The return of Maggi? Bombay HC quashes ban, orders re-tests, but Nestle not out of woods just yet

In a major relief to Nestle India, the Bombay High Court on Thursday quashed the FSSAI order banning Maggi for six weeks. The order states that principles of natural justice were not followed and so the ban should be set aside. Meanwhile, even as Nestle continues to maintain that the decision to ban its product was arbitrary, the government’s claim from the company for selling “defective and hazardous” Maggi noodles may exceed Rs 640 crore as it is tabulating further damages to be sought. The case has been heard for over a fortnight with Nestle India denying the claims of Food Safety and Standards Authority of India (FSSAI) that the instant noodle has excesses lead content. According to PTI, a division bench of Justice VM Kanade and Justice Burgess Colabawalla said that the “principles of natural justice” and procedures were not followed in the case. According to this report in The Times of India, the court also added that a show-cause notice was not issued before the ban. The High Court also said that the samples were not tested at accredited laboratories raising doubts on the results. The court allowed Nestle to send five samples of each variant of noodles for fresh testing to three labs in Punjab, Hyderabad and Jaipur. If lead content is found below permissible limit by the three labs, Nestle will be allowed to manufacture Maggi noodles in India, the Bombay HC said, reported PTI. The judges refused to grant stay on their order on a plea made by food regulators. They said the company had given an undertaking that it would not manufacture or sell Maggi noodles till the results of the three labs were received. “The fresh tests would also take some time. Hence, there was no need to grant a stay on the order,” the judges said. The HC held that the petitions filed by Nestle challenging the nation-wide ban on Maggi noodles was maintainable and that it (the high court) had the jurisdiction to hear it under powers derived by it under Article 226 of the Constitution.  FSSAI and FDA had earlier banned Maggi noodles saying the samples of noodles tested by them contained ’lead beyond permissible limit’. Nestle had argued that its product did not contain ’lead’ in excess of permissible ceiling and challenged the tests by FSSAI and FDA, while the food regulators had said that the lead content in the noodles detected during the tests in reputed laboratories was harmful to public health. FSSAI had issued the order banning Maggi noodles on June 5, this year while FDA had issued similar order the next day. During a previous hearing in the court, Justices Kanade and Colabawala had asked both the sides to give their consent for fresh independent test. However, the parties could not arrive at a consensus to the suggestion mooted by the HC which today ordered fresh tests. Nestle’s lawyer Iqbal Chhagla had earlier said the company was agreeable to the suggestion, but the tests should be conducted in the presence of a renowned scientist and the samples available with the company should be used. Darius Khambata, appearing for FDA, had contended that one of the samples must be from the lot collected by the state FDA. “For us, consumer interest is most important…this litigation may go on but we feel that the issue should be resolved amicably and, therefore we suggested the parties to agree to a fresh independent test,” the bench observed. The Nestle lawyer alleged that FSSAI and FDA had violated followed principles of natural justice by not giving a hearing to the company before banning nine variants of Maggi noodles on the ground of lead content in these products were in excess of the permissible limit. Also, though only three variants were tested, the regulators banned all nine variants of Maggi noodles, Chhagla had argued. He had said there was no substance in FSSAI’s allegation about the company destroying evidence by burning Maggi stock. “On the contrary, we have acted on the instructions of the food regulators by destroying Maggi product,” he said. Nestle, which had to recall the popular noodles brand after orders from the food safety regulator FSSAI, is the first foreign firm in India to face a class action suit, which was filed by the government yesterday under an hitherto unused provision of the three-decade old Consumer Protection Act. The Consumer Affairs Ministry has filed a 45-page complaint before the National Consumer Disputes Redressal Commission (NCDRC) to seek Rs 284.45 crore in basic damages and further Rs 355.50 crore in punitive damages, resulting in total damages of Rs 639.95 crore sought from the Swiss giant. The first hearing of the case is expected on 14 August. The government also wants Nestle India to pay interest at a rate of 18 percent per annum till the date of actual payment, while it has also asked the consumer forum to order the company to take remedial measures for wrong labelling and misleading advertisements. In a statement issued today, Nestle India said, “We are disappointed with the unprecedented step of filing of a complaint before the NCDRC against Nestle India.” The company also said it maintained “highest standards of food quality and safety in the manufacture of all its products” and it has a stringent program to test the ingredients that go to make Maggi noodles. In its petition, the ministry said it is in the process of “tabulating further damages” and will seek additional damages when further facts and data emerges. The amount claimed will be deposited in the Consumer Welfare Fund in the interest of consumers, the ministry said. The government has based its damage claims on Nestle India’s total revenue in 2014, which stood at Rs 9,485.32 crore, of which Maggi and its variants accounted for 30 percent share at Rs 2,845.59 crore. Maggi noodles, a popular brand of noodle manufactured in India, was banned in different states after a high level of lead along with excessive amounts of taste enhancer such as monosodium glutamate (MSG) were allegedly detected in the food item. Lead content in 14 of 27 samples in India was allegedly found to be 2.8 PPM to 5 PPM (particle per million), which is above the prescribed limit of 2.5 PPM. Presence of excess lead is harmful for health, PTI had reported. Nestle had earlier claimed that its own tests had reported that the Maggi noodles were safe for consumption and none of the countries, where it sold the product, including in the UK, Australia and Singapore had any problems with it. With PTI inputs