Baba Ramdev’s Divya Pharmacy bound to share profit with local communities under Biodiversity Act, Uttarakhand HC

The Uttarakhand High Court has dismissed a plea by Divya Pharmacy, an Ayurvedic pharmacy owned by Baba Ramdev and Acharya Balkrishna, challenging orders to share profits with local and indigenous communities, as part of the Fair and Equitable Benefit Sharing (FEBS) objectives of the Biodiversity Act, 2002..In a judgment passed last week, Justice Sudhanshu Dhulia rejected the position advanced by Divya Pharmacy that it does not have to share its revenue with the local and indigenous communities since it is an Indian company..A combined reading of Sections 2 (g) and 3 of the Biodiversity Act had led Divya Pharmacy to contend that it is only foreign entities using biological resources that can be made to share profits/pay fees under the head of FEBS..While defining FEBS, Section 2(g) mentions that the National Biodiversity Authority may determine the FEBS to be paid. Section 3 lays down that only entities (person or company) with a foreign element require permission from the National Biodiversity Authority before they undertake any activity using ‘biological resources.‘.On the other hand, Indian entities are regulated by the State Biodiversity Board (SBB) under Section 7 of the Biodiversity Act, among other provisions. As per Section 7, Indian entities may undertake activities involving the use of ‘biological resources’ only after intimating about the same to the SBB..While there was no dispute that Divya Pharmacy was using biological resources, the question was whether the SBB could also impose FEBS obligations on the company as part of their regulatory powers over Indian companies and persons using such resources..Divya Pharmacies argued that the SBB had no such powers since Section 2 (g) only expressly mentions such powers being conferred on the National Biodiversity Authority..Countering this stance, the Uttarakhand SBB, the Uttarakhand and the Central Government (respondents) argued that as far as FEBS obligations are concerned, there is no distinction between a foreign or an Indian entity. It was pointed out that the equitable sharing of benefits with the local and indigenous communities was one of three stated objectives of Indian Biodiversity law.The only exemption from such obligations was if the user of the biological resource is part of the local community (including growers and cultivators) or vaids and hakims who have been practicing indigenous medicines. This is laid down in the proviso to Section 7 of the Biodiversity Act, which confers the SBB regulatory powers over Indian entities exploiting biological resources.The Uttarakhand High Court, in turn, agreed with the respondents that the definition of FEBS must be interpreted broadly so that both Indian and foreign entities would be obligated to share benefits with the local and indigenous communities when a biological resource is exploited.It was noted that the Biodiversity Act itself calls for such a broad and purposive interpretation. Pertinent observations made by the High Court in this regard include the following,“… Section 2 of the Act, which defines various expressions in the Act opens with some important words, which are, “unless the context otherwise requires”. Meaning thereby that it is not mandatory that one should always mechanically attribute an expression as assigned in the definition clause.… when …[textual] interpretation results in an absurdity, or where it defeats the very purpose of the Act, then it becomes the duty of the Court to assign a “proper meaning” to the words or the phrase, as the case might be……a plain and textual interpretation here defeats the very purpose, for which the law was enacted!…What is Fair and Equitable Benefit Sharing cannot be looked through the narrow confines of the definition clause alone. The concept of FEBS has to be appreciated from the broad parameters of the scheme of the Act and the long history of the movement for conservation, together with our international commitments in the form of international treaties to which India is a signatory.“Such a purposive interpretation assumes more significance when the law in question is meant to be a welfare legislation, the Court observed.“It would be important to note that the purposive interpretation of law becomes particularly relevant when the legislation, which requires interpretation, is a socially or economically beneficial legislation. Here in the case at hand, it is clear that behind the very concept of FEBS lies the concern of the legislatures for the “local and indigenous communities.“.The Court went on to note that the various International Conventions and treaties which prompted the introduction of the Indian Biodiversity Act also called for complying with FEBS obligations, regardless of whether it was an Indian or a foreign entity exploiting the biological resource. Particular reference in this regard was made to the Nagoya Protocol, which introduced the concept of FEBS. In this backdrop, the Court held,.“…the Biological Diversity Act, 2002 has been enacted not merely in furtherance of an International treaty but it is rather to enforce a treaty obligation and therefore in case there is any difference between the language of a municipal Law and corresponding provision of the treaty, “the statutory language should be construed in the same sense as that of the treaty.”.In any case, the Court noted that the SBB has sufficient regulatory powers under the Biodiversity Act to demand the payment of FEBS as a regulatory fee..“At this juncture, it must be stated that regulating an activity in form of demand of a fee is an accepted practice recognised in law. Therefore, in case the SBB as a regulator, demands a fee in the form of FEBS from the petitioner when the petitioner is admittedly using the biological resources for commercial purposes, it cannot be said that it has no powers to do so.“.In view of these observations the Court went on to conclude that, even if it is an Indian Company, Divya Pharmacy is bound to comply with the Uttarakhand SBB’s direction to share profits with the local and indigenous communities. In this regard, the challenge made to Regulations 3-5 of the Biodiversity Regulations, 2014 was also rejected. Inter alia, the Court emphasised,