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Report on the Maggi case against Nestle India Limited and the Food Safety and Standards Authority of India/TITLE
- 1. A REPORT ON THE CASE M/S NESTLE INDIA LIMITED VS THE FOOD SAFETY AND STANDARDS AUTHORITY OF INDIA By Navitha Pereira
- 2. CONTENTS Particulars Page No. 1. Introduction 1 2. Acts relating to the case 2 2.1. Consumer Protection Act, 1986 2 2.2. The Prevention of Food Adulteration Act, 1954 2 2.3. Food Safety and Standards Act, 2006 2 2.4. The Competition Act, 2002 2 3. Case Analysis 3 3.1. Maggi case issues 4 3.2. Maggi’s Defence 5 3.3. A twist to the case 5 4. Conclusion 6 References 8
- 3. 1 1. Introduction The controversy erupted from Barabanki District of Uttar Pradesh where samples of Maggie noodles were collected by Uttar Pradesh Food Safety and Drug Administration and the same was found to contain lead, MSG. Pertinently, the order dated 5th June issued by FSSAI has classified the issues with respect to Maggie. The First is the presence of lead in excess of maximum permissible levels of 2.5 ppm, misleading labelling information on the package reading "no added MSG" Monosodium glutamate (MSG) and lead. In brief the order dated 5th June, 2015 issued by Food Safety and Standard Authority of India, Delhi has held M/s. Nestle India Ltd liable inter alia under Section 20, 22, 23 and 24 r/w Section 53, Section 26, 27, 48, 50, 52 and 58 and 595 amongst others of the FSS Act, 2006. The FSSI order published and available on the public domain inter alia also directed M/s. Nestle India Ltd to withdraw and recall the 9 approved variants of Maggie instant Noodles from the market since these products having been found unsafe and hazardous for human consumption. The Authority also directed the company to further stop the production, processing, import, distribution and sale of the instant products from immediate effect, and also to immediately withdraw and recall "Maggie Oats Masala Noodles with Tastemaker" since the product has still not been approved by the Competent Authority.
- 4. 2 2. Acts relating to the case 2.1. Consumer Protection Act, 1986 Consumer Protection Act, 1986 is an Act of the Parliament of India enacted in 1986 to protect the interests of consumers in India. It makes provision for the establishment of consumer councils and other authorities for the settlement of consumers' disputes and for matters connected therewith also. The act was passed in Assembly in October 1986. 2.2. The Prevention of Food Adulteration Act, 1954 The Prevention of Food Adulteration Act, 1954 aims at making provisions for the prevention of adulteration of food. The Act extends to the whole of India and came into force on 1st June 1955. 2.3. Food Safety and Standards Act, 2006 An Act to consolidate the laws relating to food and to establish the Food Safety and Standards Authority of India for laying down science based standards for articles of food and to regulate their manufacture, storage, distribution, sale and import, to ensure availability of safe and wholesome food for human consumption and for matters connected therewith or incidental thereto. 2.4. The Competition Act, 2002 The Competition Act, 2002 was enacted by the Parliament of India and governs Indian competition law. It replaced the archaic The Monopolies and Restrictive Trade Practices Act, 1969. Under this legislation, the Competition Commission of India was established to prevent the activities that have an adverse effect on competition in India. This act extends to whole of India except the State of Jammu and Kashmir. It is a tool to implement and enforce competition policy and to prevent and punish anti- competitive business practices by firms and unnecessary Government interference in the market. Competition law is equally applicable on written as well as oral agreement, arrangements between the enterprises or persons.
- 5. 3 3. Case Analysis The whole controversy surrounding Maggi has caught everyone’s attention. Under section 12(1D) of the Consumer Protection Act, the government has filed a complaint before NCDRC against Nestle India over the Maggi issue. They have sought about Rs 640 crore as compensation. The word 'compensation' is again of very wide connotation. It has not been defined in the Act. According to dictionary it means, 'compensating or being compensated; thing given as recompense’. In legal sense it may constitute actual loss or expected loss and may extend to physical, mental or even emotional suffering, insult or injury or loss. Therefore, when the Commission has been vested with the jurisdiction to award value of goods or services and compensation it has to be construed widely enabling the Commission to determine compensation for any loss or damage suffered by a consumer which in law is otherwise included in wide meaning of compensation. The provision in our opinion enables a consumer to claim and empowers the Commission to redress any injustice done to him. Any other construction would defeat the very purpose of the Act. The Commission or the Forum in the Act is thus entitled to award not only value of the goods or services but also to compensate a consumer for injustice suffered by him. In the FSS Act, 2006, Section 20 deals with Contaminants, naturally occurring toxic substances, heaving metals etc which states that food products will only contain the quantities as specified by the regulations. Section 22 deals with genetically modified foods, organic foods, functional foods, proprietary foods7. It is this "proprietary food" provision that has been used against Maggie Oats Masala Noodles with Tastemaker whereby M/s. Nestle India Ltd was asked to impose liability on celebrities for endorsing the products which is otherwise found to be unsafe and hazardous. It is pertinent to appreciate some of the relevant provisions dealing with advertisement under the FSS Act. Section 3 (1) (b) of the Act defines "advertisement11" and section 24 (1)12 of the Act deals with Restrictions of Advertisements and prohibitions as to unfair trade practices. Section 53 of the Act deals with penalty for misleading advertisement13 and it imposes a penalty of Rs. 10,00,000/- for misleading advertisement. The definition of advertisement is very wide when it comes to the liability of brand endorsers more so because
- 6. 4 there are various stake holders involved in branding starting from the company, advertisement agency and then the celebrities who endorse the product. Further, besides imposing a fine of Rs. 10 lakh, it is difficult to prosecute the celebrity because for the act done in good faith one cannot be held to liable. 3.1. Maggi case issues Effect of registration/licensing Each packet of Maggi contained the FSSAI license number along with its logo. Does this not give an impression to the consumer that this food business operator is under the purview of the food safety authorities? Can consumers not assume that food safety authorities would have taken due inspection to ensure the quality? During the whole Maggi episode, not even once did the FSSAI come out with a statement explaining how violations were allowed to take place at such a large scale. Non-identification of the source Nestle never came out with a list of particular units where violations took place. Such a declaration would have helped them in restricting food recall to the Maggi manufactured in only such units and saved them to a great extent. At the same time, in the absence of any such declaration, inference can be drawn against them that violations took place at all units. Food recall procedure Print and electronic media had been flooded with news of the recall and it is being projected as one of the largest recalls ever. It may surprise everyone to know that FSSAI has not implemented any food recall procedure to date. The draft regulations in this regard were circulated for public discussion only 2-3 days prior to this Maggi fiasco. In the absence of these regulations how will FSSAI ensure the proper recall of the sub-standard Maggi packets? They might have to rely solely upon the declaration made by Nestle, which has already been widely published. Labelling violations
- 7. 5 One of the reasons for banning Maggi was because “No Added MSG” was mentioned on the packet label. As per the FSSAI, this is mis-leading and they have relied upon a document of the US Food and Drug Administration to support their argument. 3.2. Maggi’s Defence Maggi in its defence has categorically and out rightly denied the presence of excess MSG and lead in its composition and rather has contended that the presence of MSG and lead is natural phenomenon. The statement issued by Maggi read as under:- "We do not add Monosodium Glutamate (MSG) to Maggi Noodles. We use raw materials that may contain naturally occurring Glutamate and which could be confused with commercially produced MSG. Glutamate is safe and is found in everyday and high protein foods including tomatoes, peas, paneer, onions, milk." Thus it can be inferred that Nestle has shielded itself from any culpability and has sought to justify MSG as natural phenomenon. 3.3. A twist to the case In a twist to the Maggi noodles ban case, the Food Safety and Standards Authority of India (FSSAI) on Friday told the Supreme Court that it had never, in the first place, banned Nestle India’s popular household two-minute snack. Instead, the FSSAI said it only issued a show-cause notice to the company, seeking an explanation about the “excess” lead levels in its products and, secondly, why it had made a “false declaration of no added MSG (Monosodium glutamate) when its products contained MSG.”
- 8. 6 “The High Court erred in coming to the conclusion that the show-cause notice was a ban order,” the FSSAI argued in its appeal against a Bombay High Court lifting the ‘ban’ on the Maggi noodles. Seeking a stay of the High Court judgment, that has paved the way for Maggi's return, the top food regulator said “harm may be caused to consumers of the products, which will have an adverse effect on human health and life in the country.”Apprehensions raised by the FSSAI prompted a Bench to direct the Nestle and the Maharashtra government to respond by Jan. 13. The FSSAI, explained that it had only asked the company to stop further manufacture, production, import distribution and sale of its noodle variants in public interest during the period of consideration of the notice. This, it contended, would hardly have the effect of a “ban order,” especially when Nestle had already issued a press release declaring that it was recalling its products under the scanner for excessive lead content. Nestle went on to destroy over 25,000 tonnes of Maggi products. The FSSAI argued that the company, instead of replying to the show-cause notice, moved the Bombay HC. The High Court had interpreted the FSSAI notice as a ban order, and concluded that banning the company's products without even affording it an opportunity to be heard was against the basic principles of natural justice. The FSSAI termed the High Court order as “fallacious.” It asked how a notice issued in public interest could be described “arbitrary, unreasonable, lacking transparency” by the High Court. That too when the High Court itself has recorded the fact that out of 82 samples, 30 had lead levels in excess of permissible limits. The Food Authority said the High Court had erred in disregarding the reports of two notified and NABL-accredited labs (Kolkata and AVON) that levels of lead were over the limit. It said the HC has committed a mistake by asking the company itself to provide the fresh samples for testing instead of asking a neutral authority to do so.
- 9. 7 4. Conclusion Nearly a year after it got into trouble, Nestlé's Maggi noodles has passed all safety tests directed by the Supreme Court (SC) and the National Consumer Disputes Redressal Commission (NCDRC). All tests conducted on 29 samples of the instant noodles brand failed to find any excess lead or artificial monosodium glutamate (MSG) in it, Nestlé India stated on Monday. Every single sample was found compliant. CFTRI (the central government's laboratory) has clarified that glutamic acid can be due to presence of ingredients like tomatoes, cheese, hydrolyzed plant protein, hydrolyzed vegetable protein, etc. It has further stated that there are no analytical methods to distinguish between naturally present glutamic acid and additive MSG, the company added. The controversy related to presence of MSG and higher than permissible levels of lead in Maggi hit Nestlé India in May 2015. It led to a countrywide ban on the flagship brand, which had contributed to 26 per cent of the previous year's Rs 9,800 crore sales. As Maggi remained off shelves between June and October, the company suffered considerable financial loss, posting a net Rs 64 crore negative figure for the September quarter, for the first time in 17 years.“We strongly reiterate that Maggi has always been safe for consumption, as demonstrated by tests carried out in independent accredited laboratories," stated Nestlé.