Section 24(5) of the Plant Varieties Act Revived?

Section 24(5) of the Plant Varieties Act Revived?

Time Stamp: April 10, 2024 12:18 AM
Source Node: 2541930
Image from here

[This post is authored by SpicyIP Intern Vishno Sudheendra. Vishno is a second year law student at the NLSIU, Bangalore. His previous post can be accessed here.]

On 22nd February 2024, the Delhi High Court, in UPL Limited v. Registrar & Anr. (“UPL judgment”), made observations that prima facie revived Section 24(5) of the Protection of Plant Varieties and Farmers Rights Act, 2001 (“PV Act”). Some readers may know this section has had a recently troubled past. In 2016, a Division Bench of the DHC had declared it unconstitutional, only for a Supreme Court order to stay that holding some months later. (Read more about the division bench judgment here and the stay order here). The matter is still pending a decision by the Supreme Court, and its stay order remains in effect.

Section 24(5) of the PV Act provides the Registrar sweeping powers to prevent any “abusive act” against any third party, upon the receipt of an application by the applicant, during the period between the filing of the application for registration and the decision taken by the Authority on such application. The problem lies in having such sweeping powers even prior to the registration of the plant variety which can be exercised arbitrarily without even examining the requisite criteria (novelty, distinctiveness, uniqueness, and stability) to be a registered plant variety.

The SC stayed this judgment declaring its unconstitutionality, so what is this aspect of revival? Given the SC stay order, does it not mean the provision is in effect? Staying of a judgment does not mean that the findings are negated, but merely implies that the judgment is put on hold. However, the effect of each stay has to be interpreted in a context-specific manner to ascertain whether or not the findings of the judgment are on hold or merely its execution. Thus, determining the effect of stay, especially on judgments determining the unconstitutionality of a provision, which has broader ramifications, is not a simple question but requires significant analysis.

In this post, I seek to explore the effect of a stay order, the precedential influence of stayed judgments and the constitutionality of Section 24(5) in conjunction with examining the effect of the UPL judgment.

The Judgment

The appeal contested the Registrar’s decision to deny an application under section 24(5) of the PV Act, where the Registrar had reasoned that such protection is only effective after the registration of the plant variety. However, the court overturned this decision, stating that section 24(5) explicitly allows for protection during the period between the application for registration and the decision taken by the Authority on such application. 

Section 24(5) of the PV Act had been deemed ultra vires by the Division Bench of the Delhi High Court. Nevertheless, the Supreme Court stayed this declaration, raising questions about its effect on the High Court’s decision. The respondent argued that the stay does not nullify the Division Bench’s judgment but merely suspends its execution. Thus, there is no basis to interfere with the Impugned Order of the Registrar.

The Court observed that the impact of an interim stay is context-specific, varying based on the circumstances and issues involved. Each stay order must be assessed individually, considering the unique aspects of the case and legal complexities. While the Division Bench ruled on the constitutionality of section 24(5), the Supreme Court’s stay suspends this determination pending a final resolution. The continued precedential influence of the Division Bench’s judgment during the stay would contradict the intent behind the Supreme Court’s order.

The Court concluded that while the Division Bench’s declaration remains, it has no binding effect during the stay. Section 24(5) continues to be in force until the Supreme Court makes a final determination. Thus, the argument that section 24(5) has been erased from the statute was rejected. Therefore, the Court set aside the impugned order of the Registrar and held that the application under Section 24(5) of the PV Act must be reconsidered.

What is the Precedential Value of a Stayed Judgment?

The staying of a judgment puts on hold the operation and/or the execution of the judgment. A judgment cannot be enforced when it has been stayed. However, in most cases, the precedential value of the stayed judgment remains. [Refer to Tarun Jain (paywalled) and Aravind Datar]

A few principles from relevant case laws are as follows:

Therefore, from the above judgments, we may conclude that stayed judgments, in most cases, have precedential value. However, as cautioned by Aravind Datar (here), such claims cannot necessarily be made for stayed judgments declaring statutory provisions ultra vires because the declaration of such unconstitutionality has much wider consequences than just enforcement of a judgment between two parties.

In the UPL judgment, the Court did consider the Chamundi Mopeds case vis-a-vis the Supreme Court’s stay over the judgment declaring Section 24(5) of the PV Act unconstitutional. However, it interpreted the same to mean that the underlying rationale and analysis of the stayed judgment “continues to remain part of the legal discourse and may influence future deliberations and decisions” while its application concerning the provision’s unconstitutionality is on hold. On the other hand, the Court while considering another judgment held that this stayed judgment would “have no legally binding effect on this Court”. This seems contradictory because the court first acknowledges the precedential influence of the ruling but then implies that it has no legally binding effect. 

In the UPL judgment, the Court, by interpreting the Supreme Court’s stay of the Division Bench judgment declaring Section 24(5) unconstitutional as lacking precedential influence and binding nature, appears to have revived Section 24(5) of the PV Act. This ruling restores the legal position of the provision to its state before the Division Bench’s declaration of its unconstitutionality, even though the judgment has only been stayed and not reversed/quashed.

Unconstitutionality of Section 24(5) of the PV Act

The said section was declared unconstitutional, in Prabhat Agri Biotech v. Registrar of Plant Varieties (“Prabhat judgment”). The Court observed that the section’s placement within the Act appears paradoxical, as it grants broad and sweeping interim order powers, in any period between application stage to disposal of registration, in a section primarily focused on registration certificates. Though, as stated by the appellants, the provision was adopted in light of the International Convention for the Protection of New Varieties of Plants, 1991, the provision’s language offers sweeping authority to the Registrar, allowing for interventions against vaguely defined “abusive acts” without clear criteria or limitations. Moreover, the absence of objective criteria for the Registrar’s actions raises concerns about fairness and the rule of law. Such unchecked discretion contradicts constitutional principles of equality before the law and prohibition of arbitrary state action, as enshrined in Article 14 of the Constitution of India.

I argue that the declaration of unconstitutionality was a necessary and commendable action, considering the illogical nature of the provision. On one hand, registration mandates qualities like novelty, distinctiveness, uniqueness, and stability as outlined in Section 15(1). However, Section 24(5) offers protection from the application stage itself, which is arbitrary since it provides this protection without first determining the prior art needed to assess novelty, a crucial registration criterion, and as a consequence unjustly affecting bonafide prior users. Therefore, this arbitrary provision opens potential misuse to gain unfair advantages.

Further, such a provision incentivizes rent-seeking behaviour (associated with growing one’s existing wealth by manipulating the social or political environment without creating new wealth). The broad discretion granted to the Registrar would incentivize rent-seeking behaviour, where individuals or entities seek to profit by manipulating provisions rather than through genuine innovation. 

The final decision on the provision’s constitutionality is still pending, as the stay on the Prabhat judgment has been in place for over seven years without addressing its merits. Despite this lengthy stay, the Supreme Court is yet to commence hearings and decide regarding its constitutionality.

Conclusion

The UPL judgment. has reignited discussions on the constitutionality of Section 24(5) of the PV Act. While the Court’s interpretation of the Supreme Court’s stay seemingly revived the provision, questions persist regarding its constitutional validity. The court’s reasoning in Prabhat judgment highlighted significant flaws in Section 24(5), emphasizing its broad and sweeping powers without clear parameters or objective criteria. The absence of safeguards against arbitrary exercise of authority raises concerns about fairness and adherence to constitutional principles. The provision’s potential for misuse and its impact on bonafide prior users underscores the need for its reconsideration. Moreover, the provision’s tendency to incentivize rent-seeking behaviour poses more challenges. Therefore, while the declaration of unconstitutionality was a necessary step, the seeming revival of this problematic provision poses a challenge to ensure fairness and equity in the protection of plant varieties and farmers’ rights.

Time Stamp:

More from Spicy IP