New Delhi: In a setback to Nestle India Ltd, the Supreme Court on Thursday lifted a stay on the proceedings of a class-action suit filed by the central government against the maker of Maggi noodles in the apex consumer court.
Nestle again lands in a soup over Maggi noodles
The National Consumer Disputes Redressal Commission (NCDRC) can now continue proceedings against Nestle India, based on the results of tests of Maggi noodle samples conducted by the Central Food Technological Research Institute (CFTRI) in Mysuru. In December 2015, the top court had stayed NCDRC proceedings against Nestle India and directed the testing of the noodles by CFTRI. In April next year, Nestle cleared all tests and Maggi was declared safe for consumption.
The government had approached the consumer court alleging unfair trade practices, false labelling and misleading advertisements by Nestle and sought a compensation of ₹640 crore under the provisions of the Consumer Protection Act, 1986.
The apex court’s ruling on Thursday means that Nestle may have to review its packaging and change the way it advertises the noodles brand.
Nestle India, in a statement, said that it welcomed the orders passed by the Supreme Court in the Maggi noodles matter. Senior advocate Abhishek Manu Singhvi, appearing for Nestle, told the court that the Mysuru-based lab had found the noodles to contain lead “within permissible limits” and that it could not be ascertained whether the monosodium glutamate (MSG) in it was natural or added.
The 2015 Maggi ban was a big blow to the Indian arm of the Swiss foods company, which took a hit of more than ₹500 crore as it recalled and destroyed more than 35,000 tonnes of noodles from 3.5 million retail outlets in June 2015.
Maggi was banned by FSSAI on 5 June 2015 for five months for allegedly containing lead beyond permissible limits, forcing Nestle India to withdraw the product from the market. This led to not just losses, but also erosion of consumer trust in the popular brand.
Nestle said that Maggi, which once enjoyed a 75% share of the market before the ban, clawed back to 60% in 2016. To further the cause of improving food safety standards in the country, in September 2017 Nestle partnered with FSSAI to open the first food safety institute in Manesar.
“Nestle had seen favourable outcomes from international and national labs for its Maggi samples before it hit the market. I do not see any major issue hitting the company in this regard,” said Abneesh Roy, senior vice-president at Edelweiss Securities.