Major setback for Ramdev

The judgment could impact not only Ramdev's widespread ayurveda and herbal products business but also that of many other pharmaceutical, ayurveda, herbal and cosmetic product manufacturers.
Nitin Sethi reports.

Ramdev's company Divya Pharmacy has claimed that 'swadeshi' companies should not share with farmers the huge profits and benefits they derive from selling India's bio-resources as their 'herbal' and 'ayurvedic' products.

But its plea has been shot down by the Uttarakhand high court.

The court has held that under the Biodiversity Act, 2002, Indian companies are as much liable to share their revenues as foreign entities when they commercially exploit natural resources that communities conserve.

The single Bench of Justice Sudhanshu Dhulia concluded the 'Plain and textual interpretation' of the law Ramdev's Divya Pharmacy made to claim Indian companies were exempt from it 'defeats the very purpose for which the law was enacted'.

The judgment could impact not only Ramdev's widespread ayurveda and herbal products business, but also that of many other pharmaceutical, ayurveda, herbal and cosmetic product manufacturers.

In the judgment last week, the high court rejected Divya Pharmacy's contention that apart from not sharing the profits and benefits with communities, the company, being a wholly Indian entity, did not even require permission from the government to commercially exploit the country's bio-resources for profits.

Divya Pharmacy had filed a case against the orders of the Uttarakhand State Biodiversity Board, which had demanded that the company share Rs 20.4 million of its Rs 4.21 billion revenue for 2014-2015 with farmers as part of legal obligation under the Biodiversity Act.

Before the court, it had pleaded that the Biodiversity Act did not apply to Indian companies.

It went a step ahead and claimed that sharing benefits from exploiting the country's natural resources with the local people was against the right to equality, enshrined in Article 14 of the Constitution.

It also said the state board's regulations levying the charges imposed 'unreasonable restrictions' on the Fundamental Right to Livelihood and business enshrined in Article 19(1)(g) of the Constitution.

Divya Pharmacy pleaded this before the court after negotiating with the state biodiversity board to reduce the amount they would have to share with farming communities. But, eventually when the state authority sent a formal notice of demand, the company took it to court.

The Biodiversity Act, 2002, was legislated after India ratified the UN Convention on Biodiversity. The two recognise the fact that many industries use lots of natural resources such as herbs and plant extracts that communities have protected and grown over centuries.

The convention and the law are meant to provide the communities 'equitable sharing of benefits' arising from exploiting these resources.

Under Indian regulations, a manufacturer has two options -- it can either pay a levy of 3% to 5% on the cost price of biological resources extracted or 0.01% to 0.05% of annual gross ex-factory sales of finished goods that contain one or more biological resources extracted from the state.

The amount is determined after negotiations with the entity.

The Uttarakhand high court judgment could bolster the case that other state biodiversity boards have made against industries exploiting biodiversity without sharing the profits they derive with the people.

The judgment reads, 'Can it be said that 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?'

'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.'

It added, 'Local and the indigenous communities in Uttarakhand, who reside in the high Himalayas and are mainly tribals, are the traditional 'pickers' of this biological resource. Through ages, this knowledge is preserved and passed on to the next generation. The knowledge as to when, and in which season to find the herb, its character, the distinct qualities, the smell, the colour, are all part of this traditional knowledge. This knowledge may not strictly qualify as an intellectual property right of these communities, but nevertheless is a 'property right'.'