Moneycontrol BureauIn a major reprieve for Nestle, the Bombay High Court on Thursday set aside the Food Safety and Standards Authority of India (FSSAI) ban order on Maggi noodles, and told the food authority to justify the ban on six variants of the product. However, Nestle will not be able to sell its marquee product just yet. The court has ruled that preserved samples will now have to be tested in three different labs located in Jaipur, Mohali and Hyderabad in a span of 6 weeks.
The company will have to send five samples of each batch to three food testing labs and will not be allowed to either manufacture or sell until the tests are completed.
The FSSAI had found high amounts of lead and traces of MSG in Nestle's Maggi and on June 5, it ordered a ban on the noodles that was quickly followed by Maharashtra FDA. Monosodium glutamate (MSG) is a flavour enhancer added to various packaged food items.
The ban was on two counts-excessive lead and mislabelling products. The FSSAI had said that the company had mislead customers by labelling the packets of Maggi noodles with "no added MSG".
The company reported its first loss in 15 years after it voluntarily recalled samples across the country. The company had to recall about 400 packets, weighing 30,000 tonne that resulted in a one-time cost of Rs 451.6 crore. The company reported a Rs 64.4 crore loss in Q1.
What Nestle argued
Nestle India sought a judicial review of orders passed by Maharashtra FDA and FSSAI and raised issues of interpretation of Food Safety and Standards Act 2011. It said the order was passed in an arbitrary manner and all analysis needs to be done by labs, that are accredited by NABL.
In more trouble for the company, the Centre recently filed a case against the company, seeking Rs 640 crore in damages for alleged unfair trade practices, false labelling and misleading advertisements.Senior Advocate Gopal Jain says the government will now have to establish that there was a violation of norms on the basis of which they are seeking compensation.
"For compensation, you have to show that there has been an injury or some wrong or act of negligence and if the court says that the ban itself was wrong, certainly it will have a huge impact in a case claiming monetary compensation or damages because damages means there has been some wrong."
Government's arguments
The government argued the company submitted doctored reports and should have approached authority with a reply instead of approaching the courts. It further alleged the company has been destroying evidence by burning product samples.
The counsel also emphasised on the company's responsibility to mention on the label that the tastemaker (the flavour enhancer found in Maggi packets) should not be consumed separately.
Obstacles galore
Pragya Singh of Technopak Advisors believes challenge now will be for Maggi to come back on shelves and to find way into consumers' carts , like it has found for the last 25 years. "The company will have to reinitiate and rebuild trust," she adds highlighting the need for effective resumption in distribution channels.
Another way of bouncing back from this setback and a point most food and beverage companies will now be more cautious of is that of packaging the product, says consultant Harish Bijoor. He believes Nestle could go into damage-control mode and contemplate a new way of labelling Maggi packets as its image has been hurt to a great extent. (Written by Ritika Dange)
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