How is Public Liability Act Premium Bifurcated from the Environmental Relief Fund?

The environment relief fund is a part of the public liability insurance act. The inclusion of an environment relief fund was made in order to provide immediate relief to the plaintiff or victim of the accidents. The industries that deal in hazardous substances are mandated to pay a public liability act premium. They have to buy an insurance policy in order to provide relief to the victim.

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Public Liability Act Premium

The public liability act premium is the amount that is based on the risk associated with the company of the insured. The business must compulsorily subscribe to the public liability act premium in order to ensure the security of the individual.

The public liability act is the response or repercussion of absolute liability which was discovered in M.C. Mehta v. Union of India. The pronouncement of the case by the Supreme Court of India mandated industries to subscribe to the public liability insurance policy.

Bifurcation of Environmental Relief Fund (ERF)

The Public Liability Insurance Act of 1991 empowers the central government to organize the ERF in order to administer immediate relief to the victim of a tragedy. It provides them with rehabilitation and medical facilities. The fund is expected to compensate the family of the deceased and the survivors of an unfortunate event.

Section 3 of the Public Liability Insurance Act of 1923 states that the owner for the death or injury from an accident. He must grant immediate relief to the victim. Further, the section states that the owner must grant compensation for the damage caused to the property resulting from such an accident.

Clause 2 of the same section further states that the claimant is not required to establish or substantiate that the death or damage or loss has been caused or the claim has been made due to the wrongful act of the owner. The explanation of clause 2 states that the injury under this section shall include permanent or partial disability.

Award of Relief

Section 7 of the public liability policy states that:

  • The collector after releasing a notice for inviting applications from the victim of an accident shall grant the opportunity to the parties to be heard.
  • The collector shall conduct or hold an inquiry against the claim made by the parties and determine the award for such claims if found to be valid.
  • The collector shall further ascertain to deliver the copies of the award to the parties concerned to the event within fifteen days after granting the award.
  • The collector may enjoy the power of a civil court in order to take evidence or oath into the notice. Further, the collector shall be a deemed civil court as prescribed in section 195 of chapter XXVI of the CPC (Code of Criminal Procedure), 1973.

Establishment of ERF

Section 7A of the public liability policy act states that the central government, by issuing a notification under the official Gazette may establish the ERF. The ERF shall be utilized to reimburse the damage or loss caused to the public or property due to an unfortunate event.

Further, the central government by issuing a notification under the official Gazette may specify the following:

  • An authority under which the ERF shall be vested
  • The manner in which the ERF shall be administered
  • The manner in which the compensation of money of ERF should be drawn


Industries dealing with hazardous substances must subscribe to the public liability act premium. It must purchase liability insurance to grant immediate relief to the victim. The central government is expected to supervise the provision made under the act.

Written By: PolicyBazaar - Updated: 20 June 2023
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