AP High Court held business model of Amway India illegal

This is the gist of the judgement of Andhra Pradesh High Court while deciding the writ petitions No. 20470 and 20471 of 2006 filed by Amway India. The Division Bench of Andhra Pradesh High Court comprised Honourable Chief Justice G S Singhvi and Honourable Justice C V Nagarjuna Reddy.

PRIZE CHITS AND MONEY CIRCULATION SCHEMES (BANNING) ACT, 1978, Sections 2(c) and 3 – Money Circulation Schemes – Applicability of provisions of Act to Pyramid Structured marketing Scheme being run by first petitioner through which money is earned by enrolling members – Scheme whether attracts definition of ‘Money Circulation Scheme’ banned under the Act – Writ petitions filed to declare that provisions of the Act have no application to the scheme run by 1^st petitioner (Amway India) and to restrain the respondents from interfering with petitioners’ business – Complaint made again petitioners that it is a money circulation scheme prohibited under Section 3 of the Act which petitioners denied – Plea taken by petitioners that none of the ingredients of Section 2(c) of the Act exist in the business carried on by them as there is neither quick or easy money involved in the scheme nor the money received by promoter or sponsor member depends on any event or contingency relative or applicable to enrolment of new members into the scheme – Petitioners further pleaded that the scheme does not provide for payment of money on a mere enrolment to attract Section 2(c) of the Act – Respondents taken a plea that scheme involved easy quick money by enrolling members into the scheme which is prohibited under the Act – ingredients of Section 2(c) – It must be proved that first petitioner is promoting or conducting a scheme for the making of quick or easy money and the chance or opportunity of making quick or easy money must be shown to depend upon an event or contingency relative or applicable to enrolment of members into that scheme – Held that scheme of first petitioner provides for easy / quick money to its distributors – The money which the sponsor member at the top of the line gets depends upon members whom he enrolls or the members enrolled by him enroll – Payment made by a member on his enrolment and his future earnings by enrolling other members constitute event or contingency relative to his enrolment – Distributor gets all the said money as a consideration for a promise made by the sponsor at the time of his enrolment – Thus, held that both the ingredients of Section 2(c) of the Act in respect of distributor satisfied – Inducement for aggressive enrolment of new members to earn more commission is inherent in the scheme – Scheme provides for sufficient inducements for its members to chase for new members to make quick  easy money – By promising payment of commission on the business turned out by down-line members sponsored either directly or indirectly by the up-line members constituting a contingency relative to enrolment of members, first petitioner (promoter) is earning quick / easy money from its distributors apart from ensuring its distributors to earn quick/easy money – The two ingredients are thus satisfied in the case of promoter too – Held that the scheme run by petitioners squarely attracts the definition of ‘Money Circulation Scheme’ as provided in Section 2(c) of the Act..

As regards Writ Petition Nos. 24799 of 2000, 7515 of 2003, 22914, 22915, 22916, 22913, 21128, 20616, 23737, 26149 of 2006, 3202, 2462, 9397 and 9398 of 2007, which were listed for hearing along with these petitions, it is appropriate to observe that the Court did not have the benefit of the arguments of the learned counsel appearing for the petitioners.  It is, therefore, appropriate that all these petitions be listed for hearing on   24.8.2007.

Finally, The Division Bench held that the following writ petitions on the same issue would be decided soon. However, once these writ petitions came on the Bench while hearing another writ petition filed by Gemini Techno, just another copycat of Amway India, another Division Bench comprising Justice Ramesh Ranganathan and Goda Raghuram dismissed them as the matter has already been decided and there is nothing to hear further on Amway India's business model.

After reading this judgement also, the Amway apologists are adamant enough to support the crooks who have been stealing the hard-earned money of Indians.