Maggi saga: Twelve questions that tore through FSSAI's defence

The questions that Bombay HC raised, which gave a lifeline to Nestle's battered noodle brand

In many respects, the Nestle-FSSAI saga is a test case for regulator-company relations in India. The Maggi ban and ensuing courtroom drama is a study in itself. When pronouncing the verdict yesterday, Justice VM Kanade of the Bombay High Court raised twelve questions, which were nothing but the points of contention in the dispute pertaining to the recall and ban of Maggi. Here is a list of the questions that tore through the defence of the FSSAI and the Maharashtra FDA.

• Whether the writ petition filed by the petitioner - company (that is, Nestle India) under Article 226 of the Constitution of India is maintainable or not?
• Whether there was suppression of fact on the part of the petitioner - company and whether it had made an attempt to destroy evidence disentitling it from claiming any relief from this court?
• Whether respondent No. 2 (CEO of FSSAI) could impose a ban on the ground that the lead found in the product of the petitioner was beyond what the latter had represented in its application for product approval, though it was below the maximum permissible limit laid down under the regulations?
• Whether the food authority (FSSAI) had unfettered discretion to decide what are the standards which have to be maintained by manufacturers of proprietary foods and whether in respect of the proprietary food (that is, Maggi noodles), the food authority was not bound by the permissible limits of additives and contaminants mentioned in the regulations and the schedules appended thereto?
• Whether in view of the provisions of Section 22 of the Food Safety and Standards Act, 2006, there was a complete ban on the manufacture of sale and products mentioned in the said section? (In other words, is a complete ban allowed under Section 22 of the Food Safety & Standards Act, 2006)
• Whether there was violation of the principles of natural justice on the part of the respondents (in this case, CEO of FSSAI, State Food Commissioner of Maharashtra and Maharashtra State)?
• What was the source of power under the which the ban and recall of Maggi was passed?
• Whether the analysis of the product manufactured by the petitioner could have been made in the laboratories in which the said product was tested by the Food Authority and whether these laboratories are accredited by NABL and whether the reports submitted by these laboratories can be relied upon?
• Whether reliance can be placed on the reports obtained by the petitioner from its laboratory and other accredited laboratories?
• Whether the food analyst was entitled to test the samples in any laboratory, even if it was not accredited and recognised by the food authority (that is, FSSAI)?
• Whether it was established by the food authority that the lead beyond permissible lead was found in the product of the petitioner and the product of the petitioner was misbranded on account of the declaration made by the petitioner that the product contained "No added MSG"?
• Whether the respondents were justified in imposing a ban on all the nine variants of the petitioner though tests were conducted only in respect of three variants and whether such ban orders are arbitrary, unreasonable and violative of Article 14 and 19 of the Constitution of India?

Bombay High Court sets aside order imposing ban on manufacture/sale of Maggi Noodles in India

If the lead content is within permissible limits, the company can start the sale of its products. The company also said that it will remove the 'no added MSG' tag from its packets.

The Bombay High Court on Thursday quashed an order passed by the Food Safety and Standards Authority of India (FSSAI), imposing a nation-wide ban on the manufacture and sale of Maggi noodles, a product of Nestle India Private Limited.

A division bench of Justice V M Kanade and Justice B P Colabawala held the ban order as arbitrary and unjust. However, it directed the company to re-test samples of the nine variants of the noodles at three independent laboratories – in Punjab, Jaipur and Hyderabad -- to ascertain the amount of lead within six weeks. 

If the lead content is within permissible limits, the company can start the sale of its products. The company also said that it will remove the 'no added MSG' tag from its packets.

On June 5, FSSAI issued the ban order, stating that a test carried out at a laboratory indicated high presence of lead content, which is harmful to the health of consumers. A day later, state Food and Drug Adminis tration (FDA) issued a similar order, imposing the ban in Maharashtra.

The judges ruled that the principles of natural justice had not been followed in this case as the company had not been given a show-cause notice before imposing the ban. The high court was also of the opinionthat the laboratory in which the samples were tested was not affiliated to the National Accreditation Board for Testing and Calibration Laboratories (NABL).

The samples for fresh test would be drawn from 750 crates. The FSSAI and FDA sought a stay on the judgment, in order to appeal in the apex court. However, the request was turned down by the court. The company gave an undertaking that it would not manufacture or sell Maggi noodles till the results of the three laboratories were received.

On a plea by food regulators that the petition filed by Maggi was not maintainable, the high court said it had the jurisdiction to hear the matter under powers derived by it under the Article 226 of the constitution.

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 contended that the lead content in noodles detected during tests in reputed laboratories was harmful to public health.

The High Court had earlier asked both sides to mutually decide on a suggestion by the judges to give their consent for a fresh independent test. However, the parties did not arrive at a consensus, following which the bench directed the company to go in for a fresh test in three renowned labs across the country.

The court made it clear that it was ordering a fresh test of Maggi samples because it had consumer interest uppermost in its mind and also because it wanted the issue to be resolved amicably.

According to FSSAI, 30 out of 72 samples of the popular Maggi noodles had tested positive for dangerously high levels of lead and even MSG, despite packets proclaiming 'no added MSG'.

“The action of the state in not supplying the material on the basis of which the action was taken and not giving a personal hearing to the petitioner and issuing a ban order when the petitioner itself had withdrawn the product clearly falls within the four corners of arbitrariness and is therefore violative of Articles 14 and 19 of the Constitution of India,” the judgment said.

In fact, the entire sequence culminating in the imposition of ban on June 5 shows that there is something more than what meets the eye, which has resulted in passing the impunged orders.

The maximum penalty for misbranding product even in criminal prosecution as laid down under Section 52 of the Act is to the extent of Rs 3 lakh. Misbranding of the product, therefore, could not be a ground for banning the product indefinitely.

Will Maggi be back in Chennai?

Tamil Nadu food safety officials say they are yet to receive notification regarding lifting of ban on Maggi.

Banned instant noodles brand Maggi may soon be back, with the Bombay High Court on Thursday conditionally setting aside a ban imposed on its nine variants.

But food safety officials in Tamil Nadu, where a three-month ban on the product is in place, say that as of now, they have received no notification from the Food Safety and Standards Authority of India (FSSAI) about this.

The court, reports state, has asked for fresh tests on five samples of the product in three accredited labs and if the tests prove that the lead content is within acceptable limits, Nestle India may resume manufacture and sales.

On June 4, the Tamil Nadu government had banned the manufacture, stocking and sales of Maggi noodles and three other brands for three months, on the grounds that the products contained unacceptable levels of lead, a toxic substance. On the following day, the FSSAI had asked Nestle India, which produces Maggi, to withdraw its noodles from the market, stating that they were “unsafe and hazardous for human consumption.”

“The company had recalled its noodles from the market, which means that after the fresh tests, if it is found safe, they will have to re-introduce it as a new product. In that case, our ban may not apply, and if the FSSAI certifies that these products are safe for consumption, we will not do anything more,” a senior food safety official said.

Maggi noodles had been in the midst of a huge controversy following a test in Uttar Pradesh that revealed that the product had high levels of lead and mislabelling of monosodium glutamate (MSG). In Chennai, of seven samples tested, six had lead content higher than the mandated limit of 2.5 parts per million.

“What about other brands that have not been tested? What about smaller manufacturers of other packaged products? There is hardly any risk analysis done of any packaged product. The government must have a mechanism for surveillance of products and to test and analyse them within certain time frames. Continuous monitoring must be on,” said G. Santhanarajan, director, Consumer Association of India.

Infobox:

Maggi was missed!

A recent survey by Airloyal, a marketplace for mobile engagement, found that Maggi was sorely missed in the country. The survey, taken by 5,000 respondents, according to a note from Airloyal, found that:

Over 65 per cent respondents miss Maggi

Of these, about 35 per cent are boys

Maharashtra seems to have missed the noodles most while Tamil Nadu comes in fifth

65 per cent of respondents feel Maggi can never be replaced

62 per cent believe that Maggi is safe and want to have it again

On twitter, many users were already celebrating the possible return of their favorite “two-minute” snack.

Swapnil Khound þ@Swapnilkhound #Happinessis A bowl of #Maggi loaded with garlic butter #MaggiIsBack @NestleIndia congratulations!

Kavya Janani þ@UKavyajanani Welcome back Maggi. I am dying to meet you after a long hiatus. :-) #Maggi #MaggiIsBack

Shatadru Seal þ@ShatadruSeal #MaggiIsBack Just 6weeks to go!!

Shivayan Bora þ@ritz_277 The best news I've heard all day... XD #MaggiIsBack

Shivam Varshney þ@sviitb7 Mere Maggi noodles aayenge #MaggiIsBack #Maggi

Maggi gets a lifeline

Bombay HC gives Nestle India six weeks to prove that the product is safe

The much-awaited verdict on the June 5 ban and recall ofMaggi noodles was pronounced on Thursday, with theBombay High Court ruling in favour of Nestle India, owner of the instant noodles brand. However, Maggi noodles, considered one of India's best-known comfort foods, won't be visible on shop shelves just yet: Nestle India has been given six weeks to prove the product is safe.

In its ruling, a Bench comprising judges V M Kanade and B P Colabawala allowed Nestle to go for fresh tests by sending five samples of each variant to independent laboratories in Mohali, Hyderabad and Jaipur. These labs were accredited with the National Accreditation Board for Testing and Calibration Laboratories, the Bench said. If the lead content in the samples was found to be below the permissible limit, Nestle India would be allowed to manufacture and sell the product, the Bench added, throwing out the Food Safety & Standards Authority of India (FSSAI)'s plea for a stay on the order.

The news pushed up the Nestle stock, trading up four per cent in the BSE during the morning session. The stock closed at Rs 6,356.7, up 2.78 per cent.

G Chokkalingam, founder, Equinomics Research & Advisory, said, "While the stock has come off proportionately, given Maggi accounts for 25-26 per cent of revenue, it is still a bit overvalued. So, there would be no gains in the near term. However, long-term investors (with a perspective of two-three years) could look at the stock, given the diversified product range, technology, resources and brands at their disposal."

Predictably, Nestle welcomed the court order. "We respect the decision by the Bombay High Court to revoke the ban order passed by FSSAI and FDA, Maharashtra, on Maggi noodles and will comply with the order to undertake fresh tests," it said in a statement.

What, however, came as a surprise was FSSAI's stand. The authority appeared to have mellowed after the verdict. Speaking to reporters in New Delhi, new chairman Ashish Bahuguna said its "doors were never shut" for Nestle India and the company could come up with new test results.

"It is only if I find that I am not in agreement with the court order and if I feel the court has not taken into account the submissions of the authority will I think of going to the Supreme Court," he said.

Health Minister J P Nadda said a decision on an appeal in the apex court would be taken after an analysis of the high court order. The government has pressed a class action suit against Nestle India in a consumer court, the first such instance in the country. Filed on behalf of consumers, the suit claimed damages of Rs 640 crore from the company. In a statement on Wednesday, Nestle expressed disappointment at the government's action, claiming it hadn't received any notice in this regard.

The samples for retesting will be taken from the 750 Maggi noodles packs preserved by the company following the ban.

NOT A TWO-MINUTE CONTROVERSY 2014

Mar 10: UP FDA officer collects Maggi noodles sample from a retail shop in Barabanki, UP

Mar 26: Govt-owned lab in Gorakhpur finds monosodium glutamate in Maggi. UP FDA serves notice on Nestlé

2015

Apr 30: UP FDA sends ‘order of recall’ for the sample batch

May 30: UP FDA files case against Nestlé India

Jun 1-4: Gujarat, Uttarakhand, Tamil Nadu, Delhi, UP and J&K ban the noodles

Jun 5: Nestlé withdraws the noodles from markets

Jun 9: Singapore declares Maggi noodles to be safe for consumption

Jun 11: Nestlé moves Bombay HC. Initiates incineration of 30,000 tonnes of the noodles

Jun 18: UP, eight other states fail to find excess lead in Maggi

Jun 30: Bombay HC allows Nestlé India to export the noodles

Jul 8: Food Processing Minister Harsimrat Kaur Badal blames FSSAI for inducing fear in industry

Jul 25: Suresh Narayanan named new Nestlé India MD

Aug 8: Health Minister J P Nadda says Nestlé isn’t forthcoming on FSSAI questions

Aug 10: House of Spices, an importer of Maggi noodles in the US, says US FDA has cleared Nestlé’s instant noodles

Aug 11: Nestlé India says US FDA finds no excess lead in Maggi

Aug 12: US FDA declares Maggi safe for consumption; Nestlé opposes class action suit filed by consumer affairs dept

Aug 13: Bombay HC strikes down countrywide ban on Maggi

In June and July, Nestle India had undertaken the first fast-moving consumer goods recall in India. About 30,000 tonnes of the brand were recalled and the overall loss was estimated at Rs 320 crore. The Maggi brand also took a few knocks, with $200 million shaved off its value after the ban and recall on June 5.

The ban and recall also led to Nestle India recording its first quarterly loss in 17 years, prompting it to say the June quarter wasn't comparable with the year-ago period's numbers.

The high court reprieve comes as a shot in the arm for the company, which has maintained that the ban order was arbitrary and violated the principle of natural justice. The company also punctured holes in FSSAI's defence, both in court as well as outside it, that the product contained high levels of lead by pointing out the tests were conducted at labs not accredited and notified by the Food Safety & Standards Act, 2006.

What also came to Nestle's aid were a series of clean chits from foreign food regulators, the latest from the US FDA. An FSSAI-approved lab at Mysuru, considered one of the best in the segment, also said the lead content in Maggi was below the permissible limit.

"Countries such as America, Singapore and the UK have much better testing standards than some labs in India. Taking a ban and recall decision on the basis of test results from these labs was erroneous in the first place, which the court also pointed out. I am sure further tests will clarify this. This will, above all, bring confidence in the industry," said Piruz Khambatta, chairman & managing director of Rasna International. Khambatta also chairs the Confederation of Indian Industry's food processing committee.

Jaipur's safe lab might redo study

Will Maggi stage a comeback?

Govt. confident class action suit will stand

Maggi case proving hot and sour for govt, agencies

HC quashes arbitrary maggi ban, orders re-test in 6 weeks

Bombay HC puts Maggi back on Menu, but after 6 weeks of Tests

NESTLÉ VERDICT - It's Not Just About Noodles

On Thursday , the Bombay High Court delivered a crucial judgment, and one that could well be considered a first of its kind in recent times. The verdict will certainly provide some relief to Nestlé India for its erstwhile flagship product, Maggi noodles.

Yes, a critical question remains unanswered: how will Nestlé recoup its losses and damages already suffered on the cost of the recall of Maggi? Or even gauge the loss in financial performance due to Maggi's withdrawal from shelves? For the time being, though, the high court judgment is not only favourable to Nestlé, but more importantly , it will send very positive sentiments and bring credibility to the application of the rule of law.

The verdict should also enhance the confidence of corporate India and MNCs. While the stock price of Nestlé India rallied strongly on the basis of the judgment, the real im plication of the interim order transcends market forces.

The Bombay High Court emphasised the “principles of natural justice“ and observed that the conduct of the government in this case lacked them. At least on this account, the court agreed with Nestlé's contentions that the process of emergency prohibition notices and orders under the Food Safety and Standards Act (FSSA) was not duly followed.

Thus, Nestlé was deprived of the rule of natural justice and an opportunity to present its case before the Food Safety and Standards Authority of India (FSSAI). While a closer scrutiny of the judgment will reveal in detail the orders passed, it is a conditional judgment requiring the retesting of Maggi samples by three independent laboratories accredited by the National Accreditation Board for Testing and Calibration Laboratories (NABL).

The verdict is well-balanced, providing adequate opportunity also to the government, as it emphasised the need to provide due process to both sides, not just to Nestlé. It is, in short, a level and regulated playing field for both parties, providing each an equal and impartial opportunity to present its case on the merits of Maggi being tested under the court's direction and accredited labs.

For a corporate entity like Nestlé, which would argue that it has been operating with integrity in India and selling Maggi for over three decades, the FSSAI had not followed the process of inquiry and investigation as laid down by the law. The varying results of the tests conducted in India and abroad proved this point.The irony is that a majority of the tests have given a clean chit to Maggi, and yet, the FSSAI is determined to pursue its case, perhaps even appealing this order to the apex court.

It isn't good news for doing business in India, if this becomes a long-drawn legal battle. The Bombay High Court order is far more meaningful than any temporary reprieve, which is not only appealable, but also likely to be overturned if ordered without a factual and tenable basis. It will surely send a strong message to any inspector raj hoping to raise its head.

The verdict should also set a precedent for deterring frivolous lawsuits being filed, corporate entities in India being harassed at multiple fora simultaneously . The government has already filed a class action against Nestlé in the National Consumer Disputes Redressal Commission (NCDRC) seeking damages for unfair trade practices by the company .

While the two fora are different -as are the two statutes invoked by the government -the cause of action is the same. The fate of Nestlé at the NCDRC is yet to be decided. But the Bombay High Court order is sure to add some teeth to Nestlé's case in the class action filed.

The order has showcased the progressive nature of the court's focus on equal opportunity and due process. While the eventual outcome is still uncertain, this order will at least deter regulators from acting impulsively and, perhaps, without substantive facts.

The writer is a corporate lawyer

Editorial: Instant trouble for FSSAI

Bombay High Court ruling should make govt think

The Bombay High Court striking down the Maggi ban saying it violated the “principles of natural justice” shows just how untenable the government’s stand in the matter has been from the very beginning. The court observed that the Food Safety Standards Authority of India (FSSAI) banned the popular instant noodles brand from Nestle even though tests by various food regulators in various states threw up widely varying results—Delhi, Uttarakhand and Gujarat found lead levels to be high while Goa, Maharashtra and Kerala found it to be within permissible limits. This points to very serious problems in the country’s food safety standards – should the noodles and tastemaker be tested separately or together in a cooked form, in the way they are eaten?—and makes the ban quite unwarranted. Indeed, both FSSAI and the government that allowed it to ban the noodles and even file a class-action suit against Nestle, must pause to rethink their actions since a host of international food regulators—including those of the US, Singapore and the UK—found the Indian samples fit for consumption as per their respective standards; and few could argue their standards, or quality-checks, are less stringent than the FSSAI’s. Within the government too, there were those who had questioned FSSAI’s actions—food processing minister Harsimrat Kaur Badal stated that the body was creating “an environment of fear”. Moreover, as the court pointed out, Nestle was never served a show-cause notice before the ban. Given this, at the very least, the government must immediately withdraw the suit at the National Consumer Disputes Redressal Commission (NCDRC) that seeks damages from Nestle on behalf of the Indian consumer.

The Bombay High Court has ordered Nestle to send five samples each to three central laboratories, in Hyderabad, Jaipur and Mohali, for testing. The company has been ordered not to manufacture or sell the noodles until test results from all three labs are in and clear the product. The FSSAI would have done well to proceed in a similar manner right from the start, but instead, it selectively relied on tests of a few state regulators, overriding evidence to the contrary from others. The high court order gives the government the chance for a course correction—to start with, it needs to drop the suit at NCDRC and time its final decision on Maggi until after the three labs give their reports. After which, serious thought needs to be given to how to beef up the FSSAI and its testing/labelling procedures—this includes not just large capital budgets, but also needs a complete restructuring on how FSSAI functions at the moment.

Now, Maggi’s Shelf Life Hinges on Outcome of Three Lab Tests

MUMBAI: Terming the action by the country’s food regulator, Food Safety and Standards Authority of India (FSSAI), “arbitrary” the Bombay High Court on Thursday lifted the two-month-old ban on ‘Maggi’ noodles for now. However, the court held that Maggi could be produced and sold again only if three NABL accredited laboratories in Hyderabad, Mohali and Jaipur certified that it was not hazardous for health.

The HC has set a deadline of six weeks for the laboratories to conduct their tests.

Delivering the judgment on Nestle India’s petition challenging the ban, Justice V M Kanade and Justice B P Colabawala set aside the FSSAI order saying the “principles of natural justice were not followed while passing the ban order”.

The HC also directed Nestle India to send five samples from each batch of Maggi for testing in the said three National Accreditation Board for Testing and Calibration Laboratories (NABL).

According to the HC, Nestle India could resume manufacturing if the tests proved that the lead content in the product was within the permissible limit.

Reacting to the HC order, Nestle India said, it will comply with the order to undertake fresh tests. “ Nestle India remains committed to working with the FSSAI, FDA Maharashtra and other stakeholders. It is Nestle India’s endeavour to get Maggi noodles back on the shelves as soon as possible for the benefit of our consumers.”

Nestle India had contended that FSSAI had imposed the ban based on the tests carried out on samples past their shelf life and the laboratories where the samples were tested were not accredited by the NABL.

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