Deemed approvals and associated risks

Introduction

Deemed approval refers to a legal mechanism under which an application, permission, licence, or regulatory request may be treated as approved when the competent authority fails to communicate a decision within a prescribed period, provided the applicable law expressly creates such a consequence.

In biotechnology, deemed approvals may become relevant to research permissions, environmental clearances, manufacturing licences, clinical research activities, genetically modified organism applications, and other regulatory procedures. The mechanism is generally intended to reduce administrative delays, improve efficiency, and provide certainty to applicants.

However, deemed approvals also create significant legal and public safety concerns. Biotechnology activities may involve genetic engineering, biological materials, human participants, and potentially hazardous organisms. Treating regulatory silence as approval without adequate scientific assessment may create risks to public health, environmental protection, and research ethics.

Meaning and objectives of deemed approvals

Deemed approval is a statutory or legally recognized assumption that an application has received approval because the authority has not taken a decision within the prescribed period.

Its principal objectives include:

Administrative efficiency: Preventing unnecessary delays in regulatory procedures.

Business certainty: Allowing applicants to plan activities based on predictable timelines.

Reduction of bureaucracy: Limiting administrative inaction and procedural uncertainty.

Investment promotion: Encouraging biotechnology research and industrial development.

Accountability: Creating pressure on regulatory authorities to decide applications within prescribed periods.

For example, a biotechnology company applying for a manufacturing permission may seek a statutory remedy if the relevant authority fails to decide its application within the legally prescribed period. However, approval cannot be presumed merely because an authority remains silent unless the governing legislation expressly provides for deemed approval.

Legal framework in India

India does not establish a general deemed-approval mechanism for all biotechnology activities. Different regulatory laws prescribe separate approval procedures, and many require affirmative authorization.

1. Environment (Protection) Act, 1986

This Act provides the foundation for environmental regulation and biotechnology-related biosafety controls. The rules made under it regulate specified activities involving genetically engineered organisms and hazardous microorganisms.

The Rules for the Manufacture, Use, Import, Export and Storage of Hazardous Microorganisms, Genetically Engineered Organisms or Cells, 1989 establish regulatory supervision through bodies such as the Institutional Biosafety Committee (IBSC), Review Committee on Genetic Manipulation (RCGM), and Genetic Engineering Appraisal Committee (GEAC).

These rules establish approval and oversight requirements for specified activities. Regulatory silence should not automatically be treated as authorization where affirmative approval is required.

2. Drugs and Cosmetics Act, 1940

This Act regulates the manufacture, import, distribution, and sale of drugs in India. Biotechnology-derived medicinal products must satisfy applicable licensing and quality requirements.

An applicant cannot generally assume that a drug manufacturing licence has been granted simply because the authority has not responded within an expected period.

3. New Drugs and Clinical Trials Rules, 2019

These rules establish procedures for clinical trial permissions and regulatory applications concerning new drugs. They prescribe specific requirements and timelines for relevant applications. Their provisions must be followed rather than relying on an assumed approval.

4. Right to Public Services legislation

Certain Indian states have enacted public service guarantee laws that prescribe timelines for delivering notified government services. Some provide appeal mechanisms or consequences for administrative delay. However, such legislation does not automatically convert every biotechnology regulatory application into a deemed approval.

International legal framework

The General Agreement on Tariffs and Trade (GATT), 1994, and the World Trade Organization Agreement on Technical Barriers to Trade encourage transparent and predictable regulatory procedures. However, they do not establish a general requirement that biotechnology applications must be automatically approved when authorities remain silent.

The Cartagena Protocol on Biosafety, 2000 establishes procedures for decisions concerning certain transboundary movements of living modified organisms. Its advance informed agreement procedure recognizes the importance of risk assessment and regulatory decision-making. It does not create a general right to treat every unanswered biotechnology application as approved.

The OECD principles of regulatory policy and governance also support transparent, predictable, and accountable regulatory administration.

Important case laws

1. State of Punjab v. M/s. Shreyans Industries Ltd. (1993)

The Supreme Court examined the consequences of statutory provisions involving deemed permission under industrial regulatory legislation. The decision is relevant to understanding that deemed approval depends on the precise wording and conditions of the governing statute.

2. Municipal Corporation of Delhi v. Ram Kishan Rohtagi (1983)

The Supreme Court considered statutory responsibilities and legal accountability under regulatory legislation. Its broader principles demonstrate the importance of examining the authority, duties, and legal conditions established by the relevant statute before determining the consequences of regulatory inaction.

3. Bhavnagar University v. Palitana Sugar Mill (P) Ltd. (2003)

The Supreme Court emphasized that statutory provisions must be interpreted according to their language and legislative purpose. This principle is relevant when determining whether administrative silence can legally produce deemed approval.

4. Union of India v. Hindustan Development Corporation (1993)

The Supreme Court discussed legitimate expectation in administrative law. The judgment is relevant because applicants may expect authorities to follow established procedures and act fairly, but such expectations cannot independently create an approval that the law does not provide.

Associated legal and regulatory risks

Deemed approvals may create several risks in biotechnology regulation.

Public health risks: Activities may begin without adequate evaluation of biological or medical safety.

Environmental risks: Genetically modified organisms may create ecological concerns if required assessments are bypassed.

Scientific uncertainty: Regulatory authorities may not have sufficient time or information to evaluate complex applications.

Administrative disputes: Applicants and regulators may disagree about whether approval legally occurred.

Liability concerns: Organizations may face legal consequences if they rely on an approval that was never validly granted.

Public confidence: Automatic approval mechanisms may weaken trust in biotechnology regulatory institutions.

Safeguards and recommendations

A balanced deemed-approval framework should include:

Clearly defined statutory timelines and eligibility conditions.

Exclusion of high-risk biotechnology activities from automatic approval.

Mandatory scientific and biosafety assessments where required.

Written confirmation of the legal status of applications.

Transparent publication of regulatory decisions.

Effective appeal and review mechanisms.

Accountability for unreasonable administrative delays.

Conclusion

Deemed approvals can improve administrative efficiency and reduce regulatory uncertainty, but their application in biotechnology requires particular caution. Indian regulatory laws generally require compliance with specified approval procedures, and administrative silence does not automatically create permission unless the relevant statute expressly provides for that consequence. Judicial decisions such as State of Punjab v. Shreyans Industries Ltd. and Bhavnagar University v. Palitana Sugar Mill demonstrate the importance of statutory interpretation in determining deemed approval. A balanced approach should promote timely administration while protecting public health, environmental safety, scientific integrity, and regulatory accountability.