* Trade Union says Fonterra has distributed products, leaflets
* Fonterra refutes charges; believes it had not violated court ruling
* Sri Lanka's local tests find DCD in some Fonterra brand milk powder (Adds Fonterra comments)
By Shihar Aneez and Ranga Sirilal
COLOMBO, Aug 21 (Reuters) - A Sri Lankan court on Wednesday issued a summons to Fonterra Brands Lanka, the local company of New Zealand's Fonterra, and four of its top officials to face contempt of court charges for not adhering to an earlier ruling that banned sales and advertising of all Fonterra milk products.
Fonterra strongly refuted the claim and said it believed it had complied with all aspects of the enjoining order.
The district court in Gampaha on Friday banned the sale and advertising of all Fonterra milk products for two weeks, following a complaint by a health sector trade union that the company's marketing was misleading.
It obtained the court ban because Fonterra products suspected of being contaminated with the toxic agricultural chemical dicyandiamide (DCD) were still on the market despite an order from the health ministry to recall them.
Lawyers representing the health sector trade union said despite the court ban, Fonterra continued to distribute its milk powder products to retailers on Saturday and distributed leaflets on Monday saying its products were still fit for human consumption.
"They (Fonterra) are in contempt as they have not followed the court order," Upul Jayasuriya, who appeared in court on behalf of the health sector trade union, told Reuters. "The judge has issued summons on Fonterra and its four directors for Aug. 23."
A Fonterra spokesperson said the company had been informed that an application had been made to the court alleging that Fonterra had not complied with the enjoining order.
"Fonterra Brands Sri Lanka strongly refutes this and believes it has complied with all aspects of the enjoining order," the spokesperson said.
The island nation's health ministry has said tests by Sri Lanka's Industrial Technology Institute (ITI) found DCD in some Fonterra milk powders and it had ordered their recall.
Fonterra disputed the accuracy of the testing, but on Thursday told Reuters it had recalled two batches of Anchor-branded product in accordance with the ministry directive.
The Sri Lankan case follows a major global food scare involving New Zealand's Fonterra, the world's biggest dairy exporter, which said on Aug. 3 some of its products could contain a bacteria that can cause botulism.
Potentially tainted products have been taken off shelves from China to Saudi Arabia while other countries took measures to restrict imports.
On Monday, the health ministry said it had decided to release a batch of milk powder made by companies including Fonterra after being held by ports on suspected DCD contamination followed by fresh ITI tests came negative.
(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Matt Driskill and David Evans)