The national consumer court on Monday issued notice to Nestle India over the central government's Rs 640-crore unfair trade practice class action suit related to tainted samples of the popular Maggi two-minute noodles.
A bench of the National Consumer Disputes Redressal Commission comprising Justice VK Jain and BC Gupta directed Nestle India to respond to the notice by September 30 and allowed the government to send samples of Maggi noodles to an accredited laboratory for tests on lead content and MSG.
During the hearing, the bench expressed doubt over the government's cause of action, saying the Bombay high court’s judgment in the matter had dealt with the issue of lead content.
It said since the high court had rejected the government’s current reports on lead content – for not being from an accredited laboratory – there was no report to prove the government's contention that Nestle was selling hazardous products.
The government's counsel, additional solicitor general Sandeep Jain, replied the government had approached the consumer forum on a "broader issue". The Centre was dealing with the question of whether Nestle had "all this while" sold a product which did not meet India’s food safety standards, he said.
After a 30-minute hearing, the forum agreed to have Maggi samples tested at an accredited lab, and issued the notice to Nestle to answer the government's accusations.
The Centre had last Tuesday filed a first-of-its-kind “class action” complaint against Nestle India, seeking Rs 640 crore in damages for alleged unfair trade practices by selling “hazardous” Maggi noodles to millions of consumers, especially children.
The complaint – filed through the secretary of the consumer affairs department in the national consumer court – accused Nestle India, a subsidiary of Nestle SA, Switzerland, of promoting noodles containing excessive lead as healthy with the sole aim of enhancing profits.
“…the opponent (Nestle India) has deliberately misled the consumers of the quality, standard and accreditation/approval of Maggi noodles,” it said.
Nestle India, which withdrew Maggi noodles across the country, has said it is prepared to fight the suit.
However, the news of the class action suit came as a blow to Nestle India that recently reported its first quarterly loss in more than 15 years after the country’s food regulator ordered recall of Maggi noodles. Amid a snowballing crisis, the company CEO Etienne Benet stepped down on July 24.
The government accused the company of advertising the popular instant snack as “taste bhi, health bhi (it is tasty as well as healthy)” despite the product containing lead and MSG (monosodium glutamate). Nestle India violated consumers’ right to life by endangering their health, it said.
The firm’s failure to disclose the presence of risk-increasing ingredients was deceptive and misleading, said the complaint filed before NCDRC through advocates Mrinalini Sen and Prabhsahay Kaur, and cleared by additional solicitor general Sanjay Jain.
Usually, individuals move consumer fora but the consumer protection act also allows the government to file complaints on behalf of consumers. This is the first time that the government has made use of this provision.
The government submitted Food Safety and Standards Authority of India (FSSAI) test results on Maggi products from across the country that tested positive for lead – accumulation of which in human body can be fatal.
The company sold Maggi Oat Noodles without clearance from the central food safety regulator. It, however, used its approval mark on the packaging, the complaint said.
“We are yet to receive official notice about the complaint filed before the NCDRC. Our current knowledge on this issue is only based on media reports. We shall be able to provide a substantive response after we receive the official papers,” a Nestle India representative said.
The money — more than Rs 640 crore — claimed by the government will be deposited in consumer welfare fund.
The government has demanded Rs 285 crore for unfair trade practice for selling “defective and hazardous goods” and Rs 355 crore in punitive damages.
An Uttar Pradesh government order recalling Maggi noodles for containing excessive lead in May triggered a chain reaction across the country. On June 4, the company announced withdrawal of the Maggi noodles, incurring a one-time removal cost of Rs 451.6 crore. A day later, FSSAI ordered the company to recall its products. Nestle India withdrew about 30,000 tonnes of popular instant noodles from the market.