Divya Pharmacy v Union of India

The case of Divya Pharmacy v Union of India is a landmark judgement in Indian environmental jurisprudence. It highlights the application of Fair and Equitable Benefit Sharing (Fair and Equitable Benefit Sharing) obligations under the Biological Diversity Act, 2002, emphasising India’s commitment to biodiversity conservation and the rights of Indigenous and local communities. The Uttarakhand High Court’s ruling clarified that Fair and Equitable Benefit Sharing provisions apply equally to Indian and foreign entities, thereby reinforcing the notion that biological resources are national property and subject to equitable utilisation.

Background of Divya Pharmacy v Union of India

Divya Pharmacy, an Ayurvedic medicine and nutraceutical manufacturing unit of the Divya Yog Mandir Trust, was founded by Swami Ramdev and Acharya Balkrishna. The trust is registered under the Societies Registration Act, 1908. The company utilises biological resources as raw materials for its products at its manufacturing unit in Haridwar, Uttarakhand.

In 2014, the Uttarakhand State Biodiversity Board (UBB) demanded Fair and Equitable Benefit Sharing payments from Divya Pharmacy under the Access and Benefit Sharing Guidelines, 2014 (ABS Guidelines), framed by the National Biodiversity Authority (NBA). Divya Pharmacy contested this demand, arguing that as an Indian entity with no foreign participation, it was exempt from such obligations. The matter was brought before the High Court for adjudication.

Laws Involved

1. Biological Diversity Act, 2002: Enacted to fulfill India’s obligations under international treaties like the Convention on Biological Diversity (1992). Mandates the conservation of biodiversity and equitable sharing of benefits arising from the utilisation of biological resources.
2. Access and Benefit Sharing (ABS) Guidelines, 2014: Provide the framework for calculating Fair and Equitable Benefit Sharing, including monetary and non-monetary contributions to local and indigenous communities.
3. International Commitments: Nagoya Protocol, 2010: Emphasises fair and equitable sharing of benefits arising from genetic resource utilisation, especially with indigenous communities.
4. Key Provisions of the Act:
   • Section 7: Requires Indian entities to give prior intimation to the SBB before accessing biological resources for commercial use.
   • Section 19 & 20: Foreign entities or Indian entities with non-Indian participation must seek prior approval from the NBA.
   • Section 23(b): Empowers the SBB to regulate commercial utilisation and impose Fair and Equitable Benefit Sharing obligations.

Issues Raised Raised

The issue raised in Divya Pharmacy vs Union of India were:

1. Applicability of Fair and Equitable Benefit Sharing to Indian Entities: Whether Indian companies using biological resources for commercial purposes are subject to Fair and Equitable Benefit Sharing obligations under the Biological Diversity Act, 2002.
2. Jurisdiction of the SBB: Whether the SBB has the authority to impose Fair and Equitable Benefit Sharing on Indian entities.
3. Constitutionality of Fair and Equitable Benefit Sharing: Whether Fair and Equitable Benefit Sharing obligations constitute an unreasonable restriction on the right to carry on business under Article 19(1)(g) of the Indian Constitution.

Appellant’s Contentions

1. Exemption for Indian Entities: Divya Pharmacy argued that Section 7 of the Act requires only prior intimation to the SBB, without any obligation for Fair and Equitable Benefit Sharing. Claimed that Fair and Equitable Benefit Sharing obligations apply exclusively to foreign entities or Indian entities with foreign participation under Sections 19 and 20 of the Act.
2. Lack of Jurisdiction: Asserted that the SBB lacked jurisdiction to impose Fair and Equitable Benefit Sharing on purely Indian entities. Cited State of Jharkhand v. Govind Singh, arguing for a strict interpretation of statutory provisions without adding words or expanding their scope. 
3. Violation of Fundamental Rights: Argued that the imposition of Fair and Equitable Benefit Sharing constitutes an unreasonable restriction on the fundamental right to carry on business, protected under Article 19(1)(g) of the Indian Constitution.

Respondent’s Contentions

1. Fair and Equitable Benefit Sharing as a Core Objective: The Union of India emphasised that Fair and Equitable Benefit Sharing is one of the Act’s primary objectives, consistent with India’s international commitments under the Nagoya Protocol and the Convention on Biological Diversity.
2. No Distinction Between Indian and Foreign Entities: Argued in Divya Pharmacy v Union of India that the Act does not distinguish between foreign and Indian entities for Fair and Equitable Benefit Sharing obligations. Both are required to contribute to biodiversity conservation and share benefits equitably.
3. Jurisdiction of the SBB: Highlighted that Section 23(b) empowers the SBB to regulate biological resource utilisation, including imposing Fair and Equitable Benefit Sharing obligations on Indian entities.
4. Community Rights: Stressed that Fair and Equitable Benefit Sharing ensures fair compensation to indigenous and local communities that conserve biodiversity, aligning with principles of environmental justice.

Divya Pharmacy v Union of India Judgement

1. Applicability of Fair and Equitable Benefit Sharing: The court in Divya Pharmacy v Union of India rejected the argument that Indian entities are exempt from Fair and Equitable Benefit Sharing obligations. Held that the Act applies to all entities—Indian or foreign—utilising biological resources for commercial purposes.
2. Powers of the SBB: Affirmed the jurisdiction of the SBB to impose Fair and Equitable Benefit Sharing under Sections 7 and 23(b) of the Act. The court in Divya Pharmacy versus Union of India slarified that the SBB’s role is regulatory and supervisory, extending to benefit-sharing arrangements.
3. Purposive Interpretation: Adopted a purposive interpretation, emphasising the Act’s objective of biodiversity conservation and equitable benefit-sharing. Cited precedents like Government (NCT of Delhi) v. Union of India, advocating for interpreting statutes in light of their purpose and international commitments.
4. Fair and Equitable Benefit Sharing as a Constitutional Measure: The court ruled that Fair and Equitable Benefit Sharing obligations do not violate Article 19(1)(g) as they serve a larger public purpose of environmental conservation and community welfare.
5. Quantum of Liability: Directed Divya Pharmacy to pay Rs. 20.4 million for the financial year 2014–2015, calculated based on:
   • 3-5% of the cost price of biological resources used, or
   • 0.01-0.05% of the annual gross ex-factory sales of finished goods.

Divya Pharmacy vs Union of India Summary

The Divya Pharmacy v. Union of India (2018) judgement by the Uttarakhand High Court reaffirmed that all entities, including Indian companies, must comply with the Fair and Equitable Benefit Sharing obligations under the Biological Diversity Act, 2002. The case involved Divya Pharmacy, a manufacturer of Ayurvedic medicines, challenging the Uttarakhand State Biodiversity Board’s demand for Fair and Equitable Benefit Sharing payments. 

The court in Divya Pharmacy v Union of India ruled that biological resources are national property, and benefit-sharing with local and indigenous communities is mandatory for biodiversity conservation. It dismissed the claim that Fair and Equitable Benefit Sharing applied only to foreign entities, emphasising that SBBs have regulatory powers under the Act. This landmark ruling strengthens biodiversity governance, aligns with global commitments, and upholds community rights.