Statement of Objects and Reasons.-The growth of hazardous industries, processes and operations in India has been accompanied by the growing risks from accidents, not only to the workmen employed in such undertakings, but also innocent members of the public who may be in the vicinity. Such accidents lead to death and injury to human beings and other living beings and damage private and public properties. Very often, the majority of the people affected are from the economically weaker sections and suffer great hardships because of delayed relief and compensation. While workers and employees of hazardous installations are protected under separate laws, members of the public are not assured of any relief except through long legal processes. Industrial units seldom have the willingness to readily compensate the victims of accidents and the only remedy now available for the victims is to go through prolonged litigation in a Court of Law. Some units may not have the financial resources to provide even minimum relief.

2. It is felt essential, therefore, to provide for mandatory public liability insurance for installations handling hazardous substances to provide minimum relief to the victims. Such an insurance, apart from safeguarding the interests of the victims of accidents, would also provide cover and enable the industry to discharge its liability to settle large claims arising out of major accidents. If the objective of providing immediate relief is to be achieved, the mandatory public liability insurance should be on the principle of "no fault " liability as it is limited to only relief on a limited scale. However, availability of immediate relief would not prevent the victims to go to Courts for claiming larger compensation.

Amendment Act 11 of 1992-Statement of Objects and Reasons.-The Public Liability Insurance Act, 1991 was enacted with the object of providing immediate relief to the victims of accidents that might occur while handling hazardous substances. The owner who has control over handling hazardous substances is required under the Act to pay specified amounts to the victims as interim relief based on no fault liability. It is mandatory for every owner handling hazardous substances to take out insurance policies for the purpose.

2. The aforesaid Act could not, however, be implemented on account of the insurance companies not agreeing to give insurance policies for unlimited liability of the owners. It was, therefore, felt that the liability of the insurance companies should be limited to the amount of the insurance policy, though the owner's liability shall continue to be unlimited under the Act. It was considered appropriate to create an Environmental Relief Fund with the additional money collected from the owners having control over handling of hazardous substances. This fund would be used to meet the requirement of providing immediate relief to the victims. The minimum and maximum limits of the insurance amount in an insurance policy also needed to be specified for ensuring payment of adequate relief. Certain definitions were also to be suitably modified to make the meaning more explicit. It was felt necessary to prevent any transfer of property by the owner in case he intended to do so for evading his liability to pay compensation.

3. To achieve the above objective, the Public Liability Insurance (Amendment) Ordinance, 1992, was promulgated by the President on 31st January, 1992 as the owners handling hazardous substances had to take insurance policies by 31st March, 1992.

[22 nd January , 1991]..

An Act to provide for public liability insurance for the purpose of providing immediate relief to the persons affected by accident occurring while handling any hazardous substance and for matters connected therewith or incidental thereto.

Be it enacted by Parliament in the Forty-first Year of the Republic of India as follows: