Relief, cheers for Nestle, Maggi fans

The news of Bombay High Court quashing Indian food regulators’ order banning Maggi Noodles has come as a major relief to the food giant. While the order has understandably gladdened the hearts of the Maggi fans, it has come as a major setback to the Indian Government, which had rushed to order the popular food item off the shelves in the country.

The Swiss food giant has always maintained the product is safe to eat, and has continued to sell it in other countries. The ruling comes a day after India said it was seeking damages of nearly $100m (Rs 640 crores) from Nestle India for “unfair trade practices” in relation to the noodles, one of the country’s most popular snacks.

Panning the government and the food regulator for acting in an “arbitrary” fashion for banning the nine variants of the popular brand, the court said it violated the “principles of natural justice”. It also permitted Nestle India to send five samples of each variant of noodles for fresh testing to three accredited labs in Punjab, Hyderabad and Jaipur.

“Even though it is 2-minute noodles, it took us a lot of time,” the bench remarked. The court said the samples should be analysed within six weeks and if tests prove that the lead content in the product is within permissible limit, Nestle India can resume manufacturing.

The bourses, too, have reacted positively with Nestle India’s stock registering a six per cent hike on the Bombay Stock Exchange and five per cent jump on the National Stock Exchange.

The HC decision has boosted the company’s falling share price, which had been reeling since the ban was imposed. The stock took a major hit in the trading session on August 12 when the government of India filed a class action suit against Nestle seeking $100m in damages, allegedly for unfair trade practices and misleading advertisements.

While this order gives a major relief to Nestle India, it could spell further embarrassment for the government if the tests show the lead content is within permissible limits. The government has already received plenty of brickbats for its decision to file a class action suit against the company without waiting for the decision of the court and, also not serving any notice to Nestle before the ban was imposed.

Meanwhile, the United States’ health regulator, the Food and Drug Administration (FDA), said on August 13 that their tests showed that the lead level in the popular instant food was within acceptable levels and did not present a public health concern for US consumers.

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