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QNET and Supreme Court | Summary of Verdict In Favor Of QNET

QNET’s sub-franchisee Vihaan Direct Selling India (Pvt. Ltd.) (“Vihaan”), as well as its legitimacy as a business, was confirmed on January 20, 2022, through the High Court of Karnataka.

After the Court had heard the Company’s argument concerning the illegal use of regulations in Karnataka Protection of Interest of Depositors in Financial Establishments Act (2004) in the case of the Govt. of Karnataka.

In directing the firm to cooperate with authorities during the investigation, the Court secured the firm from coercive action.

Chief Justice Ritu Raj Awasthi ruled the division bench, and Justice Suraj Govindaraj passed the interim order following the petition hearing of the Company challenging the legality of relying on the clauses of the KPIDFE Act.

The Company informed the Court that it was an independent selling company, not a financial institution, as claimed by the government. The Company is not in the business of taking deposits, so the regulations in the KPIDFE Act do not apply to the business.

Over the last five years, QNET was granted the courts’ approval in several of these positive orders.

Here are some essential legal rulings that favor QNET and QNET in India –

The first favorable verdicts in favor of QNET occurred when the government took significant steps to recognize and regulate Direct Selling Industry. It was in the year that the Ministry of Consumer Affairs gazetted the Qnet Direct Selling Guidelines of 2016.

It was an enormous move in recognizing the direct selling industry as it set clear guidelines for conducting direct selling businesses from both the standpoint of direct selling companies and their distribution partners.

QNET has been cooperating with the authorities in the proper investigation since 2013. QNET has provided relevant documents to demonstrate its position as a legitimate business.

Karnataka High Court quashes Cybercrime complaints against QNET in 2017.

In February of 2017 In February 2017, The Karnataka High Court dismissed a cybercrime case and made several important observations concerning the firm’s operations and credibility.

The Court rejected the charge sheet and FIR, which resulted from an action filed under the rules of the Indian Penal Code and the Information Technology Act.

After hearing arguments on each side, the judge denied the criminal proceedings. Rejecting the FIR, Justice Anand Byrareddy stated,
“The present case is a typical instance where criminal laws that are not in any way relevant to the case’s specific facts were used to justify the allegations. This dispute, should it arise it exists at any is between a buyer and a direct vendor, and (is) set to be resolved pursuant to the Consumer Protection Act. This means that it is clear that the First Information Report and the charge sheet are insufficient and must be struck down”.

The Court also ruled that “Material that is unquestionably relevant to QNET’s activities QNET has been presented to the Court. The Material and the statements on the charge sheet appear to show that the activities associated with QNET and Vihaan, i.e., the multilevel marketing corporations do not constitute a violation of the Prize Chits and Money Circulation Scheme (Banning) Act, 1978. The Company’s activities are not under the definition of a ‘Money Circulation Scheme’ in Section 2(c) of the Act and fit the definition of ‘Prize chit as defined in Section 2(e) in the Act. Suppose the actions of these businesses are not a part of any of (the) Money Circulation Scheme or Prize Chits. In that case, the offenses in Sections 4 and 5 under the Act are not likely to pertain to these activities and, as a result, accusing the accused of the same offenses is not a good idea.”

The order clearly stated that direct selling, specifically QNET, doesn’t fall within the Prize Chits and Money Circulation (Banning) Act, PCMC Act of 1978. Furthermore, it reiterates the fact it is the case that QNET is not an illegal Ponzi scheme. It is an authentic e-commerce-based direct-selling business.

QNET, as well as The Honourable Supreme Court ruling of 2017

The Supreme Court of India stayed proceedings against Vihaan Direct Selling Pvt. Ltd. Supreme Court bench comprising Justice Ghose, Pinaki Chandra, and Justice Rohinton Fali Nariman made the order based on the reasons cited in the petition submitted by the Company.

In 2019, the Honourable Supreme Court 2019 issued an order of no coercion in favor of QNET.

In January 2019, The Supreme Court of India directed non-coercive measures toward directors of the Company or its officers for more than sixty FIRs, including numerous cases filed in the States of Karnataka and Telangana. Despite this, however, Cyberabad Police, located in Telangana, was able to arrest one of its directors. Company and, consequently, in response to a petition filed by the Company to be in contempt of Court, The Honourable Supreme Court issued notice to the Director in charge of Police, Cyberabad.

In the following days, and in spite of the directives by the Supreme Court, the Cyberabad police slapped representatives from the Company and filed cases of fraud against them. QNET Distributors Welfare Association (QDWA) submitted a petition to stop these acts of harassment before the High Court of Telangana seeking protection orders. The Court was delighted to order no coercive action against the independent representatives. Through the High Courts of Karnataka and Andhra Pradesh on petitions filed by the QDWA.

“The decision that the police took has no criminal or civil law compliance and is in total contravention of the ruling issued by the Supreme Court of India that has directed all states, including Telangana. Telangana not to take any coercive actions against the firm” in the statement.

It’s the Myth of the QNET Scam

QNET can be incorrect in some sections, portrayed in media outlets as either a fraud or a pyramid scheme. Numerous reports suggest an alternative narrative. It is a significant concern to those who may misunderstand its credibility. QNET is among the leading direct-selling companies in Asia that provide a broad range of goods on its e-commerce platform. QNET follows a traditional business model that combines technology and business to empower thousands of entrepreneurs with its direct-selling business.

“Many enterprises worldwide employ the direct sales business model to advertise exclusive goods and solutions. For many interested in direct selling, it is the opportunity to be micro-entrepreneurs. Distributors can start their own sales company by selling these products when they join as distributors for an online direct selling business like QNET,” Says Malou Caluza, CEO of QNET.