Wednesday, 29 December 2010
Tuesday, 28 December 2010
Saturday, 25 December 2010
(a) prints or publishes any ticket, coupon or other document for use in the prize chit or money circulation scheme; or
( b ) sells or distributes or offers or advertises for sale or distribution, or has in his possession for the purpose of sale or distribution any ticket, coupon or other document for use in the prize chit or money circulation scheme ; or
( c ) prints, publishes or distributes, or has in his possession for the purpose of publication or distribution-
(i) any advertisement of the prize chit or money circulation scheme; or
(ii) any list, whether complete or not, of members in the prize chit or money circulation scheme ; or
(iii) any such matter descriptive of, or otherwise relating to the prize chit or money circulation scheme, as is calculated to act as an inducement to persons to participate in that prize chit or money circulation scheme or any other prize chit or money circulation scheme; or
(d) brings, or invites any person to send, for the purpose of sale of distribution, any ticket coupon or other document for use in a prize chit or money circulation scheme or any advertisement of such prize chit or money circulation scheme; or
(e) uses any premises, or causes or knowingly permits any premises to be used, for purposes connected with the promotion or conduct of the prize chit or money circulation scheme; or
(f) causes or procures or attempts to procure any person to do any of the above-mentioned acts, shall be punishable with imprisonment for a term which may extend to two years, or with fine which may extend to three thousand rupees, or with both:
Provided that in the absence of special and adequate reasons to the contrary to be mentioned in the judgment of the court, the imprisonment shall not be less than one year and the fine shall not be less than one thousand rupees."
In essence, all apologists of such schemes should be brought to book.
Section 6 deals with the offences by companies. It states who should be punished if companies committed such offences. "Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceed against and punished accordingly : Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Not withstanding anything contained in sub-section (1),where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly .
Explanation ;_-For the purposes of this section –
(a) “company” means any body corporate and includes a firm or other association of individuals ; and
(b) “director”, in relation to a firm, means a partner in the firm.
So, all the office-bearers of such companies which indulged in conducting money circulation schemes or prize chits are liable to be punished.
We shall look into other provisions later.
Thursday, 23 December 2010
Wednesday, 22 December 2010
Sunday, 19 December 2010
Saturday, 18 December 2010
Friday, 17 December 2010
India has enacted a very good legislation long back in 1978 to bring the culprits like Amway India to book. The enactment is Prize Chits & Money Circulation Schemes (Banning) Act, 1978. Earlier, the Government of Andhra Pradesh enacted a money circulation schemes banning act in 1965 followed by the Madhya Pradesh State Government and the Chandigarh Administration. However, the Union Government took initiative and enacted the all India legislation in 1978.
The enactment has effectively curbed the activities of the crooks who indulged in open money circulation schemes. However, after the Indian economy was opened to the liberalisation in 1990s, along with many legitimate companies who opened shop in the country, crooks like Amway made an entry with the promise of 'direct selling' for the benefit of the consumers. Sadly, the Indian authorities never asked them what is the directly selling method of Amway India. They presumably thought about the Indian direct selling method of weekly fairs in which the small and medium manufacturers bring their ware and sell directly to the villagers at reasonable prices.
But these crooks started a disguised money circulation scheme in the name of selling products. All these years they have only been lining their pockets. One police officer had correctly identified the activities of this crook company and he knew what enactment is applicable to file a criminal case against it.
Let us look at the Section 2 (c) of Prize Chits & Money Circulation Schemes (Banning) Act which gives the definition of money circulation scheme to understand the vision of our lawmakers.
Section 2 (c): “money circulation scheme” means any scheme, by whatever name called, for making of quick or easy money, or for the receipt of any money, or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrollment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions;
Amway India calls its scheme 'direct selling'. The enactment says whatever name called, i.e. whether it is multilevel marketing, referral marketing, network marketing or direct selling, it is ultimately a money circulation scheme.
The enactment refers the term 'for making of quick or easy money. All these schemes are -intended to make quick or easy money. That is why Amway calls its model a good business opportunity to become rich in 2-5 years period.
The enactment also states 'for the receipt of any money or valuable thing as consideration for a promise to pay money'. Amway India relies on 'valuable thing' the products which are sold at an exorbitant prices.
The enactment also says that on any event, or contingency relative or applicable to the enrollment of members into the scheme. Amway India apologists cannot escape stating that there is no enrollment.
It also states another important ingredient, i.e., 'whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions'. Amway India apologists claim that the recruiters are not making any money from enrollment. But they cannot deny that they are making money from periodical subscriptions i.e., purchasing made by their downline.
So the criminal case against Amway India is an open and shut case. That is why these crooks are a worried lot about the criminal case.
Let us discuss the powers entrusted with the police in the next post.
Thursday, 16 December 2010
Wednesday, 15 December 2010
Tuesday, 14 December 2010
Monday, 13 December 2010
Sunday, 12 December 2010
Saturday, 11 December 2010
Friday, 10 December 2010
Thursday, 9 December 2010
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.” (
In this part of