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The Public liability Insurance Act, 1991(the Act) is a pivotal piece of legislation enacted by Indian government to ensure the safety and protection of the public from accidents caused by hazardous industrial operations. The Act mandates that businesses handling dangerous substances must maintain a public liability insurance policy, ensuring that in the event of an industrial accident, immediate compensation is provided to affected individuals without the need for extensive legal proceedings. Enacted in the wake of growing industrial activities and environmental risks, the legislation aims to strike a balance between industrial development and public safety, promoting accountability within hazardous industries.
Objectives: The key objectives of the Act are:
A major reason for the enactment of this Act: Bhopal gas tragedy
The Bhopal disaster occurred on night of December 3, 1984, when a deadly gas methyl isocyanate (MIC) leaked from Union Carbide (India) Limited plant, enveloping the city and its surroundings. This catastrophic industrial disaster killed nearly 3000 people and left thousand more injured or permanently affected. Wildlife was also impacted and the environment suffered significant contamination. With 40 tons of toxic gas released, this tragedy remains the world’s worst industrial disaster.
This Act was enacted in response to the Bhopal gas tragedy, aiming to provide swift relief to victims of accidents. However, activists argue that enforcement by designated authorities remains weak. As per Section 4, companies handling hazardous substances are required to take out insurance to cover liabilities for accidents causing death or injury. Section 7A mandates the establishment of a Central Government Environmental Relief Fund to compensate victims of such accidents. The law also requires businesses to maintain insurance coverage, with a minimum equivalent to the company’s paid-up capital and a maximum of ₹50 crore.
Liability for relief on No-Fault Basis (Section 3):
Duty of owner to take out insurance policies (section 4):
Provided that any owner handling hazardous substances before the enactment of this Act must obtain the required insurance policy within one year of its commencement.
However, this exemption is only allowed if the owner has set up and maintains a fund, as per the rules, to cover liabilities under section 3(1).
Application for claim for relief (section 6):
(1). An application for claim for relief may be made
Provided that if not all legal representatives of the deceased have joined the application for relief, it must be filed on behalf of all legal representatives. Those who have not joined will be added 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.
Establishment of Environmental Relief Fund (section 7A):
(1) The Central Government may establish an Environmental Relief Fund by notification.
(2) The fund will be used to pay relief as awarded by the Collector under section 7, according to the provisions of this Act and the scheme made under sub-section (3).
(3) The government may, by notification, create a scheme detailing the authority managing the fund, how it will be administered, how money will be withdrawn, and other related matters concerning the fund’s management and relief payments.
Power to Issue Directions (Section 12):
The central government, despite any other laws but in accordance with this Act, has the authority to issue written directions for implementing of this Act. These directions must be followed by any owner, person, officer, authority, or agency involved.
Explanation:
The power to issue directions includes the authority to:
(a) Prohibit or regulate the handling of hazardous substances.
(b) Stop or regulate the supply of services such as electricity or water.
Penalty for Contravention of Section 4 (section 14):
Penalty for contravention —
Penalty for non-compliance of directions issued under section 12 (section 15):
Penalty for non-compliance of directions—
Offences by Companies
Provided that such a person will not be held liable if they can prove that the offence occurred without their knowledge or that they took all necessary precautions to prevent it.
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