The Public Liability Insurance Act 1991

Published on 11/01/2015

First Update 17/03/2017

  1. The Public Liability Insurance Act of 1991 is an act of Parliament of India to provide for immediate relief to the persons affected by accidents occurring while handing any hazardous substance. This act is related to immediate relief and not compensation. The victims have a right to claim compensation under any other law in face.
  2. The Act relates to the handling (manufacturing, processing, treatment, packaging, storage, transportation, use, collection, destruction, conversion, offering for sale, transfer or the like) of hazardous substances (any substance or preparation which is defined as hazardous substance under the Environment Protection Act, 1986 and exceeding such quantities as may be specified by notification). List of chemicals with quantities for application of Public Liability Insurance Act is prescribed through S.O. 227 (E) dated 24-03-1992 by the MoEF.
  3. This legislation relates to relief on death or injury to any person other than a workman (As defined in the Workman Compensation Act 1923) or damage to any property as a result of a major accident.

(i)                 Reimbursement of medical expenses incurred up to a maximum of Rs. 12,500 in each case.

(ii)               For fatal accidents the relief will be Rs. 25,000 per person in addition to reimbursement of medical expenses if any, incurred on the victim up to a maximum of Rs. 12,500.

(iii)             For permanent total or permanent partial disability or other injury or sickness, the relief will be (a) reimbursement of medical expenses incurred, if any, up to a maximum of Rs. 12,500 in each case and (b)cash relief on the basis of percentage of disablement as certified by an authorised physician. The relief for total permanent disability will be Rs. 25,000.

(iv)              For loss of wages due to temporary partial disability which reduces the earning capacity of the victim, there will be a fixed monthly relief not exceeding Rs. 1,000 per month up to a maximum of 3 months provided the victim has been hospitalised for a period of exceeding 3 days and is above 16 years of age.

  1. Every owner handling any hazardous substance is supposed to take out one or more insurance policies against liability to give relief on death or injury to any person, (other than workman) or damage or loss of property.
  2. It is important that the policy has to be taken by the ‘owner’ which means a person who owns, or has control of handling any hazardous substance at the time of accident and includes in the case of a company any of its Directors, Managers, Secretaries or other Officer who is directly in charge of and is responsible to the company for the conduct of the business of the company.
  3. The Insurance policy shall not be less than the amount of paid up capital (the amount of the market value of all assests and stocks of the undertaking on the date of contract of insurance) and not more than Fifty crore rupees.
  4. Every owner shall also pay to the insurer together with the premium, a sum equal to the amount of premium for the relief fund.
  5. The right to claim relief under the PLI Act is in addition to any right to claim compensation as under any other law in force. However in case compensation is also sought, the amount of relief shall be deducted from this compensation.
  6. The maximum aggregate liability on the insurer shall be limited to Rs. 5 crores in the case of a single accident and Rs. 15 crores in case of more than one accident during the currency of policy or one year whether is less. Any award for relief beyond this amount shall be met from the relief fund and in case the award is for an amount greater than the sum of the insurers liability and the relief fund then the extra sum will be paid by the owner.
  7. Liability therefore in case of a major accident, is not limited to the insurers liability but would also take from the relief fund created with the owners contribution towards this and also additional payments by the owner  as arrears of land revenue  and process of public demand to meet the amount of compensation awarded by the Commissioner  under this Act.
  8. The owner is expected to reimburse the money which was paid from the relief fund to the collector.
  9. Section 12 of the Act empowers the Central Governments and State Governments to issue directions on prohibition or regulation of the handling of any hazardous substance or for stoppage or regulation of the supply of electricity, water or any other service.
  10. Failure to comply with direction u/s 12 of the PLI act as above or not taking an insurances policy or not contributing to the relief fund will invite imprisonment which shall extend from 18 months to 72 months (24 months to 84 months in case of repeated offers). A maximum imprisonment of 3 months and a fine of 10000 Rs is prescribed for other offences (obstruction etc).
  11. The Schedule to the PLI act lists the amount of relief payable covering medical expenses, fatality, permanent or partial disability, loss of wages etc. as detailed in para 3 above.
  12. Please also see the following notifications of the Government of India.

(i)     G.S.R.253 dated 27-3-1991 for date (1-4-1991) on which the Act came into force.

(ii)   S.O. 330(E) dated 15th May, l991 for General Public Liability Insurance Rules defining procedures.

(iii)  S.O. 282 dated 19th March, 1993 for the list of Officers authorised to make an application to a Court, not inferior to that of a Metropolitan Magistrate or a Judicial Magistrate first class for restraining such owner from such handling.

(iv) S.O. 779(E) dated 15th November, 1991 for delegation of powers vested in the Central Government under section 12 of the said Act  to the respective State Governments.

(v)   S.O. 780(E) dated 15 November, 1991 for delegation of  powers and directions vested in  the Central Government under sections 9, 10 and 11 to the State Governments.

(vi) S.O. 227(E) dated 24th March, 1992 for list of chemicals with quantities for application of Public Liability Insurance Act

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