Black Marketing and Hoarding in India during to the Pandemic

By Jalaj Tokas

Published On: November 08, 2021 at 19:12 IST

Introduction

Action not taken in the best of times struck back at us in the worst of times.

Despite being given the status as the “pharmacy of the world”, India, the biggest producer of generic drugs has failed to meet the demands for antiviral medications such as Remdesivir and Favipiravir.

India arguably went through one of the toughest periods in its post-independence era as a consequence of the second wave of the COVID-19 pandemic, which has exposed technical incompetency and serious lapses in our health system.

The rampaging Covid pandemic exposed the sheer inadequacies in our preparedness and strategy. Hospitals were overwhelmed, crematoriums and burial sites ran out of space, covid testing struggled to meet the demand and the vaccination drive was at the risk of going off-track. Making matters worse were the gaping holes in vital supplies, such as of Covid drugs like Remdesivir and Tocilizumab, oxygen cylinders and oxygen concentrators, which stoked a thriving black market where thousands were forced to pay exorbitant prices for vital medicines and equipment.

Amidst the Covid pandemic, the problems faced were only exacerbated by the institutional lack of necessary supplies like medicines, oxygen, refilling of oxygen cylinders and unavailability of hospital beds.

During the second wave of COVID-19 in India, we were witnessing something which was more than just a governmental failure. Despite the urgent demand for oxygen and life-saving drugs, India choked under the weight of bureaucracy and sluggish governance.

The following article details the despair of the desperate and the pitiful state-in which India found itself during the pandemic. The following article analyses the black marketing of essential life-saving drugs. It questions the Government’s incompetence and short-sightedness as it tries to reinstate its locus by fudging data. The article also addresses the imperative role and response of the Indian judiciary in this regard.

What is a Black Marketing?

A black market is an arranged manifesto of unaccounted transactions, whether physical or virtual, where goods or services are exchanged illegally. The illegitimate nature of the goods and services along with the illegal nature of the transactions account for the ‘black’ nature of this market.

Black Marketing is an exchange of goods and services which takes place outside the reach of government agencies. No statute under Indian Law provides for a clear definition of ‘Black Market’. However, the Supreme Court has attempted to deal with the issue more recently.

In Rameshwar Lal Patwari Vs State of Bihar[i], the Supreme Court held that black marketing has at its base at shortening of supplies because black market flourishes best when the availability of commodities is rendered difficult. The Court further stated that it has a definite tendency to disrupt supplies when scarcity exists or scarcity is created artificially by hoarding to attain illegitimate profits. It also highlighted that a person’s indulgence in black marketing portrays a conduct that is prejudicial to the maintenance of essential supplies.

The notion of a black market however can be different. Although with regard to the context, it simply implies- charging an exorbitant value when there is a shortage. When there is a shortage, temporary or otherwise, prices will be higher than expected. This is no different from surge pricing used by cab companies, or ambulances charging excessively high prices now. A black market occurs when the price at which a product is sold is higher than an administratively determined price.[ii]

What is Hoarding?

Hoarding is basically the purchase of a large quantity of commodity with the intention to sell it in future when it is understock or not available in the market at a higher price. It is an exercise of monopoly over the market, when people do not have any option to purchase the same commodity from another buyer due to shortage of the same.

In Kamla Prasad Vs District Magistrate[iii], the Supreme Court analysed the etymological meaning of ‘hoarding’ pertaining to the case in hand. It held that the petitioner didn’t project the stock position in his business in order to amass and deposit it secretly. This self-explanatory implied that he wanted to hoard and conceal the stock position as it would create scarcity of the commodities in the market and vitally affect its maintenance and demand to the community.

Hoarding is basically an act of creating an illegitimate monopoly over the market and taking undue advantage of people who are helpless and have no other option but to purchase the commodity from the hoarder.

Hoarding and Black marketing are thus cross-cutting as in both cases, the culprits make a purchase of large quantities of basic or essential goods and sell it in the black when acute shortage is created in the market leading to extremely high prices due to their high demand.

Black Economy during the Pandemic

In this crestfallen battle against the virus, what was more deplorable was the brazen attempt by profiteers to fill their pockets through the desperation of many patients and their families. With the second wave of infections and the rise in COVID-19 positive cases in India, the necessity for integral medicines, hospital beds and oxygen supplies had gone up incrementally.

A 7-10 litre medical oxygen cylinder which arguably costs around a couple of grands, was being sold at Rs 50,000-70,000 during the second wave in India. Its acute shortage scaled up the demand for their import. With demand far-exceeding their supply, black marketeers stepped in.[iv]

Similarly, black marketing of Remdesivir continued even after the National Pharmaceutical Pricing Authority, a central government regulatory agency, revised the prices of seven leading brands of the drug by up to seventy per cent to make them available for Rs 1,000-2,700 for a 100 mg vial.

While a debate globally raged on the tangible benefits of Remdesivir, it still remained an important part of the treatment for critical covid patients in India. Result being that the manufacturers struggled to meet the soaring demand. The high demand for Remdesivir eventually led to gullible customers being scammed.

Countless numbers of people, nationwide, had to turn to the black market to secure essential medical supplies, as the second COVID wave ravaged India.

Against this backdrop the black market thrived, with dealers hoarding vital supplies and creating an artificial shortage. This kind of pandemic profiteering aggravated patient distress and eventually led to panic along with the loss of precious lives.

Laws Governing Hoarding and Black Marketing

Countless laws concerning the hoarding of commodities, including essential commodities, are prevalent in our country.

The Prevention of Black Marketing & Maintenance of Supplies of Essential Commodities Act, 1980 was formulated with a purpose to allow Central and State governments to authorise orders to arrest people controlling the production, supply or distribution of any essential commodity.
Section 3 of the Essential Commodities Act of 1955 states that whoever instigates any person to commit any offence punishable under this Act, with an intention to make gain in any manner, shall be punished. Keeping in mind the present situation, it is to be noted that masks, medicines and medical equipment are also now covered under the Essential Commodities Act.
The Central Drug Standard Control Organization (CDSCO) under the supervision of the Union Ministry of Health and Family Welfare, plays a pro-active role in the import, regulation and registration of drugs and medical devices.
Section 200 of the Code of Criminal Procedure, 1973 also lays down the provisions which allow a person to approach a court to file a criminal complaint against any hoarding. The Magistrate can take cognizance of such matters after examining the complainant on record.

What have the Courts said?

The central government along with various state governments took it upon themselves to fight with the malpractices of Hoarding and Black marketing. However, due to the flourishing cases of these unethical practices and due to the lack of proper dedicated legal mechanism to deal with it, governments were seen to be struggling. Therefore, the Courts stepped in and started taking actions that were necessary to combat the unethical practices of hoarding and black marketing.

Several Courts, especially during the second wave of ongoing pandemic have directed the concerned authorities to crack down on hoarding of medical supplies.

All Medical Supplies to be Sold at MRP

The Delhi High Court in the case of Bram Health Care Private Ltd. Vs Union of India[v] directed that all medicinal supplies and equipment were to be sold at either maximum retail price or below such price. While critically observing the soaring demand of oxygen and other essential equipment, the Court prioritised and remarked that it was high time to fix the maximum retail price of these medical supplies for proper management and treatment in future. Further, the Court also issued certain directions regarding the overcharging of ambulance services and other essential services.

Governments can act independently

In response to setting up of fast-track courts to deal with the cases of hoarding and black marketing of covid essential medical supplies, Delhi High Court in Manisha Chauhan Vs Government of NCT of Delhi[vi], asked the Central government as well as the Delhi government not to wait for court orders for taking strict action against hoarding and black marketing of medicines and medical equipment needed for COVID-19 patients.

Innovative and Efficient Measures by Courts

The Court in Anu Pant Vs State of Uttarakhand[vii], in a first, affirmatively called for affixing QR Codes on Remdesivir packets. Weighing on its decision, it directed the concerned Drug Inspector to clamp down on any pharmacist found guilty of hoarding and selling drugs over the permissible price.

Courts have time and again directed the Central government and governments of the States/Union Territories to file fresh affidavits about the steps taken to ensure due availability of essential drugs, including Remdesivir and Tocilizumab among other prescribed drugs. They have also called for monitoring and ensuring that the modalities, which have been set up for controlling prices of essential drugs, are being followed so that they function efficiently in order to sufficiently meet the daily requirements.

The Courts have thus been making stringent remarks on the rampant hoarding and black marketing of covid essentials. The Delhi High Court even remarked that black marketing had left the moral fabric of the people dismembered and asked the Centre and the Delhi government to act without waiting to be prodded by the judiciary.

The modus operandi through which the courts across the country have joined hands together and exercised their powers judiciously, in spite of being unable to function in a full-fledged manner, signifies the power and stature of our courts.

Recommendations

Black marketing is a form of an economic offence. Therefore, while dealing with economic offences the punishment should be made harsher because they affect more people.

However, a well planned attempt to cease black marketing operations can only be ensured by focusing on the delivery and distribution problems and fixing them by finding innovative solutions.

The need of the hour, therefore, is consistent combat action which aims to not only curb black marketing of beds and essential medical supplies, but also the sale of fake medicines and medical devices. And more importantly such action can no longer be restricted to urban areas, but should also be inclusive of rural India.
Apart from meeting the demand for various essential medical supplies and facilities, stress should be laid down on forming a constructive but more importantly a functional partnership between governments and other institutions to mitigate the effects of the current crisis.
Calls for ‘anti-corruption control rooms’ have been growing ever-since. Recommendations are being made to provide instant relief to the sufferers. However, ensuring their smooth and efficient functioning is no cake-walk.

This requires all law enforcing agencies to enforce different applicable laws to come together and set up an exclusive cell to deal with all covid related unfair practices. In addition to their own investigations, these cells should also address the complaints of overpricing of drugs.

It becomes equally important to ensure strict punishments to the offenders to send a strong message to the society. This can be achieved efficiently by setting up summary trials and fast track courts. Meanwhile, superannuated yet efficient police personnel, retired judges and even lawyerscan be recalled to shoulder some workload.
Even though the laws provide for imprisonment or fine or both for hoarders and black-marketers, the quantum of fine prescribed under the Essential Commodities Act is too meagre and the same should be reconsidered pro-efficiently.
The financial penalties imposed should be ample enough to reimburse the extra staff hired for ensuring the efficient working of the fast track courts and if possible it should also contribute towards the Covid relief work.
In addition to sentencing, the convicts should also be made to serve in Covid wards.
Lastly, the severity of the punishment should serve as a deterrent to the society so as to create the fear of law in habitual offenders.

It’s big time that the law enforcement agencies take charge and manage the corruption risks that have resulted from the extraordinary mismatch between demand and supply during this pandemic. It’s time the governments showed the political will and determination to end the menace and instil confidence in the people that the state will protect them.

Therefore, Governments must immediately launch a crackdown on black-marketing of essential medical items and services across the country, as corruption in these times is like the ‘second pandemic’.

Conclusion

Black Marketing apart from being a heinous pressing menace offence is an unpardonable immoral act of dealing in human miseries.

The gap between demand and supply in terms of hospital beds, medicines, medical devices continued to widen, giving hoarders and black marketers ample opportunities to fish in troubled waters. As the health infrastructure began to rupture, office-bearers were busy burying its debris. It’s only appalling that some people out there exploited death and misery in desperate times like these.

Courts have thus clamped-down on hoarders and black marketeers in every way possible. Across the country, arrests have been made for diversion, hoarding and black-marketing of remdesivir, oximeters and oxygen cylinders and various other essentials.

One must not forget that these are emotive issues. This pandemic truly asserted that “a season of darkness brings out the worst among people.” The silver lining lies in the fact that it also simultaneously brought out the best out of people who ensured that the effects of the pandemic were mitigated. We must remember this time as the time of our collective humanity and the time of insensitivity of a state failing its people.

ABOUT THE AUTHOR

Jalaj Tokas is a second Year Law student pursuing B.A.LLB from University School of Law and Legal Studies, GGSIPU, New Delhi. He is a life-long learner is self driven towards his ambitions. He strongly believes that expectations are premeditated disappointments and strives not just to be successful but more importantly to be of value.

Edited by: Aashima Kakkar, Associate Editor, Law Insider

Reference

[i] Rameshwar Lal Patwari Vs State of Bihar AIR 1968 SC 1303.

[ii] Bibek Debroy, “Black marketing during the pandemic comes from longstanding, systemic flaws”, The Indian Express, May 13, 2021, (last visited on November 2^nd, 2021).

[iii] Kamla Prasad Vs District Magistrate (1975) 1 SCC 314

[iv] Shwweta Punj, “Black economy: Profiteering in the pandemic”, India Today Magazine, (last visited on October 19, 2021).

[v] Bram Health Care Private Ltd. Vs Union of India 2021 SCC OnLine Del 1834.

[vi] Manisha Chauhan Vs Government of NCT of Delhi 2021 SCC OnLine Del 2018.

[vii] Anu Pant Vs State of Uttarakhand 2021 SCC OnLine Utt 432.

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