"Amway's vicious circle is evident"

These are two interesting paragraphs in the High Court judgment which nailed the Amway.

35. From the whole analysis of the scheme and the way in which it is structured it is quite apparent that once a person gets into this scheme he will find it difficult to come out of the web and it becomes a vicious circle for him. In any event the petitioners have not specifically denied the turnover they are achieving and the income they are earning towards the initial enrollment of the distributors, the renewal subscription fee and the minimum sales being achieved by the distributors as alleged in the counter affidavit. By no means can it be said that the money which the first petitioner is earning is not the quick/easy money. By promising payment of commission on the business turned out by the down-line members sponsored either directly or indirectly by the up-line members (which constitutes an event or contingency relative to enrollment of members), the first petitioner is earning quick/easy money from its distributors, apart from ensuring its distributor earn quick/easy money. Thus the two ingredients are satisfied in the case of promoter too. We are, therefore, of the considered view that the scheme run by the petitioners squarely attracts the definition of “Money Circulation Scheme” as provided in Section 2(c) of the Act.
36. We may now deal with the petitioners’ plea that the Government of India has not cancelled the scheme and, therefore, the respondents cannot prosecute them. From the record produced by the learned Advocate General and the Assistant Solicitor General, we find that none of the brochures as referred to and discussed above were placed before the Government of India. It is also clear from the record that the details of the scheme were not discussed by the committee which recommended for grant of approval to the scheme of the petitioners. As already noted above, in his letter dated 29.3.2003, the Secretary, Government of India, Ministry of Consumer Affairs, had clarified that the pyramid structured marketing scheme fall within the provisions of the Act. Therefore, the mere fact that the approval accorded by the Government of India has not been cancelled or withdrawn is not sufficient to stultify the investigation of the case registered against the petitioners. At any rate, whether the Government of India has taken any action or not or what view it takes on the schemes run by the 1st petitioner have no relevance in the adjudication of the issues raised by the petitioners in the cases before us.