Bombay and Uttarakhand High Courts Clarify Points on Benefit Sharing under the Biological Diversity Act

Two recent orders from the High Courts of Bombay and Uttarakhand raise jurisdictional and substantive points relating to the benefit sharing mechanism provided for under the Biological Diversity Act, 2002 (‘BDA’) along with the Biodiversity Rules, 2004. Both cases discuss the alternative of taking the cases at hand to the National Green Tribunal (‘NGT’) instead, and examine its jurisdictional powers. Regular readers of the blog will recall our previous posts on the topic, but read here and here for some background on the Act and the benefit sharing mechanism.

What is benefit sharing?

The BDA provides for regulated access to biological resources for various purposes, some of which are – scientific research, commercial utilisation, for bio-survey or for bio-utilisation. These conditions of access exist to ensure the conservation of biological diversity and fair and equitable sharing of the benefits arising out of the commercial use of biological resources and associated traditional knowledge. The Act further provides for prior intimation to be given to the National Biodiversity Authority (‘NBA’) or the State Biodiversity Board (‘SBB’) before biological resources are obtained, or biological activities are undertaken, under Sections 3, 4 and 7.

What is the NGT?

The NGT was established in 2010 under the NGT Act. A number of legislations have since been amended to provide for an appeal to lie with the NGT. They are: The Water (Prevention and Control of Pollution) Act, 1974 in Section 33A; The Water (Prevention and Control of Pollution) Cess Act, 1977, in Section 13A; The Forest (Conservation) Act, 1980, in Section 2A; The Air (Prevention and Control of Pollution) Act, 1981, in Section 31B; The Environment (Protection) Act, 1986, in Section 5A. The Public Liability Insurance Act, 1991, however, does not provide for any remedy before the NGT. The BDA, with which we are now concerned, in Section 52 provides for an appeal to a High Court from the NBA, or a SBB. However, since the insertion of Section 52A, an appeal may be filed before the NGT.

In this background, the two orders passed are as follows:

Bombay High Court

Through this writ petition – Central India Ayush Drugs Manufacturers Association & Ors. v. State of Maharashtra (the order is available here), the petitioners inter alia sought a declaration that Rule 17 of the Biological Diversity Rules, 2004 does not apply to Indian entities or body corporates. Rule 17 prescribes the procedure for seeking approval to transfer the results of research, and mandates an application to be made to the NBA for the same. Alternatively, it was prayed that the Rule should be declared ultra vires to the Sections 23 and 24 of the Biological Diversity Act (‘B.D Act’). These Sections prescribe the powers of the SBB, which is what the Petitioners sought to rely on to prove Rule 17 to be unconstitutional.

Unfortunately, the Court did not adjudicate on the substance of the matter, and this order only dealt with the preliminary, jurisdictional points brought up. The main issue in contention was whether the High Court has jurisdiction to hear the case, or whether it should have been taken to the National Green Tribunal (‘NGT’) instead.

The Respondents, contending that the NGT had jurisdiction to hear the matter, based their arguments on Section 14 of the NGT Act, 2010. Section 14 gives the Tribunal the power to hear ‘all civil cases’ that have a question relating to the environment. It was their stance that the case could be taken to the NGT as the present matter dealt with a challenge to subordinate legislation framed under the B.D Act. The Petitioners, in reply, claimed that a tribunal did not have the jurisdiction to hear a matter that challenged the validity of an Act or Rule. They argued that only if an enactment enabled a party to approach the NGT, were provisions of the NGT Act attracted.

The Court relied of the Supreme Court’s 1991 pronouncement in Alpha Chem & Anr. v. State of Uttar Pradesh, where it was held that the challenge to the constitutionality of a statute is maintainable under Articles 226 or 32, and was not open for proceedings before authorities constituted under a statute, or even in appeal before a High Court from such proceedings. The Court further observed that to qualify as a ‘civil case’ covered under Section 14: (1) the dispute must be civil in nature, (2) it must arise out of implementation of an enactment that provides an appeal to the NGT, listed in Schedule I of the Act, and (3) there must be a substantial question relating to the environment involved. Therefore, the Court concluded that the NGT cannot be said to have absolute jurisdiction to adjudicate on the validity of the enactments which confer appellate, or other jurisdiction upon it, or on the validity of any rules or regulations framed the enactments.

Uttarakhand High Court

In M/s Vishwanath & Ors. v. State of Uttarakhand (the order is available here), the High Court clubbed together several writ petitions for the sake of convenience. The Petitioners are primarily paper manufacturers who use bagasse, rice, husk, waste paper and wheat waste as raw materials. These raw materials are mainly from Uttar Pradesh and Bihar, but a small quantity is obtained from the Uttarakhand border. The Uttarakhand Government sent the Petitioners notices under Sections 7 and 24 of the B.D Act, threatening to take penal action. Section 7 mandates prior intimation to the SBB for obtaining biological resources for commercial utilization, bio-survey and bio-utilization for commercial utilization, while Section 24 gives the SBB the power to restrict or prohibit any of the above activities should they be found to be detrimental.

Like in the Bombay High Court order, the Respondents questioned the maintainability of the writ petitions, arguing that Section 52A allowed for an appeal to the NGT from an SBB or NBA order, which is where the grievance should have been filed. The Petitioners replied stating that the NGT wouldn’t have jurisdiction as there had been no ‘order’ passed, for one to be appealed. The Court held that the writ petitions were maintainable, and accepted the Petitioners arguments. They clarified first, that the notices sent were within the domain of the SBB, and had nothing to do with the NDA; and second, that there had been no order passed by the SBB to merit an appeal to the NGT.

The Petitioners argued that their raw material could not be considered ‘biological resources’ under Section 2(c) of the Act; and that they were an industry, which would again, not fall under ‘commercial utilization’ as defined in Section 2(f). In reply, the Petitioners claimed that waste paper would qualify as a biological resource. The Court directed the Petitioners to submit the required information to the Respondents in respect of the materials obtained from within the territorial boundary of Uttarakhand, but refrained from deciding whether waste paper would qualify to be a biological resource.

In a related development, the Uttarakhand Biodiversity Board recently issued notices to Baba Ramdev’s companies to pay a total of 12 crore as benefit sharing for the biological resources of Uttarakhand used in the manufacture of their products. The amount due is 10 crores from Patanjali Yogpeeth, and 2 crores from its subsidiary Divya Pharmacy. The orders are to be challenged in Court, and it is to be seen how much heed the companies will give to the notices, as implementation of the benefit sharing mechanism has been seen to be problematic in the past.

Hat-tip: Mr. Onkar Singh for bringing these orders to our attention!

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1 thought on “Bombay and Uttarakhand High Courts Clarify Points on Benefit Sharing under the Biological Diversity Act”

  1. In fact, cases in Madhya Pradesh set the basic foundation and highlighted the requirement of ABS Guidelines in place in India. Because, MPSBB has sent notices to many companies under section 7 of BDA 2002, wherein a percent ( 2%) of benefit sharing was asked to pay by the companies and they were threatened to take actions for non-compliance. Companies approached to the NGT to stop MPSBB to take coercive actions and challenged notices which was in form of order. Petitioner companies prayed (basically) that how a board can decide any percentage in absence of guidelines stipulated for this purpose? NGT asked central govt. to bring guidelines to decide percentage accordingly. Two-three times extension was sought and provided to bring ABS guidelines and it finally came in Nov 2014. Matters were directly to take fresh. After this, notice episode started by most of SBBs in India. Now, Guidelines is in place and but applicability of this and other rules is under challenges to various stakeholders. Hops coming days will bring more clarity as expected.

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