| M J Antony: Mass disasters unlimited | |
| The ‘strict liability’ insurance law suffered virtual death long before the recent IOC fire in Jaipur | | M J Antony / New Delhi November 11, 2009, 0:22 IST | |
 The ‘strict liability’ insurance law suffered virtual death long before the recent IOC fire in Jaipur.
One way the government assuages the anxieties of people traumatised by a man-made disaster is by passing a legislation. Communal flare-ups, terrorist incidents and financial scams are some instances which have led to new laws. The new-found law is forgotten as soon as people get back to their normal lives.
In the wake of the Bhopal holocaust 25 years ago and the oleum gas leak in Delhi a year later followed by class action, Parliament passed the Public Liabilities Insurance Act in 1991. Its object was to “provide for public liability insurance for providing immediate relief to the persons affected by accident occurring while handling hazardous substances”.
However, in all these years, just one case has been reported under the Act, and that was ten years ago, from the Allahabad high court (UPSEB vs District Magistrate). Disasters have been happening with distressing frequency in mines, industrial hubs and oil depots as in the case of the recent IOC fire in Jaipur. However, hardly anyone noticed the existence of this statute when the fire killed several people near the city and injured hundreds.
A look at the provisions of the law will show that even if they were invoked, there would hardly be any worthwhile relief to the affected people. Consider the rate of reimbursement in the following cases: Medical expenses up to a maximum of Rs 12,500; for fatal accidents Rs 25,000; for permanent total disability, medical expenses of Rs 12,500 plus Rs 25,000 and for loss of wages, Rs 1,000 monthly up to a maximum of three months.
Though environment clearance is insisted upon by the authorities in view of the Supreme Court’s tough stand, public liability insurance is largely ignored. In the UPSEB case, the board had not taken out a policy, but the court nevertheless held that even if there was no insurance, the board should compensate. The board had challenged even the measly amount awarded by the collector.
Normally, the negligent industrial unit pays a pittance to the affected persons as ex gratia and settles the matter. The government also joins in this phoney gesture. In last month’s Delhi high court judgment (Jaipur Golden Transport), the victims of a chemical fire were offered around Rs 5,000 each. However, they moved the high court for higher compensation. It raised the amount to Rs 6 to 8 lakh for each death.
Courts have recently been more liberal in granting compensation in torts cases. The Supreme Court, in the Shriram Fertiliser Industries case (1987), had devised the “strict liability” principle. It ruled that “if the enterprise is permitted to carry on any hazardous or inherently dangerous activity for its profit, the law must presume that such permission is conditional on the enterprise absorbing the cost of any accident arising on account of such hazardous or inherently dangerous activity as an appropriate item of its overhead”.
The court also emphasised that there are no exceptions to the rule of strict liability. Moreover, the amount of compensation would depend upon the capacity of the enterprise and not the earning capacity of the individual victims.
The Supreme Court has extended the doctrine to cover public utilities like the railways, electricity distribution companies, public corporations and local bodies “which may be social utility undertakings not working for private profit”. The ruling came last year in a claim against the railway (Union of India vs Prabhakaran). A woman fell on a railway track and was fatally run over. Her husband demanded and got compensation though the railways argued that the passenger also contributed to the accident. The Supreme Court said that her “contributory negligence” should not be considered; the railways has “strict liability”.
The doctrine of strict liability was propounded in a 19th century English case, Rylands vs Fletcher. According to it, people who engage in particularly hazardous activities should bear the burden of the risk of damage that their activities generate. Thus, corporations that handle water, electricity, oil, noxious fumes, colliery spoil or poisonous vegetation are covered by this doctrine. Negligence of the victims is no excuse. The Public Liability Insurance Act was passed following this principle. However, insurance is usually not in the minds of those who start an industry and the victims are invariably the poor and the inarticulate.
Our cities have several hazardous activities going on in the midst of residential areas. The truck in front of your car might be carrying nuclear fuel. A public interest case in the Supreme Court in 1985 had listed such frightening inferno points in Mumbai and Delhi. However, the government was content with verbal assurances. Even the Jaipur fire has not alerted the authorities to upgrade the law or enforce the Supreme Court judgments.
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