PLI Act explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 3 makes the owner liable, without proof of fault, to reimburse or provide relief for death, injury or damage from an accident while handling a hazardous substance. Section 4 makes insurance compulsory: before an owner starts handling a hazardous substance, he must take out a policy against that liability, keep it renewed, and pay a further amount for the Relief Fund along with the premium.
This article is current as amended up to the Jan Vishwas (Amendment of Provisions) Act, 2023 (in force for this Act from 1 April 2024). That Act substituted section 3(1) and sections 4(1) and 4(2A). Later amendments and notifications should be checked. If your site handles hazardous substances, our compliance advisory team can help you check your insurance position.
Section 3(1): where death or injury to a person (other than a workman) or damage to property results from an accident, the owner is liable to reimburse such amount, or provide such other relief, as may be prescribed, for death, medical expenses, loss of wages, other injury or sickness and damage to private property. The claimant need not prove fault (section 3(2)). Section 4: every owner of an undertaking must take out insurance before handling any hazardous substance, renew it before expiry, and pay a further amount for the Relief Fund with the premium. A policy cannot be for less than the paid-up capital of the undertaking or unit.
Section 3: liability on the principle of no fault
Section 3(1), as substituted. "Where death or injury to any person (other than a workman) or damage to any property has resulted from an accident, the owner shall be liable to reimburse such amount, or provide such other relief as may be prescribed, for—
- (a) death due to fatal accident;
- (b) medical expenses incurred due to total or partial disability;
- (c) loss of wages due to partial disability;
- (d) other injury or sickness;
- (e) damage to private property; or
- (f) such other loss or damage, as may be prescribed."
The amount of relief is "as may be prescribed". The Act no longer prints a Schedule of relief rates, because the Schedule was omitted by the Jan Vishwas Act, 2023. This article states no relief figure; the amounts are in the rules, which are outside this article.
Section 3(2): no fault. In any claim for relief, "the claimant shall not be required to plead and establish that the death, injury or damage in respect of which the claim has been made was due to any wrongful act, neglect or default of any person". The claim turns on the accident and the injury, not on who was at fault.
Explanation. For this section "workman" has the meaning in the Workmen's Compensation Act, 1923, and "injury" includes permanent total or permanent partial disability or sickness resulting out of an accident. A workman is outside section 3(1) and is not the claimant under this Act.
Section 4: the duty to insure
Section 4(1), as substituted. "Every owner of any undertaking shall take out, before he starts handling any hazardous substance, one or more insurance policies for such undertaking or unit providing for contracts of insurance whereby he is insured against liability to give such relief or reimburse such amount referred to in sub-section (1) of section 3."
Explanation. An undertaking "having separate consent to operate" under the Water Act, 1974 and the Air Act, 1981 "shall be treated as a separate unit". A site with two separately consented units therefore needs insurance for each unit.
Proviso. An owner handling any hazardous substance immediately before the commencement of the Jan Vishwas Act, 2023 "shall take out such insurance policy or policies as soon as may be and in any case within a period of one year from commencement of that Act".
Section 4(2): renewal. Every owner shall get the policy "renewed from time to time before the expiry of the period of validity thereof so that the insurance policies may remain in force throughout the period during which such handling is continued".
Section 4(2A), as substituted. A policy taken out or renewed for any undertaking or unit "shall be for an amount which shall not be less than the amount of the paid-up capital of that undertaking or unit handling any hazardous substance owned or controlled by that owner and may extend to such amount as may be prescribed but not exceeding five hundred crore rupees". The Explanation: "paid-up capital", for an owner not being a company, means the market value of all assets and stocks of the undertaking on the date of contract of insurance.
Section 4(2B). The liability of the insurer under one policy "shall not exceed the amount specified in the terms of the contract of insurance in that insurance policy".
Section 4(2C). Every owner shall, together with the premium, "pay to the insurer, for being credited to the Relief Fund established under section 7A, such further amount, not exceeding the sum equivalent to the amount of premium, as may be prescribed".
Section 4(2D). The insurer shall remit that amount to the authority named in section 7A(3) in the manner and within the period prescribed, and if it does not, it is recoverable from the insurer as arrears of land revenue or of public demand.
Section 4(3): exemption. The Central Government may by notification exempt from section 4(1) the Central Government, any State Government, any corporation owned or controlled by either, or any local authority, but only if the owner has established and maintains a fund in accordance with the rules to meet liability under section 3(1).
Section 4 at a glance
| Sub-section | Rule |
|---|---|
| (1) | Insure before handling any hazardous substance; each separately consented unit counts as a separate unit |
| (2) | Renew before expiry so cover runs throughout the handling |
| (2A) | The amount is not less than the paid-up capital of the undertaking or unit, and may extend to a prescribed amount not exceeding five hundred crore rupees |
| (2B) | Insurer's liability under one policy is limited to the amount in the contract |
| (2C) | A further amount, not exceeding the premium, as prescribed, is paid for the Relief Fund |
| (2D) | The insurer remits the Relief Fund amount; failure is recoverable from the insurer |
| (3) | Central Government may exempt government and local authority owners that maintain a fund |
What follows from non-compliance
Contravening sub-sections (1), (2), (2A) or (2C) of section 4 attracts a penalty under section 14, as substituted by the Jan Vishwas Act, 2023, imposed by an adjudicating officer. The penalty, its appeal and the offence of non-payment are explained in sections 14 to 15B. For how the Act fits an ordinary industrial plant, see our guide to public liability insurance compliance for industries. The claim procedure is in sections 5 to 7, and the Fund in sections 7A and 8.
Practical points
- Insure before you start handling, not after the first consignment.
- Insure by unit. Separate consent to operate under the Water and Air Acts makes a separate unit.
- Set the sum insured at not less than paid-up capital of the undertaking or unit, and know how "paid-up capital" is read for a non-company.
- Diarise renewal so that cover never lapses while handling continues.
- Budget the Relief Fund amount, which is paid with the premium.
- Check the rules for the amount of relief and the prescribed figures; this article does not state them.
An example
Penna Solvents Private Limited has two units with separate consents to operate under the Water Act and the Air Act. Each is a separate unit for section 4(1), so the company takes out a policy for each before handling a notified hazardous substance. Each policy is for not less than the paid-up capital of that unit, and the company pays the further Relief Fund amount along with each premium. A leak injures a passer-by. The passer-by need not prove fault to claim relief under section 3.
Need help with insurance compliance?
An owner's duty to insure, renew and pay the Relief Fund amount is the heart of the Act for an industry. Our compliance advisory team can help you map your units, your hazardous substances and your policies against section 4.
Key takeaways
- The owner is liable to reimburse or provide relief as prescribed for death, medical expenses, loss of wages, other injury or sickness, and damage to private property, without proof of fault.
- Workmen are outside section 3(1).
- Every owner must insure before handling a hazardous substance and keep the policy renewed.
- Each undertaking with separate consent under the Water and Air Acts is a separate unit.
- The sum insured cannot be less than paid-up capital and has a statutory upper limit of five hundred crore rupees.
- A further amount for the Relief Fund is paid with the premium.
Read next
- Sections 5 to 7: Collector's verification, claim and award
- Sections 7A and 8: the Environment Relief Fund
- Sections 14 to 15B: penalties and appeal
- Public liability insurance compliance for industries
Disclaimer: Based on the Environment (Protection) Act, 1986, the Air (Prevention and Control of Pollution) Act, 1981 and the Public Liability Insurance Act, 1991 as amended by the Jan Vishwas (Amendment of Provisions) Act, 2023 (in force for these Acts from 1 April 2024), the Water (Prevention and Control of Pollution) Act, 1974 as amended by its Amendment Act of 2024 (which applies only in the States and Union territories it names and in States that adopt it), and the National Green Tribunal Act, 2010 as amended by the Tribunals Reforms Act, 2021, as consulted on 3 October 2026. Later amendments, rules and notifications should be checked. This article is general information, not legal advice; check the official text before acting.