The Hindu : National : Supreme Court upholds order on Amway India

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Wednesday, Aug 15, 2007
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Supreme Court upholds order on Amway India

Legal Correspondent

Asks police to complete probe within 6 months

Government took action under the PCMCS Act
High Court Bench dismissed petitions on July 19

New Delhi: The Supreme Court on Tuesday upheld a judgment of the Andhra Pradesh High Court confirming the State Government’s decision to initiate action against Amway India Enterprises and its distributors under the provisions of Prize Chits and Money Circulation Scheme (Banning) Act.

A Bench, comprising Justices H.K. Sema and Lokeshwar Singh Panta, after hearing counsel for the company and the Government, asked the police to complete the investigation within six months uninfluenced by the observations of a Division Bench of the High Court.

When the Andhra Pradesh Government contemplated action against the company and its distributors, petitions were filed in the High Court.

The court, in an interim order in September 2006, restrained the authorities from taking any action.

However, a Division Bench dismissed the petitions on July 19.

Apprehending that action would be taken against the company and its distributors, the present Special Leave Petition was filed seeking to quash the impugned judgment and an interim stay of its operation.

Operations in 80 countries

The petitioner said it was a wholly owned subsidiary of Amway Corporation, U.S. operating in 80 countries through its subsidiaries with an annual turnover of $6.4 billion for the last 48 years. It started the Indian operations in 1995 on the same model.

The company was selling 80 consumer products through 4.5 lakh individual distributors in a direct selling channel. The products were not available in shops, it said.

Nod from authorities

It said the authorities responsible for granting licence, registration and approval had approved the conduct of business.

The PCMCS Act had no applicability to a business of sale of goods where all incomes were earned on sale of products and dependant on the volume of sales of each distributor/group of distributors.

“The petitioner’s business model does not envisage promoting or conducting a scheme for the making of quick or easy money,” it said.

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