Cattle-Feed Bran in Human Food: The Priyagold Biscuit Controversy and Lessons in Food Safety, Corporate Governance and Regulatory Compliance

By Lawcify | Corporate Legal & Regulatory Insights

Introduction

Food safety is not merely a matter of product quality; it is a fundamental legal obligation and an essential pillar of corporate governance. The reported discovery of cattle-feed bran being used as a raw material in Priyagold biscuit manufacturing by M/s Surya Food & Agro Ltd., followed by the suspension of its Food Safety and Standards Authority of India (FSSAI) licence, has brought renewed attention to the importance of supply-chain integrity, manufacturing controls and regulatory accountability in India's food industry.

According to the report and the inspection observations reproduced in the accompanying image, the concerns extended beyond the use of bran intended for animal feed. Deficiencies were also reportedly observed in plant hygiene, pest control, raw-material storage and segregation, personnel hygiene, premises maintenance and the handling of intermediate formulations.

The episode offers important lessons for food manufacturers, directors, compliance officers, procurement teams and businesses operating in regulated industries.

This article analyses the regulatory and corporate-governance implications of the reported inspection. The underlying inspection record, regulatory orders and any subsequent proceedings should be independently verified before drawing conclusions about the company's final legal liability.

1. Why the Use of Cattle-Feed Bran Raises Serious Concerns

Raw materials used in food manufacturing must be suitable for their intended purpose and comply with applicable food-safety requirements. A material intended for animal feed cannot automatically be treated as fit for human consumption merely because it contains fibre or resembles an ingredient used in food products.

The key questions in such a situation include:

• Was the material legally permitted for use in the relevant food product?

• Did it meet the applicable food-safety, quality and compositional standards?

• Was its source, grade and intended use adequately documented?

• Were the supplier's specifications and declarations verified?

• Could the use of the material compromise the safety or suitability of the finished product?

The distinction is important: the central regulatory concern is not simply the label on a gunny bag, but whether the ingredient was suitable, compliant and safe for the intended human-food application.

In a food-manufacturing business, procurement decisions must therefore be evaluated not only on price and availability but also on regulatory acceptability, traceability and consumer safety.

2. The Applicable Legal and Regulatory Framework

India's food-safety regime is principally governed by the Food Safety and Standards Act, 2006, together with the rules and regulations made under it.

A. Food Safety and Standards Act, 2006

The Act establishes the framework for regulating food manufacture, processing, storage, distribution and sale. It also provides for licensing, inspections, enforcement measures and penalties for specified violations.

Depending on the facts established by the authorities, the following provisions may be relevant:

Section 26 — Responsibilities of food business operators

Food business operators are responsible for ensuring that food under their control satisfies applicable legal requirements at the stages of production, processing, import, distribution and sale.

For manufacturers, this responsibility extends to raw-material selection, manufacturing processes, hygiene controls and the safety and compliance of finished products.

Section 31 — Licensing and registration

Food businesses must hold the appropriate licence or registration, as applicable, and operate within the conditions prescribed by law.

Section 32 — Improvement notices

Where the statutory conditions are satisfied, the designated officer may issue an improvement notice requiring specified corrective action. Continued non-compliance may lead to further regulatory consequences, including suspension or cancellation in accordance with the applicable procedure.

Section 55 — Penalty for non-compliance with directions of the Food Safety Officer

Failure to comply with directions issued by a Food Safety Officer may attract the consequences prescribed under this provision, where applicable.

Sections 58, 59 and 63

These provisions address, respectively, residual penalties where no specific penalty is provided, punishment for unsafe food, and punishment for carrying on a food business without the requisite licence.

Their applicability depends on the nature of the contravention, the evidence available and the statutory conditions. The mere existence of an inspection observation does not, by itself, establish that every such provision has been violated.

B. Food Safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011

These regulations prescribe licensing and registration requirements, including conditions relevant to food-business operations.

Manufacturers should periodically verify that their licences, product categories, manufacturing premises and operational activities remain consistent with the applicable regulatory requirements.

C. Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011

These regulations establish standards for specified food products and govern permitted ingredients and additives within their applicable scope.

For biscuit manufacturers, the ingredients and formulation must comply with the standards and requirements applicable to the particular product.

D. Food Safety and Standards (Food Products Standards and Food Additives) Regulations and applicable hygiene requirements

Applicable hygiene and sanitary requirements, including the relevant Schedule 4 requirements under the licensing regulations, are critical to safe food manufacturing. Depending on the nature and scale of the business, manufacturers must implement appropriate good manufacturing practices and good hygienic practices.

Important legal distinction: The precise contraventions, statutory provisions invoked, reasons for suspension and available remedies must be determined from the actual inspection report and the written order issued by the competent authority.

3. Why the Reported Hygiene Deficiencies Matter

The inspection observations reproduced in the report identify several areas that deserve particular attention.

Raw-material storage and segregation: Food-grade ingredients should be segregated from materials not approved for human consumption. Identification, dedicated storage arrangements and controlled access help prevent accidental or deliberate substitution.

Supplier verification: Procurement teams should verify supplier credentials, ingredient specifications, certificates of analysis where appropriate, batch documentation and the permitted intended use of materials.

Pest control: Inadequate pest-control arrangements may create contamination risks and indicate weaknesses in the manufacturer's hygiene-management system.

Personnel hygiene: Employees involved in food handling should receive appropriate training and follow prescribed hygiene practices.

Premises maintenance: Clean, maintained and appropriately designed premises reduce the likelihood of contamination during manufacturing and storage.

Handling of intermediate formulations: Work-in-progress and intermediate products must be identified, protected and handled under documented procedures that preserve traceability and prevent contamination.

These controls should not exist merely as written policies. They must operate consistently on the manufacturing floor and be supported by verifiable records.

4. Suspension of an FSSAI Licence: What Does It Mean?

An FSSAI licence is a regulatory authorisation for conducting the relevant food-business activities, subject to the applicable law and licence conditions.

Suspension can have serious operational consequences. Depending on the scope and terms of the order, a business may be required to stop specified activities, implement corrective measures or comply with further directions before resuming the affected operations.

However, suspension should not automatically be equated with permanent cancellation, a final finding of criminal liability or an adjudicated conclusion that every product manufactured by the company was unsafe.

A business facing such action should immediately:

1. Obtain and review the written suspension order and inspection report.

2. Identify the precise statutory provisions, findings and directions cited by the authority.

3. Determine the activities affected by the order and the restrictions on continued operations.

4. Preserve procurement, production, testing, batch and distribution records.

5. Implement appropriate product-hold, traceability, withdrawal or recall measures wherever required or justified by the identified risk.

6. Prepare a corrective-action plan supported by evidence.

7. Pursue the representations, review or other remedies available under the applicable law and the terms of the order.

The overriding priority must be consumer safety. Commercial considerations cannot justify continuing an activity prohibited by a valid regulatory direction.

5. Corporate Governance Implications for Directors and Senior Management

Food safety should be treated as a board-level risk-management issue rather than a matter delegated entirely to the production department.

Directors and senior management should ensure that the organisation has adequate systems for:

• Approval and periodic review of suppliers and raw materials.

• Quality assurance and independent verification of critical inputs.

• Monitoring of manufacturing hygiene and food-safety controls.

• Escalation of serious non-conformities to senior management.

• Internal audits and documented corrective-action tracking.

• Regulatory inspections, licence renewals and compliance reporting.

• Product traceability, incident management and crisis communication.

Where a material food-safety incident arises, management should promptly assess the potential impact on consumers, regulatory permissions, contractual obligations, business continuity and reputation.

Board oversight does not mean that every director is automatically liable for every operational failure. Individual liability depends on the applicable statutory provisions, the person's role and responsibilities, the evidence and the relevant legal requirements. Nevertheless, weak oversight and inadequate compliance systems can materially increase the legal and commercial risks faced by a business.

6. Commercial Consequences Beyond Regulatory Action

Regulatory non-compliance can create a chain of consequences that extends far beyond a licence suspension.

Operational disruption: Production, dispatch and distribution may be interrupted, affecting revenue and working capital.

Supply-chain exposure: Retailers, distributors and institutional customers may seek clarification, impose contractual remedies or reassess their supplier relationships.

Brand and reputation risk: Consumer confidence can be difficult to rebuild once concerns about ingredient integrity or hygiene become public.

Contractual disputes: Depending on the relevant agreements, representations, warranties, product specifications, indemnities and recall provisions may become material.

Insurance and financing considerations: Businesses may need to assess applicable insurance conditions, disclosure obligations and the effect of a serious compliance event on financing arrangements.

Investor and acquisition due diligence: A significant food-safety incident may require examination during investment, acquisition or other strategic transactions, including review of pending proceedings, corrective measures and contingent liabilities.

These consequences are not automatic in every case. They depend on the facts, the applicable contracts, the regulatory outcome and the actual impact on the business.

7. A Practical Compliance Framework for Food Manufacturers

Lawcify recommends that food manufacturers establish a documented compliance framework built around prevention, detection, response and accountability.

Step 1: Create an approved raw-material register

Maintain an approved list of ingredients, specifications, suppliers and permitted uses. Prohibit substitution without documented technical and regulatory approval.

Step 2: Strengthen incoming-material controls

Check identification, packaging, supplier documentation, batch numbers and relevant test results before accepting materials into production.

Step 3: Maintain strict segregation

Separate food-grade ingredients from animal-feed materials, chemicals, rejected stock and other unsuitable materials. Establish clear labelling and physical segregation protocols.

Step 4: Introduce batch-level traceability

Ensure that raw materials can be traced to production batches and that finished products can be traced through distribution channels.

Step 5: Conduct risk-based internal audits

Review procurement, storage, hygiene, pest control, employee practices, production records and corrective actions. Escalate serious findings without delay.

Step 6: Define accountability

Clearly allocate responsibilities among procurement, quality assurance, production, regulatory compliance and senior management. Establish escalation protocols for critical non-conformities.

Step 7: Prepare an incident-response protocol

Establish procedures for product holds, risk assessment, regulator communication, withdrawal or recall where appropriate, consumer communication and preservation of records.

Step 8: Verify closure of corrective actions

Every serious observation should have a documented root-cause analysis, corrective and preventive action plan, responsible owner, completion date and effectiveness review.

8. Lessons for Startups and Growing Food Businesses

Emerging food brands sometimes concentrate heavily on distribution, marketing, pricing and expansion while treating compliance as a documentation exercise.

This approach creates avoidable risks.

A compliant food business must integrate regulatory considerations into product development, ingredient sourcing, manufacturing contracts, vendor onboarding, quality assurance and commercial decision-making from the beginning.

Founders should also understand that outsourcing manufacturing does not automatically eliminate every responsibility that may arise under food-safety law or contractual arrangements. The legal position depends on the parties' roles, activities and applicable obligations.

For investors, lenders and strategic partners, food-safety due diligence should include a review of licences, inspection history, product standards, supplier controls, testing systems, recalls, complaints and pending regulatory proceedings.

Conclusion: Compliance Is a Business Asset

The reported Priyagold biscuit manufacturing incident is a reminder that food safety cannot be compromised by procurement shortcuts, inadequate segregation or weak manufacturing controls.

For food businesses, compliance is not simply the cost of obtaining and maintaining a licence. It is an essential part of operational resilience, consumer trust, brand protection and long-term enterprise value.

Companies that establish robust supplier-verification systems, maintain strict hygiene standards, preserve traceability and ensure meaningful management oversight are better positioned to identify risks before they become regulatory crises.

Lawcify's perspective: A strong compliance culture is built when legal requirements are translated into everyday operational controls, documented responsibilities and effective management oversight—not merely when a company prepares for an inspection.

Disclaimer: This article is intended for general informational purposes and does not constitute legal advice. The discussion of the reported incident is based on the news screenshot supplied for this article. The underlying regulatory order, complete inspection record and subsequent developments have not been independently verified. Legal provisions and their applicability should be confirmed against the current law and the specific facts before taking action.

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