Government’s claim from Nestle for selling “defective and hazardous” Maggi noodles may exceed Rs 640 crore as it is tabulating further damages to be sought, even as the company termed the class action suit as disappointing and an unprecedented step.
Nestle, which had to recall the popular noodles brand after orders from the food safety regulator FSSAI, is the first foreign firm in India to face a class action suit, which was filed by the government yesterday under an hitherto unused provision of the three-decade old Consumer Protection Act.
The Consumer Affairs Ministry has filed a 45-page complaint before the National Consumer Disputes Redressal Commission (NCDRC) to seek Rs 284.45 crore in basic damages and further Rs 355.50 crore in punitive damages, resulting in total damages of Rs 639.95 crore sought from the Swiss giant.
The first hearing of the case is expected on August 14.
The government also wants Nestle India to pay interest at a rate of 18 per cent per annum till the date of actual payment, while it has also asked the consumer forum to order the company to take remedial measures for wrong labelling and misleading advertisements.
In a statement issued today, Nestle India said, “We are disappointed with the unprecedented step of filing of a complaint before the NCDRC against Nestle India.”
The company also said it maintained “highest standards of food quality and safety in the manufacture of all its products” and it has a stringent program to test the ingredients that go to make Maggi noodles.
In its petition, the Ministry said it is in the process of “tabulating further damages” and will seek additional damages when further facts and data emerges.
The amount claimed will be deposited in the Consumer Welfare Fund in the interest of consumers, the ministry said.
The government has based its damage claims on Nestle India’s total revenue in 2014, which stood at Rs 9,485.32 crore, of which Maggi and its variants accounted for 30 per cent share at Rs 2,845.59 crore.
It has sought 10 per cent of Maggi’s annual sales as basic damages, while 30 per cent of the company’s profit from the product has been sought as punitive damages.
The Department of Consumer Affairs said in a statement issued today that it has filed “this class action suit on behalf of the large number of consumers of Maggi against Nestle India on grounds of unfair trade practices, sale of defective goods and sale of Maggi Oats Noodles to the public without product approval.”
The department said the complaint has been filed “to safeguard and protect the interest of millions of consumers who have been victims of defective, misbranded and hazardous goods/products”.
Stating that loss and injury has been suffered by a large number of consumers who are not identifiable conveniently, the Department said it has sought a sum of Rs 284.55 crore that Nestle India is liable to pay and a sum of Rs 355.40 as punitive damages.
This is “on account of the gross negligence, apathy and callousness on the part of the Opponent Company (Nestle India),” the Department said, while adding that the total claims currently works out to be Rs 639.95 crore.
Nestle India shares today fell nearly 2 per cent at the BSE to close at Rs 6,184.70 a piece.