> 03 April, 2024

Why SC has turned up the heat on

Patanjali and the government, again
Ujjaini Dutta +1

BUSINESS
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ns The Supreme Court does not want to spare

Patanjali
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Baba Ramdev seems to have found himself in a bind again. He and the co-founder
of Patanjali Ayurved—managing director Acharya Balkrishna—were given some
stick by the country’s apex court on Tuesday. The Supreme Court has charged the
company for contempt for defying its orders on publishing misleading
advertisements.

“Not just the Supreme Court, every order passed by the courts across this country
has to be respected. This is absolute defiance,” a bench of justices Hima Kohli and
Ahsanuddin Amanullah noted, adding, “Be ready for action.”

The Supreme Court’s contempt case stems from a petition lodged by the Indian
Medical Association against Patanjali's advertisements last year. The ads attacked
allopathy and allegedly propagated unsubstantiated claims about Patanjali’s
products curing ailments such as COVID-19, diabetes, blood pressure and
depression. Again, there was no clinical evidence supporting these assertions.

In November last year, the Supreme Court had issued a strict warning and ordered
the supplement seller to refrain from its “false advertisements.” But despite
assurances to the court, Patanjali did not stop. Last month, a two-judge SC bench
issued the company a contempt notice and banned it from advertising any product
that claims to cure diseases. Besides the contempt notice, the SC also asked the
company to file an affidavit explaining how it has tackled misleading
advertisements. For more details about the February hearing, read this edition.

By Tuesday, the Supreme Court had clearly had enough. Despite Balakrishna and
Ramdev apologizing, the top court refused to accept it outright.

None spared: Not just Patanjali, the SC also took the Ayurveda, Yoga and
Naturopathy, Unani, Siddha and Homeopathy (AYUSH) Ministry to task for
inaction against Patanjali’s advertisements. The court said that the ministry should
have made it clear that ayurvedic products are not intended to replace allopathic
treatment and criticized the government for not acting against Patanjali despite its
attempts to undermine modern medicine.

“Because the contemnors were going to town saying that this is the answer and the
cure and there is nothing available in modern science that can address it (COVID-
19). And they were aware of the fact that they were cautioned to not do that. We are
assuming even if you did not put it in the public domain, at least you told them that
it is nothing more than a supplement, do not tom-tom it as a cure. Still, you chose to
keep your eyes shut. We are wondering why the Union of India did it?” the bench
said.

The bench also chastised Balkrishna for trying to pass the buck to the company’s
media department—he claimed that this department was not aware of the top court’s
order.

“We are not willing to accept such an explanation… Your media department is not a
standalone island in your office is it…that it wouldn’t know what is happening in
the court proceedings? And proceedings of such a serious nature. So your apology is
not persuading this court really to accept it. We think it’s more of a lip service,”
Justice Kohli said.

The biggest pain point for Patanjali in this case is the Drugs and Magic Remedies
Act, which forbids misleading advertisements regarding certain diseases.

The Act in focus: In its February order, the SC had prohibited Patanjali from
advertising products for any ailments listed in the Drugs and Magic Remedies
 gp y g g
(Objectionable Advertisements) Act, 1954. The act explicitly prohibits advertising
cures for 54 specified diseases. These include cures for disorders of the nervous
system, menstrual flow and optical system, epilepsy, bladder stones, heart diseases,
blood pressure, obesity and tubercolosis, among others.

Several of Patanjali’s products claim to cure these even now—a quick look at the
company’s website proves this.

It regulates drug advertisements—in written, oral and visual mediums—and

prohibits claims of magical properties in remedies. The act defines “drug” as
medicines for human or animal use, diagnostic substances and items affecting body
functions. Talismans, mantras and charms that claim to heal or influence bodily
functions can also be deemed as “magic remedies”. Violations can lead to
imprisonment or fines.

Everyone involved in ad publication—from manufacturers, distributors, advertisers,

and company directors and managers—can be held liable if they were aware of or
ignored the violation.

The act was in the spotlight again in Tuesday’s hearing because Balkrishna’s
apology to the court said that the law was “in an archaic state” and passed during a
time when scientific evidence in Ayurveda research was insufficient.

But the bench was not pleased with this and called criticism of the act nothing but
defiance by Patanjali:

“Even today, one of the statements made by you in your so-called unqualified
apology is that the Act itself is archaic. So shall we assume that every Act which is
archaic shall not be implemented or enforced in law? An Act remains an enactment
archaic shall not be implemented or enforced in law? An Act remains an enactment,
which has to be enforced as a law of the land till it remains on the statute book,” the
bench said.

Defending their stance, Patanjali’s representative contended that the act was passed
in 1954, and claimed that the company has conducted its own trials and science too
has progressed far ahead since then. But the bench had harsh words in response:

“Do you think you can write anything for an apology and get away with it? We are
not so magnanimous, especially in contempt cases,” Justice Amanullah said. “Be
prepared for all consequences.”

It remains to be seen whether Patanjali will face perjury proceedings or strictly rein
in its claims.

Also read:

The rise of misleading advertisements in India

The insidiousness of Baba Ramdev
Baba Ramdev’s sermons on Patanjali’s cure-all drugs are flirting with the
law
Patanjali has ‘cures’ for incurable diseases but no clinical evidence

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BUSINESS
Byju’s is at it again: 500 laid off without any
notice
Cash-strapped Byju’s has resorted to laying off employees abruptly as the situation
gets more and more dire. According to The Economic Times, about 500 staffers
have been let go. Around half of them worked in Byju’s tuition division.

The layoffs, likely a result of the cash crunch facing the edtech major, which has not
been able to raise fresh capital and faces several lawsuits, primarily affected those in
the sales and marketing divisions.

Also read: What after Byju’s for Indian edtech?

The ET report added that those workers whose services were terminated were
identified as low performers. However, they were not put on any performance
improvement plan or given a notice period. A Moneycontrol report citing former
workers suggested that the layoffs may have been because of employees’ high salary
packages or based on weekly sales targets.

A CNBC-TV18 report said the company could further trim its workforce by 1,000-
1,500.

However, Byju’s remained defensive about the move: “..we are going through an
extraordinary situation in the company because of the ongoing litigation with four
foreign investors, where every employee and the ecosystem is going through
tremendous stress, given the present circumstances. We regret the unfortunate
situation the company has been forced into,” it said.

Also read: Byju Raveendran and the art of deception

Over the last 24 months, Byju’s has let go of more than 45,000 people, as it tries to
fight multiple fires and cut costs to remain afloat The company which had over
fight multiple fires and cut costs to remain afloat. The company, which had over
58,000 people in March 2022, is now left with just around 10,000 employees,
maybe less.

On Monday, we wrote that the company notified its remaining employees of another
salary delay—for the third consecutive time. In a note to employees, the firm said
the delay stems from “misguided foreign investors” who have restricted the firm’s
usage of the funds raised through its $200 million rights issue through an interim
order. We have written about how this rights issue seems like an arm-twisting tactic
by the company to get existing investors to put in capital here.

The Morning Context has extensively and exclusively written about Byju’s troubles
even before it fell from grace in the public eye. Read our complete coverage here.

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BUSINESS

Paytm resumes loan operations

Weeks after the Reserve Bank of India placed stringent curbs on its payments
division, Paytm resumed its loan operations.

According to a Moneycontrol report, citing insiders in the know, Paytm resumed

lending from 21 March and the fintech major has disbursed loans worth Rs 500
crore—including top ups and largely to merchants.

In January, the RBI asked Paytm Payments Bank to pause all fresh deposits and
credit transactions for “persistent non-compliance” with norms. We explain this in
detail here. One of the major lapses the central bank found was negligence on know-
your-customer, or KYC, processes. For more on this, read our explainer on Indian
fintechs’ KYC debacle.

While Paytm and its payments bank are separate entities, several banking partners
had sought clarity on the central bank’s curbs. Many of Paytm’s merchants and non-
banking financial entities making their offerings through the platform had set up
automatic payments through the fintech firm’s payments arm.

Also Read: The next big worry for Vijay Shekhar Sharma

After the RBI’s curbs, Paytm has tried to move these accounts with other banking
partners. The report added that it is negotiating with Muthoot Finance to be its
lending partner for both personal and merchant loans.

Also Read: India’s credit card industry is undergoing a clean-up and With Paytm,
RBI’s role is to regulate, not provide investor guidance.

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 WORLD

Tiger Global closes 16th fund at a third of its

original $6 billion target
Tiger Global Management fell significantly short of its $6 billion fundraising target
for its venture capital fund and managed to pool only about a third.

Industry insiders told Bloomberg that this was its smallest fundraising haul in nearly
a decade. Funding has dried up across sectors and investors have grown more wary
of VC and private equity bets as valuations shrink and deals fall through.

The hedge fund began raising money for its 16th fund—Private Investment Partners
16 fund—in October 2022.

Tiger Global is among the biggest investors in start-ups globally and has backed
roughly a third of unicorn startups in India, including Zomato, Ola, Policybazar and
Byju’s. The New York-headquartered firm counts India among its top three markets
but began exiting several of its investments after 2021. It had invested over $1
billion in Flipkart alone, though it later sold its stake to Walmart.