Uttarakhand HC Rules in Favour of Indigenous Communities over Ramdev’s Company

What does a community of indigenous people do when an Indian company, drawing astronomically high commercial profits from the bioresources sourced from and gathered from them, refuses to share fair and equitable benefits with them citing some ambiguous legal provisions, and deliberately ignoring the larger perspective which a central legislation seeks to achieve? What tools of interpretation of statutes should be employed to ensure that the community was not deprived of its inherent right to fair and equitable benefit sharing (FEBS)?

These were the questions that a bench of Justice Sudhanshu Dhulia of the Uttarakhand High Court had to confront while deciding the case of Ramdev-owned Divya Pharmacy.

In a judgement delivered on December 21 but made available to the public only this week, Justice Dhulia negotiated the fields of statutory clauses and India’s obligations under international treaties to rule against the avaricious corporation and in favour of indigenous communities.

Under the Biodiversity Act, 2002, Indian companies are as much liable to share their revenues as foreign entities when commercially exploiting natural resources that communities conserve, the court said, concluding that Ramdev’s Divya Pharmacy’s “plain and textual interpretation” to claim that Indian companies were exempt from the law, “defeats the very purpose, for which the law was enacted.”

Ramdev’s Contention

Ramdev’s company had filed a case contesting Uttarakhand State Biodiversity Board’s order demanding that the company share Rs. 20.4 million of its Rs. 4.21-billion revenue for 2014-15 with farmers as part of a legal obligation under the Biodiversity Act.

Divya Pharmacy claimed that under Sections 19 and 20 of the Act, FEBS should apply only to companies with a “foreign element” in their composition and mode of operation, and prior approval of the National Biodiversity Authority (NBA) is mandatory before levying any charge or duty on an Indian or Swadeshi corporation. Moreover, according to Section 7 of the Act, only the State Biodiversity Board could direct FEBS, and that the Uttarakhand Biodiversity Board did not have the delegated powers to do so.

The corporation contended that the court should give effect to the clear language of the statute and intentions of the legislature and quash the demands made by the State Biodiversity Board.

Uttarakhand’s Rebuttal

The Uttarakhand State Biodiversity Board (SBB) argued that under Section 7 of the Biodiversity Act, an Indian entity has to give prior intimation to the SBB, and the Board is imposing FEBS as part of its regulatory functions under Section 23 of the Act.

It also contended that Sections 23 and 7 have to be read in “the context of the purpose of the Act, and not literally”, for a plain reading of the statutory provision- without reference to the context and purpose of the legislation and the international treaties it was based on- would defeat the very purpose of the law.

In particular, SBB emphasised on the Rio De Janeiro Declaration on Biodiversity and the Nagoya Protocol accompanying it, both of which focused on FEBS and formed one of the rationales for bringing the Biodiversity Act into force.

Court’s Reasoning

The high court held that when the textual meaning, if literally taken, defeats the very purpose of the Act, the emphasis has to be on the context- what is FEBS and the importance of international treaties India has signed and ratified, especially because of the Supreme Court’s decision in- Apparel Export Promotion Council v AK Chopra (1999) and NALSA v Union of India (2014)- among others, which mandate a respect for international treaties and protocols under Article 51(c) of the Constitution.

Article 16 of the Rio Declaration and Article 5 of the Nagoya Protocol makes out a case for FEBS and does not draw a distinction between domestic and foreign entities, and makes it incumbent upon domestic legislations to give effect to FEBS.

In paragraph 72, the court said that the ambiguities in the statute, which imposes FEBS on a foreign company while giving relaxation to an Indian entity (according to Divya Pharmacy’s contention) has to be resolved by way of purposive as opposed to literal interpretation, and by taking into account the import of the Rio Declaration and the Nagoya Protocol.

In paragraph 78, the court relied upon the Canada Supreme Court’s seminal decision in the Rizzo Shoes Case which upheld the primacy of wide and purposive interpretation in cases where socially and economically beneficial legislations are concerned. It held that under Section 21(2), the NBA has the power to determine the benefit sharing agreements, and also the power to delegate such powers to the SBBs.

“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. Once we do that, we find that Under Section 2(f) and sub-section (4) of Section 21, the NBA has got powers to frame regulations in order to give payment of monetary compensation and other non-monetary benefits to the benefit claimers as the National Biodiversity Authority may deem fit, in form of Regulations and the State Biodiversity Board in turn has powers and duties to collect FEBS under the regulatory power it has under Section 7 read with Section 23 (b) of the Act,” the court held in paragraph 105.

The court asked, “Can it be said that the Parliament, on the one hand, recognised this valuable right of the local communities, but will still fail to protect it from an “Indian entity”. Could this ever be the purpose of the legislature?”

It said, “Biological resources are definitely the property of a nation where they are geographically located, but these are also the property, in a manner of speaking, of the indigenous and local communities who have conserved it through centuries.”

This decision is likely to have an adverse effect on not only Ramdev’s companies but also other such entities, but nonetheless, in a rare moment, the judiciary has stood up for justice to indigenous communities over windfalls to corporations.

Kanchi Kohli, a researcher affiliated with the Centre for Policy Research on the environment and biodiversity resources, while praising the judgement, told NewsClick, “The judgment is significant as it clarifies that the SBB’s regulatory functions include determining terms of access and benefit sharing. Indian entities like Patanjali, Dabur, Himalaya and others using resources can no longer just inform the boards and carry on business as usual.” 

The state boards are unlikely to be able to reject applications but will be able to regulate the non-compliance with the terms of FEBS.

However, the critical challenge with determining benefit sharing beyond fees and one-time payments remains. Further, how will the benefit sharing be operationalised in such a way that it does not hinder local access and conservation of the species. Conservation and sustainable use are the first two objectives of the biodiversity act.  Finally, while FEBS has become a dominant focus of the implementation of the biodiversity laws worldwide, the critical threat of biopiracy remains. We need far more innovative approaches that include delegation of powers to check one of the foremost reasons why the demand for biodiversity regulation had emerged.