Needed: Public Liability Insurance & Punitive Damages for Man-made Tragedies
In December 2021, DS Ranga Rao, a retired government officer and his wife visited a State Bank of India (SBI) branch at Thane in Maharashtra. He fell from a shaky, unstable ladder in the locker room, causing him to sustain major injuries needing surgery. SBI refused to acknowledge any responsibility or offer compensation. Bank officials would not even call an ambulance until he agreed to pay for it. Guided by Moneylife Foundation, Mr Rao filed a complaint with the branch, escalating it to the nodal officer and then taking it up with the banking ombudsman (BO) office. At each stage, his claim was summarily rejected. To add insult to injury, the BO made its decision non-appealable. When we escalated the matter to the highest levels in the Reserve Bank of India (RBI), Mr Rao’s costs were partially compensated. (Read: Moneylife Impact: SBI Finally Pays Reimbursement of Medical Expenses to Customer Who Suffered Accident inside Branch Premises
Every day, people with modest means get maimed or lose their lives in public places such as banks, restaurants, cinemas, theatres, malls, hospitals, hotels and airports, or while accessing bridges, roads and ropeways. 
The terrible disaster in Morbi, where at least 135 people died when a bridge collapsed, is only the latest such tragedy. 
The most horrific was the Bhopal gas disaster of 1984 which killed tens of thousands and maimed lakhs. 
All these situations come under what is called public liability, a branch of the Law of Torts that recognises that those who cause bodily harm, property damage or financial loss to others, on their premises or due to their operations, are liable in law to provide financial compensation to the victim.
In India, seven years after the Bhopal gas tragedy, the government enacted the Public Liability Insurance (PLI) Act, 1991, which made both compensation and insurance mandatory, but only for hazardous industries. 
Businesses often take a general liability cover which can be used to compensate victims. But there is no mechanism, compulsion or public pressure to do so. Indeed, SBI didn’t have to compensate Mr Rao out of its pocket; it had taken general liability insurance which the branch was unaware of! 
This is also the plight of victims of accidents or fires caused by faulty equipment or improper maintenance at all public places. Since insurance is non-mandatory and awareness is low, liability insurance is practically useless in dealing with public tragedies such as a fire in a mall or cinema house. All we have is ex-gratia and ad-hoc payments handed out by governments. 
What Needs To Be Done?
A recently released study by Uttara Vaid Advisory for Moneylife Foundation has also identified lacuna in both the PLI and general liability and has provided a slew of recommendations to make them workable. 
The first step would be to expand the Public Liability Insurance Act and make it mandatory for businesses and other non-commercial organisations for injury, death, or damage caused to the general public. 
The report also suggests setting up a separate judicial forum for victims of non-industrial mass casualties like the successful motor insurance tribunal, so that their cases can be fast-tracked. You can read the full report here
There is a second, more sophisticated but far more difficult, approach that the economic advisory council has initiated. In a paper titled "Fair Compensation And Accountability: Why India Needs Punitive Damages and Stronger Torts Law" issued a few days ago, Aditya Sinha & Bikashita Choudhury have advocated introducing torts law in India incorporating punitive damages. 
The paper narrates the 2014 tragedy of an 11-year-old girl drowning due to the sudden release of water from an upstream dam. The Sikkim High Court awarded a Rs5 lakh compensation to the parents, holding the National Hydroelectric Power Corporation negligent. Yet, in 2020, two people lost their lives to the sudden release of dam water. This time, the court ordered the victims to be paid Rs35 lakh each for violation of guidelines issued in the earlier case.
The paper argues that were there a codified torts law and exemplary cost imposed (say Rs50 crore) “at the first instance, perhaps, the guidelines would have been implemented sooner, and no repetition of the tragedy may have occurred.” This is called, ‘punitive damages’, which is a monetary fine over and above actual damage.  “A codified law of torts would eliminate the need to keep developing new legislation each time a new form of injury or violation occurs. It would also prevent a repetition of denying adequate relief to victims, as happened in the Bhopal gas tragedy,” says the paper. 
However, judges and advocates find it difficult to accept the concept of punitive damages. In clear cases of negligence, the civil, criminal or consumer courts do not stir themselves to offer adequate compensation, forget about exemplary damages. 
Also, the idea of punitive damages goes hand in hand with the contingency fee system for lawyers, as practised in the US. It creates an incentive to go after negligent bodies. 
In India, lawyers have no incentive to seek punitive damages for their clients, and actually discourage demand for compensation, fines and penalties beyond actual costs. 
We saw this in action in our case, when the Bombay High Court imposed an unprecedented Rs50 lakh fine on National Stock Exchange (Rs47 lakh for two hospitals) to harass us with a defamation case. The fine alarmed the senior advocates, although they would freely charge Rs50 lakh for a few appearances (or even non-appearances). 
While contingency fees and punitive damages are the right steps, it would be tough to implement them. There would be unified opposition from businesses and their shills in the legal ecosystem, who have the most to lose. It would be more practical to amend the PLI Act with steep inflation-adjusted compensation, if we want to offer justice to victims of public-place mishaps. 
However, even that would not be easy. The government itself would strongly oppose them, especially the state governments which are responsible for innumerable tragedies caused by potholes to bad roads or no signage to collapsing bridges and so on. It will require tremendous political will to bring about public liability insurance and punitive damages. But we deserve it and it should have been done decades ago.
(This article first appeared in Business Standard newspaper)
1 year ago
Thank you Mr. Debashish and the MLF team for once again highlighting my agony and trauma in the press and in these columns and thus rightly pointing out the need for Public Liability Insurance for the hapless victims of injuries, sometimes serious too, as happened in my case, in public places. But for the humongous efforts by the MLF, I wouldn't have got a penny from the Bank which was in the defiantly denial mode right from the beginning. I'm thankful to the MLF for getting me at least the part medical reimbursement by moving the mountains. I remain hoping against hope to see your campaign for the Public Liability Insurance Act come into force soon and no more victims will be left in the lurch.
1 year ago
Best advertisement for any product is a satisfied customer - legal way satisfaction comes with a cost, time and patience which is not available in India ! New ways to be evolved to make it popular like providing self protection liability policies - insurers can offer these covers to individuals and when they get impacted insurers pay the cost of injury including medical help.
Try this may be useful as with risk getting evolved newer ways to connect can help - illegal route was always available since last 30 years ! This may change perception and mindset once claims are getting paid and for recoveries insurers knock the doors of negligent party !
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