DIVYA PHARMACY CASE

INTRODUCTION

India is home to an immense variety of flora, fauna, and associated traditional knowledge systems, making the effective conservation and management of biological resources a national priority. The Biological Diversity Act, 2002 was enacted in response to the Convention on Biological Diversity (CBD) to safeguard India’s biological heritage. Its principal objectives are the conservation of biodiversity, sustainable use of bio-resources, and fair and equitable sharing of benefits arising from their use with local and indigenous communities. The Act established a multi-tiered institutional framework, including the National Biodiversity Authority (NBA), State Biodiversity Boards (SBBs), and local Biodiversity Management Committees (BMCs).

In this backdrop, Divya Pharmacy v. Union of India, 2018 SCC OnLine Utt 1035, reached the Uttarakhand High Court after Divya Pharmacy contested the demand for benefit-sharing payment made by the UBB. The controversy raised critical legal and ethical questions about the scope of Fair and Equitable Benefit Sharingobligations, the rights of local communities, and the mandate of regulatory agencies. At stake was not merely compliance with domestic statutes, but also India’s fulfilment of international commitments under the Nagoya Protocol and CBD, and the ethos of environmental justice and sustainable development.

CASE TITLE, CITATION, AND COURT DETAILS

• Case Title: Divya Pharmacy v. Union of India & Ors.
• Citation: 2018 SCC OnLine Utt 1035
• Court: High Court of Uttarakhand, 
• Single Judge Bench: Justice Sudhanshu Dhulia
• Decision Date: 21 December 2018.

Factual Background

Divya Pharmacy, the manufacturing arm of Divya Yog Mandir Trust founded by Swami Ramdev and Acharya Balkrishna, uses local biological resources in Ayurvedic and nutraceutical formulations. In 2014, the Uttarakhand State Biodiversity Board (UBB) demanded payment from Divya Pharmacy under Access and Benefit Sharing (ABS) Guidelines, 2014 framed pursuant to the Biological Diversity Act, 2002. Divya Pharmacy contested the demand, arguing that as an Indian company with no foreign participation, it was not under an obligation to share benefits, asserting that Fair and Equitable Benefit Sharing(Fair and Equitable Benefit Sharing) obligations only apply to foreign entities under Sections 19 and 20. The matter was brought before the High Court for adjudication.

Laws Involved

• Biological Diversity Act, 2002

Enacted to fulfil 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.

• 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 Sharingobligations.

• 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.

• International Commitments

• Nagoya Protocol, 2010

Emphasises fair and equitable sharing of benefits arising from genetic resource utilisation, especially with indigenous communities.

Legal Issues

• Applicability of Fair and Equitable Benefit Sharingto Indian Entities

Does the Biodiversity Act require Indian companies to share benefits with local and indigenous communities when utilizing biological resources for commercial purposes?

• Jurisdiction of State Biodiversity Boards

Does the UBB have statutory authority to impose Fair and Equitable Benefit Sharingpayment on purely Indian entities?

• Constitutionality

Does compulsory Fair and Equitable Benefit Sharingconstitute an unreasonable restriction on business rights under Article 19(1)(g) of the Constitution? 

Arguments

Petitioner (Divya Pharmacy)

• Exemption for Indian Entities

Section 7 only mandates prior intimation, not payment, for purely Indian entities.Fair and Equitable Benefit Sharingobligations under Section 19 & 20 and prior approval apply solely to foreign entities or those with foreign participation.

• Violation of Fundamental Rights

Imposing Fair and Equitable Benefit Sharingamounts to unreasonable restriction on business under Article 19(1)(g) of the Constitution of India.

• Lack of Jurisdiction

The Board’s fee demand exceeds their statutory jurisdiction, especially when a strict interpretation is preferred in fiscal statutes. Cited State of Jharkhand v. Govind Singh

Respondents (Union of India)

• FAIR AND EQUITABLE BENEFIT SHARINGAS A CORE OBJECTIVE

The Union of India emphasised that Fair and Equitable Benefit Sharingis one of the Act’s primary objectives, consistent with India’s international commitments under the Nagoya Protocol and the Convention on Biological Diversity.

• 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 Sharingobligations. Both are required to contribute to biodiversity conservation and share benefits equitably.

• Jurisdiction of the SBB

 Highlighted that Section 23(b) empowers the SBB to regulate biological resource utilisation, including imposing Fair and Equitable Benefit Sharingobligations on Indian entities.

Community Rights

Stressed that Fair and Equitable Benefit Sharingensures fair compensation to indigenous and local communities that conserve biodiversity, aligning with principles of environmental justice.

Judgment: Ratio Decidendi and Reasoning

Justice Sudhanshu Dhulia ruled that the Biodiversity Act is welfare legislation. Its primary goal is protecting local and indigenous community interests, and ensuring fair sharing of benefits deriving from commercial use of biological resources. The judge interpreted the statute purposively, noting:

• Fair and Equitable Benefit Sharingobligations apply equally to Indian and foreign entities.
• Section 7 must be read in light of Section 23(b), empowering State Boards to regulate use and require benefit sharing, not just prior intimation.
• The Nagoya Protocol forms part of India’s international commitments, and the Act must accommodate these.
• Purposive Interpretation: Adopted a purposive interpretation, emphasising the Act’s objective of biodiversity conservation and equitable benefit-sharing. Cited precedents like Shailesh Dhairyawan v. Mohan Balkrishna Lulla (2016) and Kavalappara Kottarathil Kochuni v. State of Madras and Kerala, advocating for interpreting statutes in light of their purpose and international commitments.
• Mandatory Fair and Equitable Benefit Sharingis a reasonable restriction on business interests serving a greater public good; it does not violate Article 19(1)(g).
• 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.

The Court dismissed the petition, directing Divya Pharmacy to pay ABS for the relevant years as determined by the UBB, and solidified the role of State Biodiversity Boards in enforcing Fair and Equitable Benefit Sharingunder domestic and international law. 

Impact and Significance

• Landmark affirmation of domestic companies’ obligations under Fair and Equitable Benefit Sharing, clarifying regulatory powers of State Biodiversity Boards.
• Strengthens indigenous community rights and India’s compliance with the Nagoya Protocol.
• Sets a precedent for future ABS fee enforcement and biodiversity conservation efforts in India.
• Frequently cited for purposive statutory interpretation balancing commercial and community interests.

Conclusion

The Uttarakhand High Court’s decision in Divya Pharmacy v. Union of India is a landmark affirmation of the Biological Diversity Act, 2002’s broader objectives of biodiversity conservation, sustainable use of biological resources, and community welfare. This judgment clarifies that Fair and Equitable Benefit Sharing (FEBS) obligations apply to all entities exploiting biological resources for commercial purposes within India, regardless of whether they are domestic or foreign. The court’s purposive interpretation aligns the domestic legal framework with India’s international commitments under the Convention on Biological Diversity and Nagoya Protocol, underlining that biological resources are national assets whose benefits must be shared with local and indigenous communities. By rejecting a narrow statutory reading, the judgment underscores the importance of equitable redistribution of benefits as a tool to protect vulnerable communities and ensure environmental justice.

Importantly, this ruling strengthens the regulatory authority of State Biodiversity Boards, empowering them to enforce FEBS obligations effectively. It sends a clear message to industries and enterprises using biological materials that their activities are subject to oversight and that they have a social responsibility beyond mere profit-making. The decision balances economic interests with ecological sustainability and social equity, setting a precedent for the integration of environmental considerations into commercial enterprise.

Findings & Suggestions

Findings

• The Court held that the Biological Diversity Act, 2002 does not distinguish between Indian and foreign entities when it comes to Fair and Equitable Benefit Sharingobligations. 
• Both Section 7 and Section 23(b) empower State Biodiversity Boards to regulate the utilisation of biological resources and impose benefit sharing requirements, regardless of the entity’s nationality. 
• The judgment adopted a purposive interpretation, focusing on the Act’s objective of biodiversity conservation, community welfare, and India’s international commitments under the Nagoya Protocol.

Suggestions

• Clarity in Legislation: The Act would benefit from explicit language stating that Fair and Equitable Benefit Sharingobligations apply to all Indian entities to reduce litigation based on strict statutory interpretation disputes.
• Robust Mechanism for Fee Assessment: State Biodiversity Boards should use transparent criteria and processes for determining benefit-sharing amounts to ensure fairness and avoid arbitrary demands.

REFERENCE(S):

• STATUTES

1. Biological Diversity Act, 2002.
2. Access And Benefit Sharing Guidelines, 2014
3. Nagoya Protocol, 2010
4. The Constitution of India, 1950.

• CASES

1. Shailesh Dhairyawan v. Mohan Balkrishna Lulla (2016) 3 SCC 619
2. Kavalappara Kottarathil Kochuni v. State of Madras and Kerala, AIR 1960 SC 1080
3. State of Jharkhand v. Govind Singh, AIR 2005 SUPREME COURT 294.

• BOOKS

1. Pushpa Kumar Lakshmanan, Implementing the Nagoya Protocol on Access and Benefit Sharing in India 89–134 (Routledge India 2017).
2. S.R.Myneni, Environmental Law, (6th ed. 2025).
3. 3, Justice T S Doabia, Environmental & Pollution Laws in India, 105-211 (4th ed. 2022).
4. 1, S.C. Tripathi, Environmental Law, (8th ed. 2025).
5. 1, S.C. Shastri, Environmental Law, 7th ed. 2022).
6. 1, P Leelakrishnan, Environmental Law in India, (7th ed. 2025).
7. Commercial Law Publishers, Biological Diversity Act, 2002 along with Rules 2004, ed. by Commercial Law Publishers 100–140 (2024) (annotated bare act with commentary).
8. Oommen V. Oommen et al., Biodiversity Conservation Through Access and Benefit Sharing: Himalayas and Indian Sub-Continent 120–156 (Springer Nature 2023).

• websites

1. Biological Diversity Act, 2002 – Overview and Salient Features, Drishti IAS, https://www.drishtiias.com/to-the-points/paper3/biological-diversity-act-2002.
2. Overview of Biological Diversity Act 2002, BYJU’s, https://byjus.com/free-ias-prep/biological-diversity-act-2002.
3. Divya Pharmacy v. Union of India, 2018 SCC OnLine Utt 1035 (High Court of Uttarakhand, Dec. 21, 2018). 
4. Biological resources are property of Nation; Divya Pharmacy’s challenge to fair and equitable benefit sharing dismissed, SCC Online Blog (Dec. 29, 2018).
5. Divya Pharmacy v. Union of India High Court of Uttarakhand, India, Biotechnology Law Report, https://www.liebertpub.com/doi/full/10.1089/blr.2020.29161.zmn.
6. State of Jharkhand v. Govind Singh, AIR 2005 SUPREME COURT 294, https://indiankanoon.org/doc/1029488/.