, by notification, exempt from the operation of sub-section (1) any owner, namely: (a) The Central Government; (B) Any State Government; (c) Any corporation owned or controlled by the Central Government or a State Government; or (d) Any local authority: Provided that no such order shall be made in relation to such owner unless a fund has been established and is maintained by that owner in accordance with the rules made in this behalf for meeting any liability under sub-section (1) of section 3.
6. Application for claim for relief - (1) an application for claim for relief may be made: (^6) 6. Ins. by Act No.11 of 1992 of 1992, section 3, (w.e.f. 31-1-1992). (^7) 7. "paid-up capital" means, in the case of an owner not being a company, the market value of all assets and stocks of the undertaking on the date of contract of insurance.
- by the person who has sustained the injury;
- by the owner of the property to which the damage has been caused;
- where death has resulted from the accident, by all or any of the legal representatives of the deceased; or (d) By any agent duly authorized by such person or owner of such property or all or any of the legal representatives of the deceased, as the case may be: Provided that where all the legal representatives of the deceased have not joined in any such application for relief, the application shall be made on behalf of or for the benefit of all the legal representatives of the deceased and the legal representatives who have not so joined shall be impleaded as respondents to the application. (2)Every application under sub-section (1) shall be made to the Collector and shall be in such form, contain such particulars and shall be accompanied by such documents as may be prescribed. (3) No application for relief shall be entertained unless it is made within five years of the occurrence of the accident. 7. Award of relief - (1) On receipt of an application under sub-section (1) of section 6, the Collector shall, after giving notice of the application to the owner and after giving the parties an opportunity for being heard, hold an inquiry into the claim or each of the claims, and may make an award determining the amount of relief which appears to him to be just and specifying the person or persons to whom such amount of relief shall be paid. (2) 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. (^8) [(3) When an award is made under this section - (a) the insurer, who is required to pay any amount in terms of such award and to the extent specified in sub-section (2B) of section 4, shall, within a period of thirty days of the date of announcement of the award, deposit that amount in such manner as the Collector may direct; (b) The Collector shall arrange to pay from the Relief Fund, in terms of such award and in accordance with the scheme under section 7A, to the person or persons referred to in sub-section (1) such amount as may be specified in that scheme; (^8) 8. Subs. Sub section (3) by act 11 of 1992, section 4(a), (w.e.f. 31-1-1991)
(3) The Central Government may, by notification, make a scheme specifying the authority in which the Relief Fund 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 incidental to the administration of the Relief fund and the payment of relief there from.]
8. Provisions as to other right to claim compensation for death, etc. - (1) The right to claim relief under sub-section (1) of section 3 in respect of death of, or injury to, any person or damage to any property shall be in addition to any other right to claim compensation in respect thereof under any other law for the time being in force. (2) Notwithstanding anything contained in sub-section (1), where in respect of death of, or injury to, any person or damage to any property, the owner, liable to give claim for relief, is also liable to pay compensation under any other law, the amount of such compensation shall be reduced by the amount of relief paid under this Act. 9. Power to call for information - Any person authorized by the Central Government may, for the purposes of ascertaining whether any requirements of this Act or of any rule of any direction given under this Act have been complied with, require any owner to submit to that person such information as those persons may reasonably think necessary. 10. Power of entry and inspection - Any person, authorized by the Central Government in this behalf, shall have a right to enter, at all reasonable times with such assistance as he considers necessary, any place, premises or vehicle, where hazardous substance is handled for the purpose of determining whether any provisions of this Act or of any rule or of any direction given under this Act is being or has been complied with and such owner is bound to render all assistance to such person. 11. Power of search and seizure - (1) If a person, authorized by the Central Government in this behalf, has reason to believe that handling of any hazardous substance is taking place in any place, premises or vehicle, in contravention of sub-section (1) of section 4, he may enter into and search such place, premises or vehicle for such handling of hazardous substances. (2) Where, as a result of any search under sub-section (1) any handling of hazardous substance has been found in relation to which contravention of sub-section (1) of section 4 has taken place, he may seize such hazardous substance and other things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act: Provided that where it is not practicable to seize any such substance or thing, he may serve on the owner an order that the owner shall not remove, part
with or otherwise deal with the hazardous substance and such other things except with the previous permission of that person. (3) He may, if he has reason to believe that it is expedient to do to prevent an accident dispose of the hazardous substance seized under sub-section (2) immediately in such manner as he may deem fit. (4) All expenses incurred by him in the disposal of hazardous substances under sub-section (3) shall be recoverable from the owner as arrears of land revenue or of public demand.
12. Power to give directions - Notwithstanding anything contained in any other law but subject to the provisions of this Act, the Central Government may, in exercise of its powers and performance of its functions under this Act, issue such directions in writing as it may deem fit for the purposes of this Act to any owner or any person, officer, authority or agency and such owner, person, officer, authority or agency shall be bound to comply with such directions. Explanation - For the removal of doubts, it is hereby declared that the power to issue directions under this section includes the power to direct - (a) Prohibition or regulation of the handling of any hazardous substance; or (b) Stoppage or regulation of the supply of electricity, water or any other service_._ 13. Power to make application to Courts for restraining owner from handling hazardous substances - (1) If the Central Government or any person authorized by that Government is this behalf has reason to believe that any owner has been handling any hazardous substance in contravention of any of the provisions of this Act, that Government or, as the case may be, that person may make an application to a Court not inferior to that of a Metropolitan Magistrate or a Judicial of a first class for restraining such owner from such handling. (2) On receipt of the application under sub-section (1), the Court may make such order as it deems fit. (3) Where under sub-section (2), the Court makes an order restraining any owner from handling hazardous substance; it may, in that order - (a) Direct such owner to desist from such handling; (b) authorize the Central Government or, as the case may be, the person referred to in sub-section (1), if the direction under clause (a) is not complied with by the owner to whom such direction is issued, to implement the direction in such manner as may be specified by the Court.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company^12 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^13 , manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
17. Offences by Government Departments - Where an offence under this Act has been committed by any Department of Government, the Head of the Department shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this section shall render such Head of the Department liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised diligence to prevent the commission of such offence. 18. Cognizance of offences - No court shall take cognizance of any offence under this Act except on a complainant made by - (a) The Central Government or any authority or officer authorized in this behalf by that Government; or (b) Any person who has given notice of not less than sixty days in the manner prescribed, of the alleged offence and of his intention to make a complaint, to the Central Government of the authority or officer authorized as aforesaid. The Schedule [See Section 3(1)] (I) Reimbursement of medical expenses incurred up to a maximum of Rs. 12,500 in each case
12 12."company" means any body corporate and includes a firm or other association of individuals;
13."director", in relation to a firm, means a partner in the firm. 13
(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 (a) reimbursement of medical expenses incurred, 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 an authorized physician. The relief for total permanent disability will be Rs. 25,000. (iv) 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 exceeding Rs. 1000 per month up to 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) Up to Rs. 6,000 depending on the actual damage, for any damage to private property.
BENEFITS:
- Provides cover against claims: Public Liability Insurance Act provides cover against claims made by members of the public who have suffered injury or damage to property in
The amount of compensation as awarded according to the schedule one is too meager to be regarded as relief as compared to the damage or injury caused. If a person suffers a total permanent disability then a relief of Rs. 25,000 as per schedule is not suffice as it would not in any case compensate the damage caused.
- Improper Implementation of the Act: One of the major shortcomings is improper implementation of the act. The provisions laid under the act could not stop various other disasters from taking place. Even after the Bhopal tragedy many cases came up. Though the provisions were made to penalize the defaulter still the cases came up. The following table shows various tragedies after Bhopal disaster. Chemical Incidents in India after Bhopal Location Year Origin of incident Chemical involved Number of Deaths Injured Evacuated Cochin 1985 Release Hexacyclo- pentadiene
New Delhi 1985 Release Sulphuric acid
Bombay 1988 Fire in refinery Oil 35 16 - Bathinda 1989 Leakage Ammonia - 500 - Nagothane 1990 Leakage Ethane and propane
Calcutta 1991 Leakage from a pipeline Chlorine - 200 - Vishakhapatnam 1997 Refinery fire
LPG 60 31 150000
Vellore 2003 Explosion Explosives 25 3 Mohall 2003 Fire Not known 4 25 - Cochin 2004 Fire Toluene - Not known
- Slow legal process: Though there are various provisions of approaching courts for relief and injunction there follows a shortcoming which is the slow legal process. The working in courts is generally slow due to the overburdening of cases. Because of which there is delay in providing relief to victims.
- Complications of the act: Certain provisions of the act are so complicated which makes it difficult for a layman to understand and to claim compensation.
- Misuse of powers: There is a great possibility of misuse of powers by various officials appointed under this act as corruption is something inevitable.
- Change in social scenario: As this act was enacted in 1991, the provisions are in accordance to that time. With the pace of time, a social change is inevitable so laws promulgated in 1991 are outdated and so are the provisions. As regard to present time where there is rise in price, it is very difficult for a common man to bear with increasing expenses. Moreover the relief provided under this act is in accordance to 1991 which is quite low in comparison to present time.
SUGGESTIVE CHANGES
- Amount of compensation should be increased :
environment and the need to enact this act was felt after the famous Bhopal gas leak tragedy. The Public Liability Insurance Act, 1991 imposed a no-fault liability in case of accident and injury upon the owner of hazardous industry. The industry had to compulsorily insure itself and compensation for death, injury, medical expenses and damage to property was to be paid on a no fault basis under this statute while preserving the right of the injured to claim additional compensation under the ordinary law. Various provisions were incorporated laying down certain powers, penalties, amount of relief and reimbursements, appointment of officers etc but after analyzing the act we found that the act lacked in implementation. There was no proper check on renewal of insurance policy, the legal procedure was slow and there was a misuse of powers by the officials appointed. Moreover it is very difficult for a common man to understand the complicated provisions under this act. So to overcome these deficiencies of the act, the laws need to be revised time and again so that they don’t lose pace with present scenario and are in accordance with present time.
Bibliography
1.http://74.125.153.132/search?q=cache:_DkPYLK6J3YJ:www.iitk.ac.in/che/ jpg/papersb/full%2520papers/K%2520- %252051.doc+public+liability+insurance+act+1991- +critical+analysis&cd=24&hl=en&ct=clnk&gl=in&client=firefox-a 2.http://books.google.co.in/books?id=9WUqqgfrBHQC&pg=PA72&lpg=PA72& dq=how+public+liability+insurance+act+1991+failed&source=bl&ots=UcX v722B&sig=hZ6ieoXlgX1u-dbJVnlEnDi8dLQ&hl=en&ei=sIF9Sr3YDcn- kAX687jfAg&sa=X&oi=book_result&ct=result&resnum=8#v=onepage&q=&f =false
