India: Biological Resources Are Property Of The Nation; Divya Pharmacy's Challenge To Fair And Equitable Benefit Sharing Dismissed

Last Updated: 27 February 2019
Article by S.S. Rana & Co. Advocates

On December 21, 2018, a Single Judge Bench of the Uttarakhand High Court ruled that Divya Pharmacy, an Indian company which was engaged in the manufacturing of Ayurvedic medicines, would be subjected to the fair equitable benefit sharing obligations under the Biological Diversity Act, 2002, (hereinafter referred to as "the Act") and thereby, the said company was required to make payment to the Uttarakhand State Biodiversity Board (hereinafter referred to as the 'UBB') as per the rates laid down in the Access and Benefit Sharing Guidelines, 20141.

Brief Facts:

  • "Divya Yog Mandir", is a Trust, registered under the Registration Act, 1908, and "Divya Pharmacy" (hereinafter referred to as 'the Appellant') is a business undertaking of this Trust. The Appellant manufactures Ayurvedic medicines and Nutraceutical products, at its manufacturing unit at Haridwar, Uttarakhand. The Trust and the Pharmacy were founded by Swami Ramdev and Acharya Balkrishna, according to the averments of the writ petition.
  • "Biological Resources" constituted the main ingredient and raw materials in the manufacturing of Ayurvedic and Nutraceutical products. Appellant was aggrieved by the demand raised by Uttarakhand Biodiversity Board (from hereinafter referred to as the 'UBB'), under the head "Fair and Equitable Benefit Sharing" (FEBS), as provided under the Biological Diversity Act, 2002, and the 2014 Regulations framed by National Biodiversity Authority.

Issues Raised:

  1. Whether the State Biodiversity Board could impose 'Fair and Equitable Benefit Sharing' as one of its regulatory functions on the Indian entities using Biological Resources?

Appellant's Contentions:

  • The Appellant in the instant case argued that the UBB could not raise a demand, under the head of "Fair and Equitable Benefit Sharing" (FEBS), as the Board neither had the powers nor the jurisdiction to do that.
  • It was contended that the Appellant was not liable to pay any amount or make any kind of contribution under the head of "FEBS" as SBB had no power to impose FEBS in respect of persons referred under Section 7 of the Act.
  • Appellant contended that as per Section 19 and 20 of the Act, a prior approval was required from National Biodiversity Authority (hereinafter referred to as the 'NBA') by any person defined under Section 3 (2) of the Act, and such persons who were not the citizens of India, or even though a citizen of India, they were still non-resident Indian, and if it was a body corporate, association or organization, it was not incorporated or registered in India, or if incorporated or registered in India under any law for the time being in force, it had a non-Indian participation in its share capital or management. For an Indian entity such as the Appellant, the provision was provided under Section 7 of the Act, which provided that the "prior intimation" was to be given to the State Biodiversity Board (SBB). It was contented that the requirement of FEBS would arise only if the approval was required under Section 19 and 20 of the Act.
  • In order to substantiate its case, the Appellant relied in the case of State of Jharkhand v. and another v. Govind Singh2 , wherein the Court held that "where the "language" is clear, the intention of the legislature is to be gathered from the language used. What is to be borne in mind is as to what has been said in the statute as also what has not been said. A construction which requires, for its support, addition or substitution of words or which results in rejection of words, has to be avoided, unless it is covered by the rule of exception, including that of necessity, which is not the case here."

Respondents' Contentions

  • The Union of India were the Respondents in this case.
  • It was contended that the FEBS was one of the three major objectives sought to be achieved by the Act in accordance with the international treaties and conventions to which India is a signatory. It was submitted that with regard to FEBS, there was no distinction between a "foreign entity" and an "Indian entity", otherwise the very basis of the International treaties and conventions would be defeated.
  • It was alleged that the regulation and control of the Indian entity was given to SBB under the Act and SBB had the authority to impose FEBS as one of its regulatory functions under Section 23 of the Act.
  • The Respondent contended while explaining the functions of SBB under Section 23 of the Act that sub-section (b) of Section 23 has to be read with Section 7 of the Act and reading of both the provisions would mean that although an Indian entity has to give "prior information" only to SBB, SBB has the powers to "regulate by granting of approvals or otherwise requests for commercial utilization or bio-survey and bio-utilization of any biological resource by Indians".
  • Respondents contended that the appeal before the National Green Tribunal lies under Section 52A of the Act against any order passed by NBA or SBB regarding determination of benefit sharing which itself depicted that the SBB had powers to impose FEBS on Indian entities.
  • It was alleged that reading Section 32 of the Act would show that the SBB had got an important role to play in the field of FEBS.
  • It was contended that it was perused from the Act that it starts from the words "in this Act, unless the context otherwise requires", which meant that the definitions of the words provided under Section 2 of the Act had to be given such interpretation as applied under normal circumstances but if the application of the definition loses its purpose, the context would require a different examination.
  • It relied on Nagoya Protocol of 2010 and said that in the said protocol emphasis was put on "Fair and Equitable benefit sharing" and the importance of indigenous and local communities in this regard.

Court's Decision:

  • The Court specified that as Section 2 of the Act starts with "unless the context otherwise requires", it is not mandatory that one should always mechanically attribute an expression as assigned in the definition clause. The Court relied in the case of Venguard Fire and General Insurance Co. Ltd., Madras v. Fraser & Ross3.
  • The Court had placed reliance on the international treaties and conventions and stated that even the conventions and treaties had recognized the importance of biological diversity for evolution and for maintaining life sustaining systems and the desirability of sharing equitably benefits arising from the use of traditional knowledge, innovations and practices relevant to the conservation of biological diversity and the sustainable use of its components. It was stated that the Biodiversity Act, 2002 was drafted taking into consideration the international commitments made by India vide treaties and conventions.
  • The Court had also placed its reliance on international convention Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits arising from their Utilization to the Convention on Biological Diversity and one of the main objectives of the conservation of biological diversity is fair and equitable sharing of genetic material, including the traditional knowledge associated with the genetic resources and the benefits arising out from their use. It was clarified by the Court that as per the protocol the beneficiaries of the FEBS are the "local and indigenous communities". It was laid down that the Parties shall endeavor to support the development by indigenous and local communities, including women within these communities.
  • The Court relied in the cases of Maharashtra State Cooperative Bank Limited v. Assistant Provident Fund Commissioner and others4 , Shailesh Dhairyawan v. Mohan Balkrishna Lulla5, Government (NCT of Delhi) v. Union of India and another6 , and placed emphasis on the principle of purposive interpretation of law.
  • The Court held that the State Biodiversity Board has powers and duties to collect FEBS under the regulatory power it has under Section 7 read with Section 23 (b) of the Act and the NBA has got powers to frame necessary regulations in view of Section 21 of the Act.

Footnotes

1. Available at http://nbaindia.org/uploaded/pdf/Gazette_Notification_of_ABS_Guidlines.pdf (Last visited at Jan 4, 2019).

2. (2005) 10 SCC 437

3. AIR 1960 SC 971

4. (2009) 10 SCC 123

5. (2016) 3 SCC 619

6. (2018) 8 SCC 501

For further information please contact at S.S Rana & Co. email: info@ssrana.in or call at (+91- 11 4012 3000). Our website can be accessed at www.ssrana.in

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