The Public Liability Insurance Act 1991

In one line

The Public Liability Insurance Act 1991 gives a person injured by an accident involving a hazardous substance immediate relief on a no-fault basis, and requires the owner to carry insurance so that the money exists.

In the wording a student can write in an exam: the Public Liability Insurance Act 1991 provides for public liability insurance for the purpose of giving immediate relief to persons affected by an accident occurring while handling a hazardous substance. Section 3 imposes liability to give relief on the principle of no fault. Section 4 requires every owner to take out one or more insurance policies before he starts handling a hazardous substance. Section 5 requires the Collector to verify and publicise an accident, section 6 provides for applications and section 7 for the award. Section 7A establishes the Environmental Relief Fund.

Why it was enacted

Bhopal.

The absolute liability rule of the Oleum Gas Leak case gave a victim a cause of action that required no proof of fault. It did not give the victim money. Between the accident and the payment lay a suit, a defendant that might be insolvent or restructured, and years of litigation, and the Bhopal claims machinery had to be created by a special statute whose constitutional validity was itself litigated.

The Act of 1991 answers the gap between a right and a payment, and a candidate who says that has said what the statute is for.

The scheme

Section 3: no-fault liability. Where death or injury to any person, other than a workman, or damage to any property, has resulted from an accident, the owner shall be liable to give the prescribed relief. The claimant need not plead or establish that the death, injury or damage was due to any wrongful act, neglect or default of any person.

Section 4: compulsory insurance. Every owner shall, before he starts handling any hazardous substance, take out one or more insurance policies providing for contracts of insurance by which he is insured against liability to give the relief under section 3. The obligation is prior to the activity, which is what makes the money available when the accident happens.

Section 5: verification and publicity. Whenever it comes to the notice of the Collector that an accident has occurred within his jurisdiction, he shall verify the occurrence and cause publicity to be given inviting applications.

Section 6: applications. By the person who has sustained the injury, by the owner of the property damaged, by a legal representative where death has resulted, or by an authorised agent.

Section 7: award. The Collector holds an inquiry and makes an award determining the relief, which is paid by the owner or out of the insurance and, where applicable, out of the Relief Fund.