Thursday, 7 April 2011

Supreme Court of India held that MLM is cheating

Nikhil Bhatia,  it seems, believes that network marketing is OK. Let us have a look at what the Supreme Court of India stated in Kuriachan Chacko case.
"The High Court also upheld the argument of prosecution that the Scheme was a "mathematical impossibility". The promoters of the scheme very well knew that it is certain that the Scheme was impracticable and unworkable making tall promises which the makers of the promises knew fully well that it could not work successfully. It could work for some time in that "Paul can be robbed to pay Peter" but ultimately when there is a large mass of Peters, they will be left in the lurch without any remedy as they would by then have been deceived and deprived of their money. If it is so. It could be said to be a case for application of Section 420 read with Section 34 IPC."
As per the Prize Chits & Money Circulation Schemes (Banning) Act, 1978, (PCMC Act) joining in such money circulation schemes and making others join i.e. enrolling is also crime attracting the penalty and imprisonment. Nikhil Bhatia should understand the Andhra Pradesh High Court held that the business model of Amway India squarely attracts the provisions of PCMC Act).
One more thing. Nikhil is quoting Swami Vivekananda time and again. I respect him as a great philosopher of early 19th century. But that does not mean his views are acceptable in the 21st century. Had he alive today, he would have welcomed the new ideologies and adapted himself to the new modern age. People like Nikhil conveniently forget the great ideas put forward by him on caste system, superstitions and others.
Anyway, I hope Nikhil would realise soon that it is a mirage to run after easy and quick money by joinining multilevel marketing schemes and come out of it with a rational outlook.  


6 comments:

Nikhil Bhatia said...

Thanks Shyam, I respect Supreme Court. Shall go into further detail. As I already told you I have still not started doing business; still researching the facts.

Shyam Sundar said...

The comment has been deleted. Mr. Steadson is yet again reminded that his reality-inverting disguise of 'Independent Business Owner Fight Back,' will no longer be tolerated on CFW.

Anonymous said...

The traditional marketing system in which a wholesaler sells goods to distributors and distributors to further distributors ,or may be retailers where any number of distributors ,sub distributors or retailers can be appointed and where this wholesaler gets commission based on total volume sold by distributor,sub distributor,or retailer then this involves element of moneycirculation and why should it not be governned by prize chits money circulation??? That means all business not only mlm but all business involves money circulation. But one is governed by sale of goods act then the other should also be governned by the same. Both are based on sales volumes.sale of Goods act should prevail. Money circulation means onlywhen money is received on recruiting people. But a company.like Amway you neednt recruit people to get commission then how can it be pcmc? Please dont give me Andhra hc version bcos iv seen that judgement.

Shyam Sundar said...

This nameless fellow has two voices if not more. There is no point to answer to this fellow's senseless questions. He doesn't accept the HC judgement. So there is nothing else to say.That is the real evidence that the Amway is making easy and quick money and that is prohibited.PERIOD.

koolrohit25 said...

I have read a lot of discussion blogs on MLM, what my point of view is like any other industry there are possibilities of fraud here and these are there because of absense of governance. I believe MLM does offer possibility of earning through sale of goods and like any other business it requires some investment. Problem comes when there is absense of goods and incorrect promises. Like any business not all who participate in this would make money. My point of view is to amend or create a law to govern this industry. All companies which are in direct selling model must adhere to following points.
1.) The company has to register itself as an entity with registrar of companies.
2.) There has to be a responsible person who will be held accountable incase of misselling or fraud.
4.) There has to be a product or products which are sold with service or no service. Any company which is selling only service is definatly a ponzi scheme.
3.) People who participate in this as agents or IRs have a way out. Meaning these companies must restrict loss amount for each IR and if any IR chooses to not to be part of this at any point must get refund of the total sum which is above the cost of product.

The reason people feel cheated is for the fact that they want to earn money without doing any work. But there is nothing free in this world. Every company must clearly mention before enrolling members into such schemes of the total risk amount and a way out.

I believe if these issues are implemented then number of frauds will be restricted to a lower number.

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