Bombay High Court: Old Monk Sale Ban by FSSAI Leads to ₹500 Cr Loss

• Mohan Rocky Springwater Pvt. Ltd. informed the Bombay High Court that the Old Monk sale ban has caused over ₹500 crore in losses for its Thane unit.
• The Maharashtra State Excise Department has lost approximately ₹350 crore in revenue due to the sales prohibition.
• The FSSAI issued a prohibition order because external rum flavors were added to spirits sold under standard product names, which it claims masks natural compositions.
• Authorities have offered to permit sales if the company agrees to label its product as 'rum-like' instead of 'rum'.
• The manufacturer argued that other units in Maharashtra continue to sell the identical rum formulation without restrictions.

Lawyers advising beverage companies should note the significant financial implications of FSSAI prohibition orders, both for businesses and state revenue, and consider the potential for resolution through product labeling modifications as demonstrated in this Bombay High Court case.

During recent proceedings before the Bombay High Court, the manufacturer of Old Monk rum, Mohan Rocky Springwater Pvt. Ltd., presented arguments concerning the significant financial repercussions of a sales prohibition. The company informed a division bench, comprising Chief Justice Mahesh Chandra Tripathi and Justice Advait Sethna, that the ongoing restriction on its product sales has led to substantial losses. Specifically, the manufacturer's senior counsel, Venkatesh Dhond, highlighted that the company has incurred a loss exceeding ₹500 crore from its Thane district production unit alone. This submission was made as part of a legal challenge, Mohan Rocky Springwater Pvt Ltd v. Union of India & Ors., contesting a directive issued by the Food Safety and Standards Authority of India (FSSAI).

The financial impact extends beyond the company, as the Maharashtra State Excise Department has also experienced a considerable reduction in its revenue. According to the manufacturer's legal representation, the state excise department has foregone approximately ₹350 crore in revenue due to the Old Monk sale ban. A key point raised by the manufacturer was the apparent inconsistency in enforcement, noting that other production facilities within Maharashtra continue to distribute the identical rum formulation without facing similar sales restrictions. This disparity underscores the specific targeting of the Thane unit's output under the FSSAI's directive.

At the heart of this legal dispute is a prohibition order from the FSSAI, which targets liquor products that incorporate external rum flavors into spirits marketed under conventional product designations. The regulatory body asserts that the addition of artificial or nature-identical rum flavoring agents can obscure the inherent chemical makeup and natural characteristics of a spirit. This practice, according to the FSSAI, misrepresents the product to consumers by masking its original composition, thereby necessitating the sales ban. The FSSAI's directive aims to ensure that products are accurately labeled and that their core ingredients are not disguised by added flavorings.

Additional Solicitor General Anil Singh, representing the authorities, articulated the government's position during the court hearing. He indicated that the FSSAI is prepared to permit the sale of the product, provided the manufacturer agrees to modify its labeling. The proposed modification involves reclassifying the product description from 'rum' to 'rum-like'. This suggested resolution points to a regulatory emphasis on clear and precise spirit labeling regulations in India, ensuring that consumers are fully aware of what they are purchasing, especially when flavorings are involved.

The financial toll of the FSSAI's prohibition order is stark, impacting both the private entity and public coffers. The manufacturer's reported loss of over ₹500 crore from a single unit, coupled with the Maharashtra State Excise revenue loss of ₹350 crore, illustrates the significant economic consequences of such regulatory actions. This case, involving the Old Monk sale ban before the Bombay High Court, highlights how FSSAI rum flavoring prohibition can lead to substantial financial distress for beverage companies and states alike. The proposed solution, focusing on a change in product description, offers a potential pathway for resolution.

Lawyers advising beverage companies should note the significant financial implications of FSSAI prohibition orders, both for businesses and state revenue, and consider the potential for resolution through product labeling modifications as demonstrated in this Bombay High Court case. The willingness of authorities to consider sales permission contingent on a descriptive label change from 'rum' to 'rum-like' indicates a regulatory preference for clarity over outright prohibition, provided the product's true nature is communicated effectively to the consumer.

Lawyers advising beverage companies should note the significant financial implications of FSSAI prohibition orders, both for businesses and state revenue, and consider the potential for resolution through product labeling modifications as demonstrated in this Bombay High Court case.

Source: Original reporting via legal news outlet.