V-Can Network did exactly what Amway did in Andhra Pradesh

Let us have a look at another fraudulent company which has chosen to file a writ petitiion in the Madras High Court complaining against the investigation by the Tamil Nadu police into their business model like Amway did in Andhra Pradesh.

V-Can Network (Private) Limited is a Chennai-based company which was into the illegal money circulation scheme a la Amway India. When the police started investigation into its business model of cheating the public in 2003, it filed a writ petition to issue a writ of Mandamus directing the police officials not to prevent the company from carrying on their day-to-day business of selling their products and services under the multi-level marketing scheme by using their respective offices and network systems.

A quick glance at the facts. The company is engaged in manufacturing home appliances of consumer durables and adopting the procedure for marketing, called multilevel marketing or network marketing system. Accordingly, they had introduced three major products, namely, 'Ozone Water Purifier', 'Magnetic Bed' and 'Companion' (multipurpose foldable table with four seats and designed to look like a suitcase). These their products are sold under the distribution system in addition tot he direct sales by the company and each of these items would cost Rs.5,990.

The independent distributor have the power not only sell the products but also appoint two other distributors under him and all of them earn the value points apart from the incentive commission on the value of the products sold.

The purchaser of the products who became distributor on accumulation of 600 value points, becomes an independent distributor and eligible for 30 per cent of the sale price of the product. The Madras High Court held that the business model of V-Can Network attracts the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 and the police have every right to continue the investigation and file criminal case against the Company. The court agreed to the argument of the Advocate General that the products are overpriced which do not cost more than Rs. 500 and the scheme is nothing but money circulation scheme. Teh High Court directed the Investigation Agency to expedite the investigation and file criminal case against the company.