Between an overzealous regulator and an overconfident multinational company, someone was in the wrong. But who exactly?
It is 32 minutes past 11am. 13 August. Room No. 53 at the Bombay high court is packed. Journalists crowding on the left, lawyers in the centre, more journalists on the right, and several other people seated on the benches at the far end of the room. Up ahead, on a raised platform, past the wooden fence that splits the room in 70:30, justice V.M. Kanade is reading from the judgement. Reading softly. Very, very softly.
Sssshhh…, someone whispers.
Justice Kanade doesn’t look up and continues reading in a monotone: “Principles of natural justice have not been followed before passing the impugned orders and on that ground alone the impugned orders are liable to be set aside...” Commotion follows.
And just like that, the ban on Nestle’s Maggi noodles is set aside.
There is reason to be outraged, because is this even possible? Wasn’t there overwhelming evidence of lead in the noodles? Lead, which can cause cancer and several other health ailments? What about the outrage after the test results carried out by several state governments? Those images of people burning the packets, stomping on them with their feet as they went about the whole performance? Is it all okay now? Whatever happened?
Well, this.
Conspiracy
It is 4.30pm on 30 July. In a courtroom brimming with people, advocate Darius Khambata, 54, is holding forth.
He has been building towards it. Over the previous day, after lunch and since 11.30 in the morning. Building his case, one argument after another. And now, it seems he has reached a crescendo and has everyone’s ear.
Everyone inside room No. 53 at the Bombay high court—the two judges, a handful of journalists, patient onlookers, aloof peons and odd-job men doubling up as mules to carry heavy case files held together by string, and anxious lawyers waiting for their turn to be heard.
The courtroom is theatre. And all the people are craning their necks just a little bit to listen. That’s because Khambata, representing the Maharashtra Food and Drug Administration (FDA), has just brought up a deep-seated conspiracy. Nestle India has been destroying evidence, he alleges. It is a serious charge. Why has Nestle been in such a tearing hurry to burn thousands of tonnes of Maggi noodles? Thirty thousand tonnes, to be exact. Worth almost Rs320 crore. Gone. Poof! Up in smoke. All in just a few weeks.
Nestle’s action reeks of a dark guilt, Khambata says. And it can be interpreted only in one way—that the company didn’t want those samples tested.
It’s another matter altogether, though, that Nestle raised a hue and cry over every other test carried out by several laboratories across the country. “My learned friends will correct me if I am wrong, that they have burned the rest of the stock,” says Khambata. “Then the only evidence that whether those reports are valid or not lies in the fourth part of the sample with us.” (More on the fourth sample later.)
“This is a serious matter, because if we detect lead, which is a serious contaminant, in a few samples, then we are not shutting down their business. These products are valid for nine months; we gave them the opportunity to come back. They could have come back in June and asked us what are we doing, have the fourth part tested. It would have been a week, two weeks, may be even less to get those results and if there was a variance, it would have gone to a referral lab. Why didn’t they do that? We are now in the end of July. The matter would have been resolved. Now a petitioner who does that, I would respectfully submit, does not have justice on his side... Therefore, there is no case.”
That’s a fair point. Except, it doesn’t take away the case. No. Not yet.
The petition
On 11 June, Nestle India filed a petition in the Bombay high court challenging the ban imposed on Maggi noodles. That came after the Food Safety and Standards Authority of India (FSSAI) on 5 June and the Maharashtra FDA on 6 June ordered Nestle to withdraw all nine variants of Maggi instant noodles from the market, terming them unsafe and hazardous for human consumption. In various tests, the regulators found overwhelming evidence that the product contained lead far above the maximum permissible limit of 2.5 parts per million. In the order, FSSAI also asked Nestle to stop the production, processing, import, distribution and sale of the product with immediate effect. However, there was no directive given to destroy the stocks.
The food regulator also called upon the company to explain itself. “M/s Nestle India Private Limited is further called upon to show cause within a period of 15 days from the date of issue of this communication as to why the product approval granted by FSSAI... be not withdrawn.”
Simply put, Nestle was toast.
In its petition filed in the court, Nestle argued that FSSAI had prejudged the issue. That its order cancelling the product approval was arbitrary and that both FSSAI and the Maharashtra FDA had passed those orders without any show-cause notice.
It alleged that the test results for lead were not credible. That multiple tests of the same sample across laboratories had shown different results. Moreover, the procedure followed by the laboratories was faulty. They were not even qualified to carry out those tests in the first place. The laboratories had tested the noodles and tastemaker separately, while they should have been tested as a composite, in the way Maggi is consumed. Not just that, Nestle also alleged that some of the samples were way past their shelf life and while testing, they remained unsealed for three months and as such the test reports could not be relied upon.
Simply put, Nestle felt it had been given a raw deal. And it wanted FSSAI to do a mea culpa. It wanted justice.
Needless to say, the regulator would have none of it.
Thus, the case. And this is where Khambata comes in. For good measure, he is not alone—there’s Anil Singh, the lawyer representing FSSAI, and Mahmood Pracha, representative for the chief executive of FSSAI, Yudhvir Singh Malik.
And this group’s contention before the two-judge bench of justices V.M. Kanade and B.P. Colabawalla is simple—Nestle is a multinational company under the illusion that it is above the law. By doubting the credibility of the tests carried out by the regulator, it is misleading the courts. But worst of all, by doing all of this, it is playing with the lives of countless people who consumed Maggi noodles. On the flip side, by banning Maggi, the regulator did nothing out of the ordinary. In fact, it only complied with what it was mandated to do.
How could its action in the interest of consumers be wrong?
An overconfident MNC
Before we go any further, first, the law. The Food Safety and Standards Act, 2006, is the bedrock of food standards and regulation in India. It is FSSAI’s bible. In its submission before the court, FSSAI said that it followed the Act to the T, right from the day the Maggi issue cropped up. Let’s take up Nestle’s grievances, one by one.
First, the contention that FSSAI and the Maharashtra FDA ordered the ban without a show-cause notice.
True. There was no show-cause notice because there was overwhelming evidence of lead in Maggi noodles. Before the ban order, on 5 June, several states had tested Maggi samples and found lead in excess of 2.5 parts per million. Uttar Pradesh, Bihar, Delhi, Tamil Nadu, Maharashtra, Gujarat, Jammu and Kashmir and Uttarakhand—each of them had conducted tests and decided to ban the product. Before passing the ban order, FSSAI collected 72 samples from across the country and found excess lead in 30 of them.
And it’s not like the regulator didn’t give Nestle a hearing. On 4 June, a day before passing the order, FSSAI and senior Nestle executives met. The meeting was attended by Paul Bulcke, global CEO of the Swiss company, Etienne Benet, managing director and CEO of Nestle India, along with a few other company officials. On its part, Nestle said that the whole controversy had been created out of confusion and a lack of proper understanding of the issue. FSSAI didn’t find the explanation satisfactory.
Add to this the fact that the Act is of a prohibitive nature. In the court, FSSAI’s lawyer Singh argued, “Under the Constitution, it is the responsibility of the regulator that food has to be safe and fit for human consumption and if found that it is unfit and substandard, then under the Act, FSSAI can pass orders to stop manufacture and sale in the public interest and in interest of consumers.”
Well, that’s what FSSAI did.
Second, what about the whole brouhaha over competence of laboratories in India and the process followed by them to test the product? To be sure, in the court, Nestle claimed that it had carried out not one, but 2,700 tests across the world. And there, no red flags were raised. No high content of lead. Maggi was found to be safe.
In more ways than one, this issue is at the heart of the dispute.
This part is a bit technical, so let’s get that out of the way first. The Food Safety and Standards Act gives enormous power to a food analyst. So, it is not necessary for the food analyst to test the food item in an accredited food laboratory. The analyst is allowed to conduct the test on his/her own and this can be done in his/her private laboratory or any other state or notified laboratories. Only in the case of imported food is the analyst required to get the analysis done at a notified laboratory.
Spare a moment to understand the two terms—accredited and notified. Now, an accredited laboratory is one that has been certified by the National Board for Accreditation of Laboratories (NABL). But it may or may not be a notified laboratory. A notified laboratory is recognized by the state and central food authorities and accredited by NABL or an equally qualified accreditation body. In the court, enough time was spent splitting hairs on the definition of an “equally qualified accreditation body”. FSSAI said that this could also be FSSAI.
Now, back to the argument. Were any of the tests on Maggi samples carried out in either accredited or notified laboratories? Yes. Were these laboratories accredited to carry out tests for lead or certain other substances found in the tastemaker? One or the other requisite accreditations for testing lead, spices or cereals was missing.
Why? Because they didn’t need to. Remember, the food analyst can test the sample anywhere he/she feels like. Even in his/her kitchen, as alluded to by Nestle.
Food analysts are highly qualified people. They are scientists. They could be operating out of their own laboratories or may be attached to other recognized laboratories. Under the Act, when an item is picked up for random sampling, the food safety officer has to divide the item into four parts. One part is sent to the food analyst for testing. On receipt of the package, the food analyst shall note the seal and the condition in which he/she has received the package and in 14 days, he/she must send the report to the officer.
Significant silence
The Act has a provision for an appeal if a company is not in agreement with the food analyst’s report. The food officer can send the second part (of the sample) to an accredited laboratory. If there is any difference between the two reports, the officer can then send the third part (of the sample) to the referral food laboratory whose reports will be the final say in the matter.
It is another matter altogether that Nestle never disputed the food analyst’s report.
In the court, Khambata pointed this out in as many words: “Any food business operator who is confident of his case, that this is a stray report, a malafide report, the Act itself gives a mechanism to send one sample to an accredited laboratory. It is one of the most significant silences in the matter, that Nestle, with all the vociferous nature of its case and 2,700 reports from all over the world, has never thought of invoking this right.”
“It is going to be my argument that you cannot come into the court by brandishing 2,700 reports if you don’t submit yourself to the discipline of the statutes in the country in which you operate and make profits. This is the simplest way of testing. I am not saying that they are right or we are right. Test it. Test our reports. If we are wrong, there we are proved to be wrong. How are you reacting—that all the accredited laboratories in India—none of them are trustworthy? Not one is worthy of the Nestle standard?”
As things turn out, certainly not for Nestle. (It is another matter altogether that FSSAI pulled out quite a surprise in the court when it submitted a report from an accredited laboratory, which satisfied Nestle’s requirements. On 29 June. Of a sample that was tested by the Avon Food Lab in New Delhi, which is certified by NABL. The test report found lead, but more on that later.)
A far bigger drama played out in the court over the term “intended use”; a term in the Act that Nestle used to argue that the tests carried out on Maggi should have been composite and not separate. Simply put, cooked Maggi and not the noodle and the tastemaker separately.
FSSAI’s lawyers argued that there are several people who consume the product separately; does that mean they should be harmed by the higher lead content found in them separately? And that’s not all. Pracha, the lawyer for FSSAI’s CEO, argued that Nestle applied for the product approval to FSSAI, as part of the Codex, which requires that the product must be tested separately and not as a composite. (The Codex is a collection of international standards, codes of practice and guidelines relating to foods, food production and food safety.)
It is strange then that Nestle would now argue otherwise.
“Whichever way the wind blows, they change their stand,” he said. “There is no reason for this petition.”
Khambata cornered Nestle on another point. He said that the company was aware of the provisions in the Act where they could ask for a retest in a referral laboratory. But Nestle hid material evidence in its petition filed on 11 June.
Take a moment to understand. The Maharashtra state report on the presence of high lead content in five samples of Maggi came out on 5 June, the day of the FSSAI ban order. The same were sent to the company, the very same day. In the letter, Nestle was told that it could ask for the test to be done again if it didn’t agree with the analysis. But Nestle didn’t.
Not just that, it didn’t even mention this in its petition. That’s clearly a case of suppressing facts. “A petitioner who does not do that, does not have justice on his side. Therefore, this is not a case,” said Khambata.
In other words, Khambata requested the judges that on the basis of the arguments above, the court must dismiss Nestle’s petition. It would be the right thing to do because the discipline of the Act must be followed. It is important to safeguard public health. It is important for foreign investments. “Why do investors come to India?” he said. “They come here because we have the rule of law. That is our main USP against China, which doesn’t have it.”
It is quite likely you might feel that Nestle was in the wrong. That FSSAI was well within its right to pull the company up. Not just that, perhaps the regulator deserves a pat on the back for a job well done. Sure. Hold on to that thought.
And read on.
Overzealous regulator
Advocate Iqbal Chagla, 76, has seen enough of courtrooms in his life. He is tall, about 5’9”, and has a sharp nose and a head full of white hair. When he speaks, Chagla is calm and composed. When he isn’t speaking, he likes to tap his fingers on the table and nonchalantly glance around the courtroom.
It is 31 July. A day after FSSAI’s lawyers’ arguments.
Chagla, representing Nestle India, isn’t pleased at all.
Khambata’s claim that Nestle’s case should be dismissed because the company suppressed material facts in its petition (by not mentioning the letter sent by the Maharashtra FDA) hasn’t gone down well with him. “To say that they sent the letter on 5 June and we did not refer in our petition filed on 11 June is a serious charge,” he said. “They did not dispatch the letter till 10 June.”
Chagla submitted before the judges two documents tracking the shipment from India Post, which had the dates on which the letters were dispatched and received. Two letters were sent out by the Maharashtra FDA on 10 June. One was received by Nestle’s Rudrapur plant in Uttarakhand on 17 June. The other was received at Nestle’s plant in Goa on 15 June.
“The regulator has not been fair,” added Chagla. “In fact, it has taken an adversarial role to tell that we have suppressed information. With this knowledge, they instructed their lawyers to so argue that your lordship must dismiss this case. This is a deliberate attempt at misleading. This is a regulator? A statutory authority? My lordship, it leaves much to be desired. This charge is completely uncalled for and should not have been made.”
Next up, the allegation that Nestle has been destroying evidence by burning Maggi. “It was done with full consultation with FSSAI. It was mutually decided and agreed upon,” said Chagla. “We were reporting on a daily basis. Let me put forward the minutes of the meetings. This was no clandestine approach.” According to the Act, a food recall procedure expressly states that the recalled food ought to be destroyed. Nestle wasn’t burning Maggi noodles on a whim. FSSAI knew all about it. So much so that every day, Nestle was sending an update to the regulator, along with pictures of the incineration for factual verification.
In fact, in a meeting held on 24 June, FSSAI told Nestle that the company must retain a sample of each and every variant produced at each of its plants. This meant that the company had to save some 2,000 cartons of the noodles it was withdrawing from the market. Nestle tried. However, it hasn’t been able to get back all the samples. And has been able to retain only 750 cartons. Each carton contains 90 packets. “On 3 July, there is a letter from Nestle which has been signed jointly,” said Chagla. “Despite all this, a charge has been made that we are destroying evidence.”
Now, let’s move on to the other contentious issues: the role of the food analyst, the test procedure, the interpretation of intended use and Nestle’s flip-flop on how the sample should be tested, according to its product approval document.
Let’s start with the product approval document. In the court, Chagla vehemently denied that Nestle ever filed the product approval documents with FSSAI which stated that Maggi noodles and the tastemaker have to be tested separately.
This took judge Colabawalla by a fair bit of surprise. His immediate response: “If your argument is that it should be tested as a composite, then what was the need of giving it separately in the product approval?”
To that, Chagla’s response: “My lordship, product approval does not say it separately. Only in Tamil Nadu and Delhi, it is separate because of Codex requirements. In all other states, it is combined.”
Chagla didn’t stop at that. In fact, he argued that FSSAI had fabricated reports to support its action. Specifically, the test report from the Avon Food Lab. Now, nobody knew about this document till the time it was introduced in the court by Pracha, the lawyer for FSSAI’s CEO.
“It is a serious charge worth contempt,” said Chagla. That’s because the food analyst (Amit Singh in Delhi) in his report said that he did not rely on any other external report. But the Avon report had his name. It was carried out under his personal supervision. “In the report of the food analyst,” continued Chagla, “Dated 27 May and completed on 2 June, the lead content is 1.75 ppm in the noodle and 4 in the tastemaker. But there is no mention of anything being outsourced.”
It is a curious question. But then, there is the other bit which is fishy. Specifically, the sample quantity in the Avon report: 300g.
Now, Maggi packets are sold in only two quantities: 280g and 420g. “What went to Avon?” asked Chagla. “The sample received by the food analyst is one, so how does it go to two different people? It is a package so the entire package should be sent.”
It is a pertinent point. Did the food analyst open the packet? If that be the case, then the test has no sanctity because the Act clearly states: Foods sold in packaged condition shall be sent for analysis in its original condition without opening the package.
Of course, having tasted blood, Chagla didn’t stop at that. He pushed further. “The Avon reports were never furnished to us,” he said. “Because it was procured after the event to justify the ban. I banned these goods, therefore, I must stand by it.”
It is here that the argument about the powers of a food analyst, the accreditation and notification of a laboratory and the procedure to conduct tests must be examined.
Nestle has alleged that the Act is a bit absurd. While it specifically states that food items that are imported should be tested in notified laboratories only, for foods produced in India, it doesn’t say anything.
“A food analyst is not an institution,” said Chagla. “He is a person. If he carried out the test in a chemical laboratory or anywhere, then he may not discover if there is anything bad in the food. Labs serve a purpose of proper analysis of food. That’s the purpose. It will be defeated by the argument that the food analyst can do what he wants. The prejudice cuts both ways. What if he misses?”
True. But that’s what the Act says. A food analyst can carry out the test anywhere.
Anyway, a few Q&As should help bring more clarity.
The referral labs in this Maggi case, are they accredited? Yes and no. The lab in Pune is accredited, but not for testing lead. Of the 72 tests conducted on Maggi samples in India, how many were carried out in accredited labs? None that met with all requirements for testing Maggi. That is, if you don’t count the Avon report. Is accreditation for testing lead and certain spices important? Yes. Only so that the lab can come up with an accurate test result. What about the intended use and composite test, what gimmickry is that? Well, that’s what the Act says. The test must be conducted in the “intended use” form. Nestle clearly labels that the noodles must be added in water along with the tastemaker and boiled. So, that’s that.
It is with this submission that Chagla argued: “The food analyst will test my product in an accredited lab, but not for lead. Nestle will test the product in notified and accredited labs. But it is this food analyst that will decide my fate.”
Chagla makes a fair point. So, let’s make another.
Was there lead?
Mired in splitting threads on accreditation and the sanctity of testing procedures, perhaps this is a question that hasn’t been asked enough. In the court, FSSAI’s lawyers have vehemently argued that there most certainly was. But their actions are suspect. The reporters for this story sent out two questions to Nestle India: Is there lead in Maggi, above the permissible limits? Is there any evidence to prove that while there is lead, if the sample is tested individually, noodles and tastemaker separately or as a composite, it is below permissible levels?
Nestle chose not to respond. In the court, Nestle’s lawyers refused to speak on the issue, saying that the matter is sub-judice.
It is here that the two judges in this case must be introduced. Justices Kanade and Colabawalla. During the last month of hearings, it was quite clear that both are extremely patient, keen to understand the fine print of the Act and ensure that justice is done. It is to that effect that they suggested common ground to bring a closure to the dispute.
Can both parties come to an agreement on a retest? In a laboratory of their choice—accredited and notified. Heck, not just one, but five laboratories. On both samples—the fourth sample that has been stored by FSSAI. And also samples from the 750 cartons that were withdrawn by Nestle from the market, as it was directed to do by FSSAI.
As things have turned out, the parties did not come to an agreement.
On its part, Nestle argued that it does not have faith in FSSAI and the sanctity of the fourth sample. It is however willing to get its own samples (from the 750 cartons) tested across five laboratories under the supervision of independent experts. Chagla suggested some names of scientists before the court: G.M. Tewari, M.S. Qureshi and K.K. Sharma.
Needless to say, FSSAI would have none of this. Khambata argued that it is the fourth sample or nothing. Because that’s what the Act says. In the courtroom, Pracha was pretty miffed with Nestle’s suggestions. “Can an entity say that I want these investigators?” he said. “These people are suggesting their own procedure. To allow that, Parliament will have to amend the Act first. Even the labs they have suggested are not under the Act.”
But, sir, why do you think they are not agreeing to test the fourth sample?
“What else, there is lead. And who knows what sample they have stored with them. For all you know, it must have been manufactured later.”
The same question was posed to one of Nestle’s lawyers.
“I can’t comment on this. The matter is sub-judice,” he said. But, sir, just this question. “I can’t comment. Hope you understand, my friend.”
The judgement
On 13 August, justices Kanade and Colabawalla set aside the nationwide ban on Maggi noodles.
In the judgement, which can only be termed as scathing, they noted: “Though Respondents have been shouting from roof top that their action was in public interest as they found that the food which was contaminated by lead beyond permissible limit was unsafe for human consumption, they promptly swung into action and banned the product. The said tall claim has not been substantiated by them before us. Merely stating that the food was unsafe or that the action was in public interest is not sufficient.”
It will be fair to say that the order has taken apart the regulator’s legal team, very comprehensively.
For instance, on the credibility of tests carried out: “It is not in dispute that the Laboratories in which these food samples were tested were either not accredited by NABL or not recognized by the Food Authority... or even if they were accredited or notified, they were not accredited to make analysis in respect of leading the samples. There is no material on record to show whether the procedure of testing samples which is mentioned under the Act... has been followed. There is a grave doubt about the samples being tested at Avon Food Lab (Pvt.) Ltd. and even if they are so tested, prima facie, it does appear that procedure of testing the samples has not been followed.”
On that count, the court ruled in favour of Nestle that the sanctity of the fourth sample held by the regulator was not tenable. Thus, a retest has been ordered but only of the samples held by Nestle. The court has directed the company to submit five samples each of nine variants of Maggi noodles for tests at laboratories certified by NABL—in Jaipur, Hyderabad and Mohali. The tests have to be carried out in six weeks. If the test results show the presence of lead within permissible levels of 2.5 ppm, Nestle is free to resume the manufacture and sale of Maggi noodles.
Does the FSSAI have egg on its face? Yes. Is the crisis surrounding Maggi over? Far from it. FSSAI has the option of challenging the high court verdict in the Supreme Court. And then, there is the other case—on 11 August, the ministry of consumer affairs filed a complaint against Nestle in the National Consumer Disputes Redressal Commission, seeking about Rs640 crore in damages for alleged unfair trade practices, false labelling and misleading advertisements.
A lot rests on how things pan out in the next six weeks. For Nestle and FSSAI.
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