Prize Chits & Money Circulation Schemes (Banning) Act, 1978 bans the organising of Prize Chits or Money Circulation Schemes. Section 7 of the Act empowers the police to enter, search and seize, if necessary by force whether by day or night any premises which he has reason to suspect, are being used for purposes connected with the promotion or conduct of any prize chit or money circulation scheme in contravention of the provisions of the Act.
When the enactment has clearly given the powers to the police, Amway India's counsel contended, "Even assuming that the police are satisfied that the petitioners are indulging in money circulation scheme, they cannot high-handedly interfere with the business of the petitioners till the criminal court after a full fledged trial holds the petitioners guilty of the offence alleged against them."
The AP High Court held, "We have carefully considered this submission of the learned counsel. It is well settled principle of criminal jurisprudence that no person shall be presumed to be guilty until his guilt is proved, but we are unable to accept the broad submission of the petitioners that till the conclusion of the criminal case the police have no power to interefere with the business activities of the petitioners."
So the Andhra Pradesh High Court held that the police have powers to stop the business of Amway.
All these crooks employ the same method of obstructing justice challenging the Section 7 of the Act.
In the Apple FMCG case also the petitioners sought for the direction of the judiciary to stop the police from surveillance of their meetings. The Madras High Court held, " In this part of India, people are gullible and fall an easy prey to the tall promises made through the media. The petitioner is not entitled for direction for prohibiting the authorities from keeping surveillance over any meeting. Section 7 of the Act confers the right on the police officer to enter any premises, where he has got a reason to suspect that the premises are being used for purposes connected with the promotion or conduct of any prize chit or money circulation scheme."
The Apple FMCG also contended that there have been no complaints against the company from any distributor. However, the Madras High Court held, "The mere fact no complaints were received does not make an act legal, if it be otherwise illegal."
It is clear that the police have every power to stop the illegal business of all these multilevel marketing or referral marketing or network marketing or direct selling which are nothing but illegal money circulation schemes. Be it Amway, Herbalife, Forever Living Products, Tupperware, AMC India, Hindustan Unilever Network Ltd and others, they are all liable to be punished under the provisions of the Act.