Bombay High Court lifts ban on Maggi, orders fresh tests (Roundup)

Nestle India got a significant respite on Thursday with the Bombay High Court lifting the ban on the sale of its Maggi instant noodles and ordering fresh tests in three separate labs to ascertain that the product complied with the country's food safety norms.

The conditional relief came following a petition filed by Nestle challenging the regulatory order of June 5 for the withdrawal and recall of nine variants of "Maggi Instant Noodles" and "Maggi Oats Masala Noodles with Tastemaker".

A division bench of Justice V.M. Kanade and Justice B.P. Colabawalla, while ruling that the principles of natural justice were not followed, also directed fresh tests to be conducted on all major Maggi samples by three separate laboratories within the next six weeks, before it can return to the markets.

"We have examined the evidence in great detail. Since the petitioner Nestle has already agreed not to make and sell Maggi until the food authorities are satisfied, we see no reason to allow any relief to food authorities," Justice Kanade said.

The court directed that five samples of each Maggi noodles variant sent private labs in Punjab, Jaipur and Hyderabad which are recognized by the National Accreditation Board for Testing & Calibration Laboratories.

These samples would be taken from the 750-odd preserved by Nestle after the ban, while a large stock of its products was destroyed by the company after the ban was implemented.

The court specified that only if the lead content was found to be within permissible limits could the company resume its manufacture and sale.

Immediately after the judgement, the stocks of Nestle India surged to the day's high of Rs.6,545, and eventually closed at Rs.6,356.70, with a gain of Rs.172 or 2.78 percent.

The Food Safety and Standards Authority of India (FSSAI), the industry watchdog, had said in its order that tests conducted on a batch of Maggi were found to contain more-than-permissible levels of lead and high quantities of mono-sodium glutamate (MSG).

Refusing also to stay its own order observing that manufacturing and fresh testing would take time, the bench said the FSSAI ban was imposed without following the due principles of natural justice. It also said the tests were conducted in unauthorised labs.

The court further said that the company itself had stated it would not manufacture and sell Maggi till it secured a clean chit from labs accredited with the food safety regulator.

Nestle was also directed to provide five samples from each Maggi batch for testing by the three labs.

Welcoming the judgement, Nestle India said said in a statement that it would comply with the order for conducting fresh tests on samples and expressed its commitment to working with FSSAI, the Maharashtra FDA and other stakeholders.

The significant ruling came a day after Indian authorities announced that they will seek Rs.640 crore in damages from Nestle India for indulging in what they alleged was "unfair trade practices" and mis-statements pertaining to the popular noodles brands.

The National Consumer Disputes Redressal Commission (NCDRC) is set to hear the case on Friday.

However, the company said recently that more than 2,700 samples of Maggi noodles have already been tested by laboratories in India and abroad in recent months and all have concluded that the lead content was far below permissible limits.

The company also said that five samples tested by the government-accredited referral food laboratory, Central Food Technological Research Institute, Mysuru, on samples sent by the Food and Drug Administration (FDA) of Goa, had also found similar results.

"Maggi noodles made in India have been tested and found to be safe for consumption by the authorities of several countries across the world."

Among the four divisions of Nestle India, the category of "prepared dishes and cooking aids", which broadly translate into Maggi, accounted for 31.5 percent of sales in 2014, as per a presentation by the company to analysts.

The Maggi unit also saw a 1.8 percent increase in volumes in 2014 over the previous year and 8.1 percent rise in value at Rs.21.4 billion

Of the remaining divisions, the category of "milk products and nutrition" had the largest share of 47.1 percent, followed by 12.2 percent for "chocolates and confectionery" and 9.2 percent for "beverages".