After Maggi ban, govt hits Nestle with Rs 640-cr damage suit
The Centre on 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.Updated: Aug 12, 2015 10:07 IST
More than a month after banning Maggi, the government on Tuesday dealt another blow to Nestle India, the manufacturer of the popular two-minute noodle, with a Rs 640 crore damage suit.
In a first-of-its-kind “class action” complaint against Nestle India, the government filed a complaint saying the company had misled consumers with advertisements that claimed that the noodle was a healthy snack.
The complaint -- filed through the department of consumer affairs secretary -- in the national consumer court accuses 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 said it was yet to receive official notice about the complaint.
Read: Maggi noodles in soup: All you need to know about the controversy
The complaint came close on the heels of food safety watchdog FSSAI saying it has not given any clean chit to Nestle's banned Maggi noodles as it rubbished all-clear reports from two of its own empanelled labs. The food regulator said there were lapses in the tests at Goa and Mysore laboratories.
However, Britain’s Food Standards Agency (FSA) had recently said the samples of Maggi noodles it tested after the furore in India revealed that the lead content was well within EU’s permissible levels.
In another development, Consumer affairs minister Ram Vilas Paswan had, last week, said he was hopeful that Maggi would be back on the shelves soon, a day after the food regulator said it did not give any clean chit to the Nestle product.
Tuesday’s developments come 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 in the National Consumer Disputes Redressal Commission (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 — 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.
Read: Nestle's Maggi noodles found safe by govt-approved lab