In a relief to Dabur India, the Delhi High Court on Friday stayed the Food Safety and Standards Authority of India's (FSSAI) order that prohibited the consumer goods company from selling its products carrying claims such as "100% Pure", "100% Natural" and "100% Purity Guaranteed".
The bench of Justice Amit Mahajan said, prima facie, the food regulator should not have passed the prohibitory order without first giving Dabur an opportunity to be heard.
Justice Mahajan issued notice on Dabur's petition challenging the FSSAI's 3 August order and directed the regulator to file its response within 15 days. The interim stay on the impugned order will continue till the next date of hearing on 24 August.
The Delhi High Court stayed the FSSAI's order prohibiting Dabur from selling products labeled with '100% Pure' claims, stating the regulator should have given Dabur an opportunity to be heard before issuing the order.
The FSSAI issued the order because it found that claims such as '100% Pure' were ambiguous, unverifiable, and likely to mislead consumers, creating a false impression of product superiority.
Dabur challenged the FSSAI's order in court, arguing that it violated principles of natural justice by not granting prior notice or an opportunity for a hearing before the prohibition was imposed.
The FSSAI order affected several of Dabur's products, including honey, apple cider vinegar, virgin coconut oil, sesame oil, cow ghee, coconut water, and coconut milk, among others.
Companies should be cautious in using '100% claims' as they can violate food safety regulations, being deemed ambiguous and misleading, which could result in regulatory actions like those faced by Dabur.
"This Court is of the opinion that the prohibitory order of such nature ought not to have been passed without affording an opportunity of holding. Till the next stage, the effect of the impugned order is stayed," the court observed.
The FSSAI had directed Dabur to stop selling products bearing the impugned claims, stating that such statements could not be scientifically verified and were likely to mislead consumers by creating the impression that the products were superior to competing brands. The order covered several products, including honey, ghee, sesame oil, coconut water and coconut milk.
Appearing for Dabur, senior advocate Sandeep Sethi argued that the regulator had exceeded its statutory powers by issuing what was effectively a prohibitory order without following due process. He contended that the order had been passed without granting the company a show-cause notice or an opportunity of hearing, in violation of the principles of natural justice.
Appearing for FSSAI, counsel Ashish Dixit submitted that the issue concerning Dabur's "100%" claims is already pending before the Delhi High Court in a separate petition relating to Real fruit juice, where interim protection has been granted.
Opposing the plea, counsel for FSSAI submitted that an improvement notice had earlier been issued to the company and maintained that the designated officer was empowered to prohibit the sale of products found to be in contravention of the Food Safety and Standards Act.
Shares of Dabur have been on a decline since the order was passed on 3 August. They were trading at ₹409 apiece on the National Stock Exchange, down 0.5% from the previous close and closer to the 52-week low.
On 3 August, FSSAI directed Dabur to immediately prohibit the sale of the food products identified in the notice and all other food products carrying the misleading claims, and to submit an action-taken report (ATR) within 15 days.