Public Liability Insurance Act, 1991

Need
The Public Liability Insurance Act, 1991 (the Act) was brought into effect to provide
immediate relief and support to those affected by any accident while working/ dealing
with hazardous substances at the workplace.

Salient Feature:
o Public Liability Insurance Act,1991 is to provide the compensation for damages to
victims of an accident of handling any hazardous substance or It is also called, to save
the owner of production/storage of hazardous substance from hefty penalties.
o This is done by proving compulsory insurance for third-party liability. As from the
name of the act, it is Public Liability.
o This law requires all enterprises that own or have control over handling of any
hazardous substance, to subscribe to a “public liability insurance policy
cover” whereby they are insured against the claims from third parties for death or
injury or property damage caused by hazardous substances handled in their enterprise.
o The compensation payable under this Act is also irrespective of the company’s
neglect. The victims who are exposed to hazardous substances used by the industry
may file a claim with the Collector within 5 years of the accident.
o On receipt of an application, the Collector, after giving notice to the owner and after
giving the parties an opportunity of being heard, will hold an inquiry into the claim
and may make an award determining the amount of relief which appears to him to be
just.
o The Act establishes an Environment Relief Fund (ERF), which is subscribed by all
such user industries by an amount equal to the annual premium amount of such
insurance policies. Additionally, the Act empowers the Central Government to
constitute an Environmental Relief Fund to provide immediate relief by utilizing the
funds to facilitate rehabilitation, medical and other facilities for the survivors.
NECESSARY COMPLIANCE

Section 3 of the Act provides for the principle of 'no-fault liability' on the owners, which
makes it certain that the owner shall provide adequate relief to the worker in case of death or
injury or damage of property caused as a result of an accident at the workplace. 

● Ensure undertaking one or more insurance policy against any accident or mishap at
the workplace while handling hazardous substances and that such policy is renewed in
a timely manner;
● Section 4 of the Act prescribes the limit of such insurance policy and also the liability
of the insurer under one assurance policy;
● Ensure adequate relief to the claimant for any loss or damage caused due to the
hazardous substances. Such claim may be made by the person suffering the damage or
 loss or in case of a casualty, the legal representative of the deceased or through an
authorized agent;
● The insurance claim shall cover bodily injury or property damage that occurred due to
the business operations, which in addition to a person suffering injury or loss; also
includes property damage, which may be sought by the owner who has suffered
property damage due to the hazardous material.

Authority and Time Limit for Seeking Relief under the Act
Any application for claim or relief under the Act must be made to the Collector, within whose
jurisdiction the accident occurred. The Collector under such circumstances has the powers of
Civil Court for seeking evidence on oath, attendance of a witness and so on. The application
for claim or relief sought must be made within 5 years from the occurrence of the accident.

Upon accepting the application, the Collector conducts a detailed inquiry into the matter and
the claim sought. Thereafter, basis the inquiry, the Collector passes an award stating the final
compensation amount to be paid by the insurer. Such award is required to be delivered to
both the parties within 15 days from the date of delivery of the award and stands binding on
all the parties thereto.

The insurer is required to make the payment within 30 days from the date of announcement
of the award, in a manner as prescribed by the Collector. Where the owner is liable to pay
relief, resorts to disposal of the property to evade payment of such relief; in such cases, the
Collector may restrain the act by granting a temporary injunction on such disposal under
Order XXXIX of the Code of Civil Procedure, 1908.

Penalties
Any form of non-compliance with the provisions of this Act shall attract both imprisonment
and a fine. In case of repeated offenders, the imprisonment shall not be less than 2 years
extending up-to 7 years and a fine of not less than one lakh rupees.

Liability of Companies
Where a company commits an offence, every person in-charge or responsible for the business
operations of such company when the offence was committed, stands guilty of the offence
and is liable for punishment accordingly. Besides the person in-charge, if it is proved that the
offence was committed with the consent or attribution of any other person; then such other
person also becomes liable under the Act

Important schedules

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.

Vizag Gas Leak: LG Polymers

Ig polymers vs. Appcb

Gas Leak at LG Polymers Chemical Plant in RR Venkatapuram Village

Visakhapatnam in Andhra Pradesh

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 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. 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,
and thousands were hospitalized with serious complications on May 7.