In Central India AYUSH Drugs Manufacturers Association v State of Maharashtra (2016), the Bombay High Court at Nagpur examined the regulatory scope of the Biological Diversity Act, 2002, and held that constitutional courts retain writ jurisdiction to determine the validity of statutory rules, as the National Green Tribunal lacks authority to decide the constitutional vires of subordinate legislation.
Bombay High Court Decision on Biodiversity Law and Jurisdiction
The judgment pronounced on September 28, 2016, by a division bench comprising Justice B.P. Dharmadhikari and Justice A.S. Chandurkar addressed contentious regulatory obligations imposed on Indian pharmaceutical manufacturers. The primary controversy centered on whether Indian manufacturers utilizing local biological resources for commercial production of Ayurvedic, Unani, and Siddha medicines are obligated to pay access fees and share commercial benefits under the Biological Diversity Act, 2002.
The writ petition (Writ Petition No. 6360 of 2015) was filed by the Central India AYUSH Drugs Manufacturers Association, represented by prominent herbal medicine producers including Shree Baidyanath Ayurved Bhavan Pvt. Ltd. The petitioners challenged demands issued by the Maharashtra State Biodiversity Board requiring compliance with fair and equitable benefit sharing regulations.
Context and Grievances of AYUSH Drug Manufacturers
Under the Biological Diversity Act, 2002, and the Biological Diversity Rules, 2004, the regulatory architecture differentiates between foreign entities and domestic citizens. Section 3 mandates prior approval from the National Biodiversity Authority (NBA) for non-citizens and foreign corporations seeking to access biological resources. In contrast, Section 7 requires Indian citizens and domestic entities to provide prior intimation to the concerned State Biodiversity Board before obtaining biological resources for commercial utilization.
The AYUSH drug manufacturers biodiversity compliance dispute arose when the State Biodiversity Board issued notices demanding that domestic manufacturers enter into benefit-sharing agreements and deposit a percentage of their annual turnover. The manufacturers raised several core legal objections:
- Domestic Entity Exemption: Petitioners contended that Section 7 only mandates prior intimation and does not empower State Biodiversity Boards to impose benefit-sharing levies on domestic Indian companies.
- Subordinate Legislation Ultra Vires: The petitioners challenged the validity of Rule 17 of the Biological Diversity Rules, 2004, and the 2014 Guidelines on Fair and Equitable Benefit Sharing, arguing they exceeded the parent statute.
- Traditional Knowledge Protections: AYUSH manufacturers argued that indigenous systems of medicine utilizing commonly cultivated herbs should not be subjected to commercial access restrictions meant for bio-prospecting and foreign extraction.
Jurisdictional Demarcation: High Court Versus National Green Tribunal
Before evaluating the substantive merits of the regulatory guidelines, the High Court had to resolve a crucial preliminary objection raised by the State and the Biodiversity Board. The respondents argued that under the National Green Tribunal Act, 2010, any dispute concerning the implementation of the Biological Diversity Act falls within the exclusive jurisdiction of the National Green Tribunal (NGT), barring High Court jurisdiction under Article 226.
The High Court rejected the preliminary objection, clarifying the jurisdictional boundary between statutory tribunals and constitutional courts. The bench held that while the NGT handles environmental dispute resolution and implementation challenges, National Green Tribunal jurisdiction on statutory vires does not exist. Tribunals created by statute cannot examine the constitutional validity of parent statutes or subordinate rules framed by the legislature.
Because the writ petition challenged the legislative competence and constitutionality of the State Biodiversity Board access regulations and the 2014 Benefit Sharing Guidelines, the High Court held that the petition was maintainable under Article 226 of the Constitution.
Substantive Analysis of Biological Diversity Act Benefit Sharing
Addressing the core regulatory scheme, the Court scrutinized the balance between biodiversity conservation and domestic commercial rights. The Biological Diversity Act benefit sharing mechanism aims to secure equitable returns to local communities, forest dwellers, and biological resource conservers. However, the exact scope of levies applicable to domestic manufacturers required harmonious interpretation of Section 7 and Section 21 of the Act.
The Court analyzed that while foreign entities require prior approval from the NBA, domestic entities remain subject to the regulatory oversight of State Biodiversity Boards. The bench examined related administrative precedents on statutory compliance and regulatory jurisdiction, drawing comparisons with structural standards established in Manoj Kumar Sharma Vs. State of Chhattisgarh [Supreme Court of India, 23-08-2016] and corporate governance principles discussed in Vimal Kishor Shah Vs. Jayesh Dinesh Shah [Supreme Court of India, 17-08-2016].
Statutory Construction of Prior Intimation Versus Prior Approval
The High Court devoted close attention to the deliberate choice of language utilized by Parliament in Section 3 and Section 7 of the Act. Section 3 specifically requires foreign entities to obtain prior approval from the National Biodiversity Authority, whereas Section 7 employs the distinct terminology of prior intimation for Indian citizens and domestic entities. The petitioners maintained that an obligation to intimate cannot be converted by administrative circulars into an obligation to pay financial levies or obtain discretionary permits.
The Court observed that statutory interpretation must give full effect to legislative intent. When Parliament creates separate classifications for domestic entities and foreign corporations, executive rules cannot erase those distinctions without legislative amendment.
Implications for Ayurvedic Medicine Producers and Biodiversity Boards
The ruling in Central India AYUSH Drugs Manufacturers Association v State of Maharashtra established important principles for environmental and pharmaceutical law in India:
- State Biodiversity Boards must act within the precise statutory boundaries defined by the Biological Diversity Act, 2002, without imposing unauthorized fiscal demands.
- High Courts retain complete writ authority to review subordinate environmental regulations and determine their conformity with parent statutes.
- Domestic AYUSH manufacturers must maintain documented prior intimation records with State Boards while protecting traditional medicine practices from arbitrary levies.
- Statutory tribunals remain bound by parent legislation and cannot evaluate constitutional challenges to subordinate rules.
This decision set a crucial precedent for subsequent biodiversity litigation across India, reinforcing the necessity of clear statutory authorization for any administrative levy imposed on domestic commercial enterprises.