India is suing Nestle for $100m (£64m) over "unfair trade practices", an official has confirmed to the BBC.
The complaint against Nestle is that it caused damage to consumers through misleading advertisements related to its Maggi noodles product.
Maggi was banned in India after the food safety regulator accused Nestle of not complying with food safety laws.
Nestle has challenged this at the Bombay High Court, saying its products are safe.
But the company, which has 80% of India's instant noodles market, has already destroyed 400m tonnes of Maggi products.
The claim, made on behalf of Indian consumers, was not filed through the courts but with the National Consumer Disputes Redressal Commission (NCDRC), which has semi-judicial powers.
A Nestle spokesman in New Delhi told the Reuters news agency that the company would only be able to "provide substantive response" after it receives an official notice about the complaint filed to the NCDRC.
The Food Safety and Standards Authority of India (FSSAI) had earlier said that tests deemed the instant noodles to contain "unsafe and hazardous" amounts of lead.
The news of legal action has caused a stir on Indian social media. The tag "Rs 634", a reference to the rupee amount of the damages the government is seeking, has begun trending on Twitter.
Most have asked whether the large amount of compensation that has been sought on behalf of consumers would be redistributed to everyone who ever ate Maggi.