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Amway approaches SC over direct selling

Amway India Enterprises has approached SC seeking a direction that direct selling of goods through individual distributors is not an offence, reports Bhadra Sinha.

business Updated: Aug 01, 2007 20:41 IST
Bhadra Sinha

In a bid to safeguard its investments in India, Amway India Enterprises, subsidiary of US based Amway Corporation has approached the Supreme Court seeking a direction that the company’s business of direct selling of goods through individual distributors is not an offence under the Prize Chits and Money Circulation Scheme (banning) Act.

Amway India Enterprises mentioned its appeal before the bench of Justice BN Aggarwal and Justice PP Naolekar who issued notice and posted the matter for August 14.

Meanwhile, senior counsel Gopal Subramanium appearing for the Union of India and Andhra Pradesh promised the court that the State police would not initiate coercive action against the company’s executives or employees.

The Andhra Pradesh CID has registered a criminal case against Amway India Enterprises stating their business is covered by the definition of "money circulation scheme" under the Prize Chits and Money Circulation Scheme (banning) Act. The company failed to receive any favourable order from the Andhra Pradesh High Court and has, therefore, approached the apex court for relief.

According to senior counsel, Harish Salve, Amway Corporation USA, is operating in 80 countries and territories in the world through its subsidiaries and has an annual turnover of sales of more than US $ 6.4 billion. The company invested more than Rs 151 crore in India of which Rs 26 crore is in the form of direct foreign investment. Salve said the company invested in India after the Ministry of Industry scrutinized Amway Corporation’s proposal and approved it.

Disagreeing with the Andhra Pradesh High Court’s order, Salve said the Act has no applicability to a business of sale of goods where all incomes are earned on sale of products. "Their business model does not envisage promoting or conducting a scheme for the making of quick or easy money. Every distributor involved has an equal chance to earn income by selling the products and building up a group of distributors," Salve added.