The Public Liability Insurance Act, 1991
The Public Liability Insurance Act, 1991 (PLIA)
1. Background
After the Bhopal Gas Tragedy (1984), where leakage of methyl isocyanate gas killed thousands, the need for a quick relief mechanism for victims of hazardous accidents became urgent.
Civil suits for damages were time-consuming and victims had no immediate remedy.
Therefore, Parliament enacted the Public Liability Insurance Act, 1991 to ensure:
Immediate relief to victims of accidents involving hazardous substances.
Compulsory insurance for industries handling hazardous substances.
2. Objectives
To provide immediate compensation to victims of accidents involving hazardous substances.
To make it mandatory for industries dealing with hazardous substances to take insurance policies.
To impose absolute liability (no need to prove negligence) on the owner handling hazardous substances.
To create an Environmental Relief Fund for compensation.
3. Key Provisions
(a) Applicability
Applies to all owners handling hazardous substances (as defined under the Environment (Protection) Act, 1986).
“Owner” includes a person who owns, controls, or is in charge of handling hazardous substances.
(b) Liability (Section 3)
Owner is absolutely liable to give relief in case of death, injury, or damage caused by an accident involving hazardous substances.
Victim does not need to prove fault or negligence.
(c) Insurance (Section 4)
Every owner handling hazardous substances must take out an insurance policy.
Insurance coverage must equal the paid-up capital of the undertaking, subject to a maximum limit (later notified by government).
No operation without such insurance is permitted.
(d) Environmental Relief Fund (Section 7A)
A fund created by the Central Government.
Amount paid by insurers + contributions from owners go into this fund.
Used to pay compensation to victims.
(e) Relief (Schedule of the Act)
Compensation is fixed for immediate relief:
₹25,000 for death.
₹12,500 for permanent disability.
Up to ₹6,250 for medical expenses.
For property damage, up to ₹6,000.
These amounts were kept low because this is immediate relief, not final compensation.
Victims can still file civil suits for larger damages.
(f) Collector’s Role (Section 7)
The District Collector has power to process claims.
Victim or legal heirs can apply to the Collector for relief.
(g) Penalties
Failure to take insurance → imprisonment up to 1 year or fine up to ₹10,000, or both.
Continuing contravention → additional fine up to ₹1,000 per day.
4. Case Laws under the Act
(a) Charan Lal Sahu v. Union of India (1990, SC)
This case challenged the validity of the Bhopal Gas Disaster (Processing of Claims) Act, 1985.
The Supreme Court upheld the principle of no-fault liability and observed that laws like the PLIA were necessary to provide immediate relief to victims.
Though decided before PLIA, it set the foundation.
(b) Indian Council for Enviro-Legal Action v. Union of India (1996, SC)
Hazardous chemical industries in Rajasthan were causing environmental damage.
Court applied Polluter Pays Principle and directed compensation.
The judgment reinforced the idea that PLIA embodies absolute liability — industries must pay irrespective of negligence.
(c) M.C. Mehta v. Union of India (Oleum Gas Leak Case, 1986)
Supreme Court developed the doctrine of Absolute Liability (stricter than strict liability).
This principle became the backbone of PLIA, which was enacted later to give statutory effect to immediate compensation.
(d) Vellore Citizens’ Welfare Forum v. Union of India (1996, SC)
Court declared that Precautionary Principle and Polluter Pays Principle are part of law.
Although not directly under PLIA, it supported the objective of PLIA: owner must bear responsibility for hazardous activities.
5. Significance of the Act
First law in India providing immediate relief to victims of industrial hazards.
Introduced the concept of mandatory insurance for hazardous industries.
Incorporated the principle of absolute liability into legislation.
Ensured social justice by protecting poor and vulnerable victims who cannot afford long litigation.
Worked alongside Environment (Protection) Act, 1986 and Factories Act, 1948 for industrial safety.
✅ Conclusion
The Public Liability Insurance Act, 1991 is a landmark law that ensures quick, no-fault compensation to victims of accidents involving hazardous substances. By making insurance mandatory and holding industries absolutely liable, it balances industrial growth with public safety. Courts, through cases like Oleum Gas Leak and Enviro-Legal Action, reinforced the principles behind this Act, ensuring that polluters pay and victims get immediate relief.
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