Bombay High Court scraps Maggi recall order, but demands tests

By Nivedita Bhattacharjee

MUMBAI (Reuters) - The Bombay High Court on Thursday ruled in favour of Nestle in its battle to overturn a nationwide ban of its Maggi instant noodles, but demanded the popular snack be tested again for safety before it can go on sale again.

The ruling marks a partial victory for the Swiss food giant, which withdrew the noodles from Indian stores in June after the Food Safety and Standards Authority of India (FSSAI) said they contained unsafe levels of lead.

A spokesman said Nestle India would comply with the court order, which it hopes will mark the beginning of the end of India's worst packaged food scare in a decade.

"It is Nestle India's endeavour to get Maggi noodles back on the shelves as soon as possible for the benefit of our consumer," the spokesman said. The company had said its own tests showed the noodles were safe to eat.

Lawyers acting for the food safety regulator said they may appeal, depending on the results of the fresh tests.

The Bombay High Court order said these tests must be conducted at specific laboratories, after media reports criticised the FSSAI's facilities as ill-equipped and under-staffed. The regulator itself has said India needs to strengthen food safety infrastructure.

The safety scare left Nestle with a 66 million Swiss franc ($67.46 million) recall bill as well as the challenge of rebuilding its brand after its worst public relations crisis in India to date.

It replaced the head of its Indian unit last month with turnaround specialist Suresh Narayanan, the first Indian in almost two decades to run operations in the country.

Industry experts said the credibility of all involved was at stake. "A lot of work has to be done both by the industry as well as the regulator to ensure that a controversy like this does not erupt again," said Arvind Singhal, chairman of retail consultants Technopak.

Separately, the government earlier this week filed a lawsuit against Nestle's Indian unit, seeking $99 million in damages on behalf of consumers, citing unfair trade practices and the sale of defective goods. That case is not related to the food safety scare.

($1 = 0.9784 Swiss francs)

(Additional reporting by Swati Bhat and Sumeet Chatterjee; Writing by Clara Ferreira Marques; Editing by Miral Fahmy)