In Central India Ayush Drugs Manufacturers Association v. State of Maharashtra (2016), the Bombay High Court upheld the statutory validity of Access and Benefit Sharing regulations applicable to domestic commercial manufacturers under the Biological Diversity Act, 2002. The Division Bench ruled that Indian entities utilizing local bio-resources for commercial utilization of biological resources must provide prior intimation to the State Biodiversity Board and comply with equitable benefit-sharing requirements. The decision affirmed that national conservation and local community benefit-sharing obligations apply to domestic enterprises and foreign entities alike.
Statutory Framework of the Biological Diversity Act 2002
The Parliament of India enacted the Biological Diversity Act, 2002 to give effect to the United Nations Convention on Biological Diversity (1992). The primary objectives of the statute are the conservation of biological diversity, the sustainable use of its components, and the Biological Diversity Act 2002 benefit sharing mechanism arising out of the utilization of biological resources and associated traditional knowledge.
The regulatory architecture divides oversight between two primary statutory bodies operating at central and state levels:
- National Biodiversity Authority (NBA): Regulates access to biological resources by foreign individuals, foreign entities, and non-resident Indians under Section 3 of the Act, ensuring that sovereign biological wealth is protected against unauthorized international exploitation.
- State Biodiversity Board (SBB): Regulates the commercial utilization of biological resources by Indian citizens and domestic body corporates under Section 7 and Section 24 of the Act, coordinating conservation efforts across provincial jurisdictions.
Section 7 mandates that no person who is a citizen of India or a body corporate registered in India shall obtain any biological resource for commercial utilization, or bio-survey and bio-utilization for commercial utilization, except after giving State Biodiversity Board prior intimation. This statutory notification enables regulatory authorities to monitor bio-resource harvesting and prevent ecological degradation.
Challenge by Domestic AYUSH Drug Manufacturers
The Central India Ayush Drugs Manufacturers Association, representing manufacturers of Ayurvedic, Yoga and Naturopathy, Unani, Siddha, and Homoeopathy drugs, filed a writ petition before the Nagpur Bench of the Bombay High Court. They challenged the validity of demand notices issued by the Maharashtra State Biodiversity Board requiring domestic manufacturers to pay equitable benefit-sharing fees.
The petitioners contended that Rule 17 of the Biological Diversity Rules, 2004 and the Guidelines on Access to Biological Resources and Associated Knowledge and Benefits Sharing Regulations, 2014 were intended to govern only foreign entities. They argued that domestic Indian companies purchasing herbs and raw materials from local markets were exempt from fair and equitable benefit sharing Indian entities mandates, asserting that such demands exceeded the statutory scope of Section 7 of the Act. When articulating jurisdictional boundaries in regulatory disputes, parties rely on precise legal frameworks as discussed in Statements of Issues.
The manufacturers further asserted that imposing monetary benefit-sharing levies on domestic pharmaceutical processors created an unfair economic burden, arguing that the parent Act reserved mandatory revenue sharing exclusively for foreign applicants under Section 21. They sought the quashing of all Board notices and a declaration that Indian businesses are exempt from benefit-sharing formulas.
Interpretation of Commercial Utilization and Intimation Rules
The Division Bench, comprising Justice B.P. Dharmadhikari and Justice A.S. Chandurkar, analyzed the statutory definition of commercial utilization under Section 2(b) of the Act. Commercial utilization means end uses of biological resources for commercial utilization such as drugs, industrial enzymes, food flavours, fragrance, cosmetics, and other similar products.
The Court observed that the legislative intent behind the Biological Diversity Act was not merely to restrict foreign exploitation, but to ensure that anyone profiting from India's biological heritage contributes to biodiversity conservation and local community welfare. Section 23 and Section 24 confer broad regulatory powers on State Biodiversity Boards to restrict, prohibit, or regulate activities that involve the commercial utilization of biological resources.
The Court held that Indian drug manufacturers who commercially exploit biological resources to produce pharmaceutical goods fall squarely within the regulatory ambit of Section 7. Prior intimation is not a mere ministerial formality; it enables the State Biodiversity Board to evaluate the environmental impact and determine fair benefit-sharing terms. Businesses navigating these complex regulatory environments often consult Expert Legal Drafting Services to ensure full statutory compliance with environmental mandates.
High Court Findings on Equitable Benefit Sharing Obligations
The High Court rejected the argument that the 2014 ABS Guidelines were ultra vires the parent statute. The Court held that the power of the National Biodiversity Authority under Section 21 to determine equitable benefit sharing operates in harmony with the functions of State Boards under Section 23 and Section 24.
The Bench emphasized the following key legal determinations:
- The Biological Diversity Act does not create a blanket immunity for Indian companies from contributing to biodiversity funds when utilizing commercial biological resources.
- State Biodiversity Boards possess the authority under Section 24(2) to regulate and levy fair benefit-sharing fees on Indian entities engaged in commercial manufacturing.
- Rule 17 of the 2004 Rules and the 2014 ABS Regulations provide a valid administrative mechanism for calculating and enforcing benefit-sharing contributions across both Indian and foreign commercial processors.
- The requirement of prior intimation under Section 7 is mandatory for any commercial entity extracting or utilizing biological resources within the state.
- Local self-government institutions and Biodiversity Management Committees are entitled to receive monetary support generated from benefit-sharing levies to support conservation at the grassroots.
Implications for Environmental Law and Traditional Medicine
The judgment in Central India Ayush Drugs Manufacturers Association v. State of Maharashtra stands as a landmark ruling in Indian environmental and intellectual property jurisprudence. It reaffirmed that sustainable development requires domestic industry to contribute equitably to the conservation of ecological resources from which it derives commercial profit.
For the AYUSH manufacturing sector, the decision confirmed that sourcing raw botanical ingredients triggers compliance obligations under the Biological Diversity Act. The ruling reinforced the role of State Biodiversity Boards in safeguarding local ecosystems and ensuring that traditional knowledge holders receive an equitable share of commercial proceeds generated from biological diversity. Subsequent litigations across India have consistently cited this decision to affirm the broad jurisdictional powers of state environmental boards.