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This article is written by Vanshika Arora on the topic of Public Liability insurance Act that provides for compulsory public liability insurance.


The 1991 Public Liability Law regulates mandatory liability insurance. Under the law, companies must commit to installing and handling hazardous materials that have been reported under the Environmental Protection Act, 1986. It is basically a part of tort law, which focuses on the misconduct of civil law. The applicant (the injured party) usually sues the accused (owner or convict) according to general law due to negligence and/or damage. Claims are generally successful if it can be proven that the owner/occupant is responsible for the injury and therefore violating his maintenance obligations.

Once a due diligence violation has been identified, a lawsuit in a court may succeed. The court will provide financial compensation based on the applicant’s injury and loss. As the rate of such dangerous industries grow it is a threat not only to the employees or the workers but also the people near.

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Basics about the Law

The Public Liability Insurance Act of 1991 deals with hazardous substances; each owner must conclude one or more contracts which include the obligation to provide direct compensation. It should be provided to all those who have suffered damages that should be given to the property of the deceased legal heir in the event of their death.

The 1991 Public Liability Act was ordained to provide direct assistance to people affected by accidents related to handling hazardous materials and other coerced and related matters. Coverage insurance is claimed when someone is injured at the place of business. Places like shopping centres, night clubs, and theatres need this type of insurance to protect themselves. 

The Public Liability Insurance Act 1991 applies to all owners associated with the production or handling of any hazardous chemicals, to provide immediate relief to victims and persons (other than workmen) affected by accidents occurring while handling hazardous substances through the insurance amount paid by the owner of the hazardous substance. Coverage insurance covers claims by community members who have suffered injury or property damage in connection with the business. Coverage insurance covers a person or company in the event of an accident at their company.
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A major reason for the enactment of this law

Bhopal Gas Tragedy

Union Carbide Corporation vs Union Of India Etc on 4 May 1989

It is also known as the Bhopal disaster, in which thousands of people lost their lives. This is considered the worst industrial disaster in the world that happened on a cold winter night in the early hours of December 3, 1984. Around midnight, a chemical reaction began at the Union Carbide (India) Limited plant, which resulted in the release of a deadly gas methyl isocyanate (MIC) from one of the tanks. As a result, the gas cloud gradually tumbled enveloping the city within its deadly folds. Both the city and the lake had become a gas chamber. Nearly 3,000 people died in the tragedy, and thousand more were physically injured and affected in various forms.

Wildlife was killed, injured, and contaminated. The business was totally cut off. People’s lives were affected. The environment was polluted disturbed ecology and wildlife. An estimated 40 tons of methyl isocyanate (MIC) gas leaked from the Union Carbide Factory. Lessons learned from the Bhopal gas tragedy were quickly forgotten.

The Public Liability Insurance Act 1991 came into force after the tragedy and aims to provide immediate assistance to victims of accidents involving hazardous industries. However, activists argue that legal provisions are not enforced by collectors appointed as law enforcement agencies. According to Section 4 of the law, owners of companies that use hazardous substances take out insurance policies to cover liabilities from accidents that cause death, injury, or injury. In addition, Section 7 A, i) and (ii) regulate the establishment of a central government environmental promotion fund to be used in accordance with the law to pay assistance to accident victims in dangerous companies. The law also regulates business owners to take insurance policies that cover obligations not less than the paid-up capital of the business and not more than Rs 50 crore. In Bhopal leak gas case MIC leaked from the plant of union carbide India Ltd, which caused the death of 3000 persons and serious injuries to a large number of people.

The government of India responded with a number of concrete legislative measures:-

  1. Environment Protection Act, 1986– this expands the central government powers to enter, inspect, and close down facilities that are formerly under inadequate supervision.
  2. The Factories Act, 1987, and the Hazardous Wastes Act, 1989 imposed various responsibilities on industries.
  3. The innovative public liability insurance act 1991: this required factory owners to ensure against potential personal injury and property damage in surrounding communities.

Vizag Gas Leak: LG Polymers

Ig polymers vs. Appcb

Gas Leak at LG Polymers Chemical Plant in RR Venkatapuram Village Visakhapatnam in Andhra Pradesh

Another disaster-affected people in the Gopalapatnam region in Visakhapatnam, Andhra Pradesh. On the eerie night of May 6, 2020, respiratory problems occurred, and nearly 13 people were reported to have died in a very short period of time, and thousands were hospitalized with serious complications on May 7.

The leak was discovered from LG Polymers India Limited. This produces polystyrene, a type of plastic used in consumer goods such as toys and household appliances. The gas that comes out is called styrene. This gas is stored at cold temperatures. This resulted in a chemical reaction and heat being released in the tank, causing gas to come out. Inhaling air contaminated by this deadly gas caused respiratory problems, central nervous system depression, and several other deadly diseases.

The Prime Minister took cognizance of the accident and the NDRF special team (National Chemical Disaster Management Force) for the CBRN (chemicals, biology, radiology and nuclear) was moved by the scene of the accident. The Andhra Pradesh High Court, the National Human Rights Commission, and the Apex court took suo moto cognizance about the case and sent communications to the central and state governments to investigate the incident.

According to the Public Liability Insurance Act, company owners must take out an insurance policy with hazardous substances within one year after starting work. LG Polymers has two policies-one that is the Public Liability Act policy which is mandatory according to the Act-AOA (Any One Accident) of Rs 5 crore, and also has an industrial PLI policy limited to 5 crore – both are from New India Assurance. 

An AOA of Rs 5 crore means that the company will be liable to pay up to Rs 5 crore (in total, for all victims) per accident. also, the central government can establish an environmental support fund to provide legal assistance to accident victims in dangerous companies

The NGT issued the orders under Sections 14 and 15 of the NGT Act, 2010. The NGT smacked a provisional detriment of Rs 50 crore on LG Polymers India and pursued a response from the centre on Friday in the gas leak incident. Andhra Pradesh, saying “there seems to be a fault in fulfilling the told Rules and other statutory provisions”.

Objectives of the Public Liability Insurance Act

This law provides liability insurance for the purpose of immediate assistance to those affected by the accident. While handling hazardous substances and related matters that can cause an error. Legal consequences are produced by law because it is not an adequate Announcement of the provisions of Section 3 of the law.

The growth of dangerous industries affects everyone either directly or indirectly. Such accidents result in death and injury to people and other living things and damage personal and public property. Very often, most of those affected come from economically weaker regions and suffer great hardship due to late release and compensation. While employees of hazardous facilities are protected the community is not guaranteed assistance, except through lengthy legal procedures. Industrial facilities are rarely willing to easily compensate victims of accidents, and the only way now available to victims is to bring prolonged litigation to court. Some units may not have the funds to provide the slightest assistance.

Major provisions made in the Public Liability Insurance Act

Following are some of the relevant provisions of this Act:

Defined as:

  1. An accident is a sudden or unexpected incident, which is related to a hazardous substance that causes continuous or temporary exposure or injury to a person but does not result in an accident that is solely caused by war or war radioactivity.
  2. To deal with hazardous substances is to manage the production, handling, packaging, storage, transportation of vehicles, use, collecting, destructing conversion, making offers for sale, removal   from such hazardous substances Insurance – is liability insurance in accordance with subsection 3 of Section 1.
  3. The owner is the one who controls and handles hazardous substances at the time of the accident:
  1. Partners, in the case of a company
  2. Any member, in case of an association

prescribed are the rules made in this act, relief fund is the environmental relief fund established under Section 7A.

The vehicle is any mode used for transport that does not include railways. 

Obligations of the owner to take out an insurance policy –

Before handling hazardous substances, the owners should have insurance policies regulating an insurance contract in which it is insured based on the exemption duties as in Section 3(1).where each owner before entering into an insurance contract works with hazardous substances as in Each owner will receive an insurance policy which will be extended from time to time before the expiration date so that the insurance policy continues to apply throughout the period in which this processing continues.

From the trade or employer business, who are railroad employees as defined in Section 3 of the Indian Railroad Act 1890 not being permanently employed in the administrative or subdivision territory of the railroad and were not employed in any of the characteristics of the main navigators or other crew members of the ship listed in Annex II or (he)  a master or other crew member of the aircraft someone who has been appointed as a mechanical sweeper assistant or in other connections with motorized vehicles, people who work for companies abroad and who work outside India have been stopped and aircraft or automotive companies can be registered in India, or “Injury” includes permanent partial or partial permanent disability or illness related to an accident.

Any insurance policy taken out or resurrected by the owner shall be for the price less than that of the paid-up capital of the undertaking that handles any hazardous substance, that the owner owns or controls also should be more than the price although should be less than Fifty crore rupees or as it prescribes. 

The relief provided under this act

Compensation for liability in certain cases without error

  1. As in Section 3 If the death or injury of another person (other than a worker) or property damage due to an accident has occurred, the owner is obliged to provide the assistance listed on the list for the death, injury, or damage.
  2. In a claim for compensation under Section 1 (hereinafter referred to as this law as compensation), the plaintiff does not need to declare and prove that the death, injury, or damage on which the claim was based on an action, neglecting or not showing one’s performance.

Explanation: For the purposes of this;

  1. “Employee” has the meaning assigned to it in the Employee Compensation Act of 1923 
  2. “Injury” includes a permanent or total permanent disability or partial illness resulting from an accident

Establishment of environmental relief fund

  1. The Central Government can establish a fund known as the Environmental Assistance Fund through notification.
  2. Relief funds are used for payments in accordance with the provisions of this Law and regulations under Section 3 relief in the case of assignments by collectors in accordance with Section 7.
  3. The Central Government can, through notification, establish a system that determines the location where the support funds are located, the way in which the support funds are managed, the form and the manner in which money from support is placed is removed. Funds and for all other matters relating to or in connection with managing the support and payment of benefits there.

Provisions as to claim to other rights for compensation for death etc

  1. The right to claim compensation under Section 3 subsection 1 for death or injury to a person or damage to property has, in addition to other rights, for compensation in connection with other laws currently in force.
  2.  There is no prejudice as in the provisions, the owner, who is required to apply for help, is also required to pay compensation for someone’s death or injury or damage to the property. This amount of compensation is reduced by the number of concessions paid under this law.

Application for a claim for relief

 An application for a claim for relief may be made as according to Section 6(1)); 

  • 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
  • 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 impeded as respondents to the application.

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.

No application for relief shall be entertained unless it is made within five years of the occurrence of the accident

Award of relief

After receiving an application in accordance with Section 1, the collector, having notified to the owner’s request, given the parties an opportunity to be heard will examine the request or one of the claims and can give a gift to Give a level of relief which he thinks is fair and show the person or person to whom this compensation will be paid.

Collectors must arrange delivery of copies of prices to interested parties quickly and in any case within fifteen days from the date of the assignment.

 If you give a gift according to this section,

  1. The Insurer, which is required to pay the amount for the assignment to the extent specified in Section 4, sub-section(2B) within thirty days from the date of notification of the assignment, the amount of the deposit in a way that the collector can control.
  2. The collector must arrange a grant for this grant and in accordance with the system set out in Section 7A, to pay the person referred to in paragraph 1 or the person specified in paragraph 1 the amount that can be arranged in this system.
  3. The owner must deposit an amount that can be instructed by the collector in this period.]

When conducting a test in accordance with Section 1 the collector may use a short procedure in accordance with the rules specified in this name, which he thinks is appropriate.

The collector has all the powers of the civil court for the purpose of taking oath by evidence and forcing the presence of witnesses and forcing and presenting documents and material objects and for other purposes that may be determined, and the collector is considered a civil court for all purposes of Section 195 and Chapter XXVI of the Criminal Procedure Code 1973.

If the insurance company or owner who receives remuneration in accordance with Section 1 does not deposit the amount of this premium within the period specified in paragraph 3, this amount will be replaced by the owner or, if any, by the guarantor as arrears of land income or public demand.

Claims for damages related to death, injury or injury to property or damage to property must be addressed as soon as possible and must be released from this claim within three months of receipt of the Application for release in accordance with Section 6 (1).

If there is a possibility that the owner will delete or sell his property to avoid paying a price by him, the collector can, in accordance with the provisions of Regulations 1 to 4 of Order XXXIX of the First Schedule of Civil Procedures in 1908  set the order limit for such actions.

The right to appeal to the court to prevent its owner from handling dangerous substances

  1. If the Central Government or the government authorized by this name has reason to believe that the owner has handled a hazardous substance that violates one of the provisions of this Law, the government has or, if necessary, can submit an application to the court, which no lower than a metropolitan judge or first-class judge, to prevent the owner from processing it.
  2. After receiving the application referred to in paragraph 1, the Court may make a decision as deemed necessary.
  3. If the Court issues an order in accordance with paragraph 2 that prevents any owner from handling dangerous substances, he can be based on that order:
  1. instructs the owner to refuse such processing,
  2. authorizes the Central Government or, where appropriate, the person referred to in paragraph 1 if the owner to whom this instruction has been issued does not follow the instructions referred to in item (a); from the court.

All expenses by the central government or, if applicable, people who follow the Court’s instructions under Section 3 (b) must be replaced by the owner as arrears of land or public claims.
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Penalty for contravention of subsection (1) or sub-section (2) of section 4 or failure to comply with directions under section 12

  1. Anyone who violates any of the provisions of Section 4 (1) [1 or section 2 or Section 2A Section 2C] or violates instructions issued in accordance with Section 12, will be punished with deprivation of liberty for a period of time which may not be less than one year and six months, but until it may take six years or a fine that may not be less than one rupee or both.
  2. Anyone who has been convicted of an offence under section 1, after the second offence has been convicted of a second offence or another offence, will be sentenced to a prison sentence of at least two years, which in any case can last up to seven years and with a fine of not less than a lacquer rupee.
  3. Nothing listed in Part 360 of the 1973 Criminal Procedure Code (2 of 1974) or the 1958 Criminal Law (20 of 1958) does not apply to someone convicted of a violation under this Act unless the person is under the age 18 years.

Penalty for failure to comply with a direction under section 9 or order under section 11 or obstructing any person in discharge of his functions under section 10 or 11

If the owner does not follow the instructions in Section 9 or does not follow orders according to Section 11 sub section 2 or prevents someone from carrying out their duties in accordance with Section 10(1), he will be punished with a sentence of three can be extended for months, or with fines of up to ten thousand rupees or both.

Offences by companies

The company shall be considered to be guilty of the offence and shall be liable to be proceeded against and punished according to if any offence under this Act has been committed by the company. It is proposed that nothing in this sub-section will result in people being punished as provided in this Law if they can prove that the crime was committed without their knowledge or that they have taken all precautions necessary to prevent the crime from being committed. such crime.

Notwithstanding all the provisions in section (1), if a crime is committed by a company in accordance with this Law and it is demonstrated that the crime was committed with approval or appeasement or because of neglect of the entity, each director, manager, secretary or other employees the company, director, manager, secretary or other employee is also found guilty and subject to a reasonable sentence and will be punished accordingly.

Explanation: For the purposes of this section:

  1. “company” means a legal person and includes a company or association of other natural persons;
  2. “Managing Director” in relation to the company is a partner of the company.

Reforms and suggestions

  1. The amount of compensation will be increased according to Section 1, the compensation amount is too meagre. A person who suffers from a permanent disability due to this must be given compensation enough to get his bread. 
  2. Efficient enforcement of the act-The act should be enforced properly by making the provisions more strict and there should be a proper check on defaulters so that they do not misuse the power given to them, Amended according to the scenario
  3. The provisions should be reformed and renewed according to the scenario.

Important schedules

Section 3(1)

  1.  Reimbursement of each medical expense up to a maximum of Rs 12,500.
  2. In case of a fatal accident, the assistance is Rs 25,000 per person, in addition to reimbursement of medical expenses incurred by the victim up to a maximum of Rs 12,500.
  3. In the case of permanent partial or partial permanent disability or injury or other illness, the assistance is to reimburse medical expenses up to a maximum of Rs 12,500 each and cash benefits based on the percentage of Disability certified by an authorized doctor. Assistance for total permanent damage is Rs 25,000.
  4. A fixed monthly allowance of a maximum of Rs1000 per month for a maximum of 3 months is given for salary loss due to the temporary partial inability to work which reduces the victim’s profit capacity:
  5. Provided the victim is hospitalized for more than 3 days and is over 16 years old. Up to Rs 6,000, depending on actual damage, for damage to personal property.


This study on public liability insurance act shows that it has been enacted after section 13 of the Rio Declaration on the Environment, 1992 A need to enact this law was felt after the Bhopal Gas Tragedy. This Social Responsibility Law regulates the authority to request information, entry, inspection, search, and seizure. Owners of hazardous facilities try to provide information that is authorized by the central government that inspectors naturally need to establish requirements to make requirements, rules, or instructions in accordance with this Law. 

Section 12 of the Liability Insurance Act 1991 endorses the central government to give written instructions to any owner, employee, or agent. Instructions also include restrictions or regulations on handling hazardous substances. It can also control the power supply or shutdown.

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