The Public Liability Insurance Act was created in response to the horrific Bhopal Gas Tragedy in 1984 and the subsequent Oleum Gas Leak in 1985. As these two accidents sparked a great deal of controversy in India and led to extensive, drawn-out litigation Due to the numerous parties involved and the significant potential damages. To tackle with these issues and to provider speedier remedy t the victims Public Lability Insurance Act came into force. This research paper aims to examine the legislative background and shortcomings of the Public Liability Insurance Act.
CONTENT & ANALYSIS-
The landmark English case Ryland v. Fletcher[1], in which the notion of strict liability was established, introduced an idea of strict liability into the realm of environmental and industrial catastrophes. This approach also allows the defendant to raise a few defences. By making way for these numerous exceptions, the strict liability principle’s strictness was weakened. This principle eventually grew out of date and was rejected by the courts. The Supreme Court of India established the principle of “absolute liability” while considering not only the destiny of the Oleum Gas Leak victims but also the future of the Indian judicial system in the case of M. C. Mehta v. Union of India[2], and rejected the principle of strict liability. The Public Liability Insurance Act, 1991 was enacted by the parliament as a legislative solution to the Apex Court’s decision in M.C. Mehta v. Union of India and in response to the Bhopal Gas Tragedy and the Oleum Gas Leak case.[3] This very main intent of the act is to render quick relief to the victims of industrial accidents and other mishaps brought on by the handling of hazardous materials. Every owner is legally required by this Act to obtain insurance coverage before interacting with or handling any type of hazardous materials in their business.
SHORTCOMMINGS-
As no particular piece of legislation is infallible. Every legislation has some sort of lacunas. So, let’s have a look at the shortcomings of the Public Liability Insurance Act.
Definition of Hazardous Substance–
“Hazardous substance” is defined under Subsection (d) of section-2. According to the definition provided under the section, the essence of hazardous substance is borrowed from Environment Protection Act, 1986. A hazardous substance which is given under Environment Protection Act will also be considered as the hazardous substance for the purpose of public liability insurance act but the quantity of that substance must exceed the quantity that the central government designates by notification. And this is also the shortcoming of this definition because this suggests that even if a chemical endangers life or limb of a person, the advantageous aspects of the act will be unavailable to victims if the government has not issued the requisite notification with respect to that substance. The definition also fails to answer a scenario where the damage has been caused by the substance that has not been discovered yet or is totally new to the world and also to the officers who are issuing the notification regarding the hazardous substance. In such case it will cause a lot of hardship for the victims as they will not be able to claim any relief, despite very serious harm has been done to them.
However, to tackle with the hardship caused by this section, Allahabad High court provided some sort of relief in the judgement of, U.P. State Electricity Board v. District Magistrate, Dehradun[4]. In this case High Court stated that electricity falls in an ambit of harmful substance though central government has not issued any notification with respect to this. The Court continued by saying that it would be incorrect to assume that a substance cannot be treated as a “hazardous substance” if it is not classified under Section 2(d) of the act. The PLIA definition has a broad amplitude and vast scale, thus it should’nt be interpreted in a constrained or limiting way.
Definition of “accident”-
Another essential definition included in Section 2 is the concept of “accident” (a). This concept has a fairly broad scope because it encompasses unintended events that happen while handling hazardous materials as well as mishaps that happen accidentally rather than deliberately. However, the shortcoming of the definition is that it does not include accidents caused by radioactivity or war. This may be excluded because nuclear energy falls largely under the state’s jurisdiction. And state might not want to face any liability in future. It is important to highlight that this exemption of accidents happening owing to radio-activity runs counter to the ruling of Apex Court in the case of M.K. Sharma v Bharat Electronics 1987[5], as in this case court held that it requires the mandatory insurance coverage for the workers engaged in radioactive zones to protect them against the potential dangers.
Definition of “handling”-
Another crucial term in the act is that of “handling.” This has been described as the production, processing, storage, transportation by vehicle, usage, gathering, transfer, or similar activities involving any hazardous substance. The scope of the definition is comprehensive enough to cover several tasks involved in handling dangerous drugs. But one point that can be figured out is the usage of term “transportation by vehicle.” “Transportation” is qualified by the word “vehicle.” Thus, it may be said that even though the definition of “handling” has a broader scope but it becomes a bit restricted by usage of an expression ‘vehicle’. Additionally, Section 2(j) defines the word “vehicle” as any kind of surface transportation other than railways. Therefore, the term “handling” does not include the conveyance of hazardous materials by air, sea, or railway. This is an outright lacuna in the definition because any method of transportation is perilous while transporting hazardous materials.
No-fault doctrine incorporated under Section 3-
The act’s Section 3 incorporates the no-fault principle, which requires owners who manage hazardous substances to compensate injured victims. According to the Section, the one who is having the ownership of the establishment in question has been obligated to offer reparation as set forth in the Schedule in cases where a person has died, been hurt, or had property damaged in ta wake of an accident constituting the handling of a hazardous material. However, the shortcoming is that Section isthat it does not grant workmen the right to file a claim for remedy. Furthermore, “injury” has been defined in the explanation annexed to this section to include permanent entire or permanent partial disability or illness resulting from the accident. To put it another way, we can say that if a person has suffered temporary disablement, then he would not be entitled to claim compensation within an act.
Statutory, mandated insurance pursuant to Section 4-
The owners of businesses that handle hazardous substance are required by Section 4 of the Act to get insurance coverage for any claims resulting from Section 3(1) of the Act. This sort of a policy needs to be updated periodically and shouldn’t expire while hazardous material management is still being done. But the shortcoming in this provision is,that any business owned or operated by the Central Government, a Government of State, an organization that either the Central Government or a State Government owns or manages, or any municipal body may be exempted from the statutory requirement to obtain insurance by the Central Government.[6] This is one of the biggest shortcomings of this act. Because it is defeating the entire purpose for which act is made and is conferring arbitrary powers in the hands of Central Government. As central government can make any organisation immune from the liability by mere passing a notification. Moreover, this is also a violation of the principle of “Pares Patriae”. According to which state is supposed to be acting under the authority of a parent for its citizens. And if the state itself is shirking from its responsibility, then it is not the true sign of being a welfare state.
COMPENSATION MECHANISM AND STRUCTURE-
Compensation Mechanism-
The act grants district collector the authority to consider an application for compensation made by an injured person. When an accident is reported to the collector, he is required to confirm its occurrence. And then the collector must decide on an award after consulting both the sides. There is one lacuna in the entire process of granting the compensation, which is bestowing the authority of granting relief to the district’s principal administrative official may cause inordinate delays and may not be the best course of action because evaluating a claim and making an appropriate award after taking into account the arguments of the parties include many technical and legal consideration.[7] And the District while being an official in the state administration might not be familiar with all of these nuances.
Adequacy of Compensation-
The Act’s compensation mechanism was created in 1991, and since then it has not once been altered even a single time during the whole span of 33 years. According to the compensation structure, the maximum payable amount in cases involving fatal accidents is Rs. 37,500, which includes up to Rs. 12,500 in medical costs per individual. Even though we cannot measure the worth of a human life in monetary value but the loss of a person due to an accident in which he played no part at all is undoubtedly more than what the Act allows for. Therefore, one cannot help but imagine the utter worthlessness of that financial alleviation if a family’s sole breadwinner perishes in an accident covered by the act and the whole family is only given this pitiful sum of money. And now coming towards the accident survivors who require medical attention, the maximum award of Rs. 12,500 is woefully insufficient.
So, taking into account the compensation mechanism set forth in the act It is not an exaggerating to say that the respite offered by the statute, which provides utmost of Rs. 12,500 on healthcare cost, is woefully insufficient. The exact identical thing holds true for all further reliefs provided under the other categories stated in the act’s Schedule. There is no question that the Act’s compensation mechanism, which has been in place for 33 years, must be updated to meet modern demands.
CONCLUSION- On the basis of the aforesaid discussion, it can be concluded that lawmakers have tried to implement the principle of no-fault liability by way of Public Liability Insurance Act, 1991 but there are a lot of shortcomings in the act. As the fact that the act’s compensation system is inadequate, it must be modified. After taking a look at the nuances of the legislation one cannot help but find the numerous loopholes that are present in this Act. Even though PLIA has many flaws, it is nonetheless a creative piece of legislation that has revolutionised Indian Civil law. The effects of the statute should not be viewed as solely a continuation of the judicial recommendations made in the Carbide and Oleum Gas Leak cases. Instead, it must be viewed as having opened up fresh perspectives on environmental protection and hazardous liability that have come a long way from the early cursory tort remedies of trespass and nuisance.
[1] 1868L.R. 3H.L. 330.
[2] A.I.R. 1987 S.C. 982; A.I.R 1987 S.C. 1085.
[3] Vikram Raghavan, Public Liability Insurance Act: Breaking New Grounds For Environment Law, Vol. 39, No. 1, Journal of the Indian Law Institute.
[4] 1997 UPLBEC (2) 1344.
[5] 1987, (1) SCALE 1049.
[6] Gazal Sancheti, No-Fault Principle in the Public Liability Insurance Act, 1991: Legislative History, Implementation and Present-Day Relevance of Compensation Structure, 3 INT’l J.L. MGMT. & HUMAN. 555 (2020).
[7] Vikram Raghavan, Public Liability Insurance Act: Breaking New Grounds for Environment Law, Vol. 39, No. 1, Journal of the Indian Law Institute.
Author: Dhruv Pachauri
Juris Centre 