In M/s. Apple FMCG Marketing (Pvt) Limited, Vs. The Union of
The Madras High Court held that Mere fact that no complaints were received does not make an act legal, if it be otherwise illegal (Para 15).
Contention of the petitioner that there is no chain of customers appears not acceptable- Scheme creates chain of customers and only when the chain progresses without any break in any of the links, the ‘principal distributor’ gets more commission- If, for any reason, the chain is broken, at any stage, then the principal distributor’s commission would get reduced proportionally to the extent- Therefore, it is not correct to say that there is no chain of customers in the process (Para 16).
Definition in S. 2© makes it clear that any scheme by whatever name it is called whereby on a promise that one would receive or would make quick or easy money be enrolment as members into the scheme is ‘money circulation scheme’ – Such members earlier get commission without doing any work; getting such a commission is nothing but getting quick or easy money- Therefore, such schemes/ the so called ‘Multilevel Marketing’, definitely falls within the definition of ‘money circulation scheme’. (
It is suffice to say that it is not for Union of India or any Member of Parliament to interpret the provisions of any legislation- Statement given by the Union of India or its Officers that Multi-level Marketing does not attract the provisions of the Act cannot legalise an illegal act. (
Grievance of the petitioners is that the petitioners are conducting conferences and lectures in order to propagate the scheme and they are under surveillance by the police, and this would amount to violation of the petitioner’s fundamental rights under Article 19(1) (a) and 19(1) (g)- This argument is not acceptable- It is true that they have the right to freedom of speech and expression and also to the freedom to carry on business- But, both the rights are subject to reasonable restrictions as contemplated under Articles 19(2) and 19(g)- The right to freedom of speech is subject to reasonable restriction on the ground of ‘public order’ and the right to freedom to carry on business is subject to reasonable restriction in the interest of ‘general pubic’. (
The High Court also stated that it is true that several companies including Multinational Companies carry on the business of the “Multilevel Marketing” and it is also true that the Executive and the law enforcing authorities keep a blind eye on such activities. This also does not make an illegal act legal. It is always a fact that the law enforcing authority would try to close the stable only after the horse had escaped.” (
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