C. V. Nagarjuna Reddy, J.

( 1 ) WHETHER the business activities being carried on by the petitioners attract the provisions of Prize Chits and Money Circulation Schemes (Banning) Act 1978 (for short "the Act") and whether the action of respondents 3 to 6 in interfering with the activities of the petitioners by invoking the provisions of the Ad is arbitrary, are the questions which fall for consideration in these two writ petitions.

( 2 ) THE resume of facts in W. P. Nos. 20470 and 20471 of 2006:

( 3 ) PETITIONER No. 1 is a private company with unlimited liability registered under the Companies act 1956 having its registered office at C-3, quatab Institutional Area, New Delhi. It is the wholly owned subsidiary of Amway Corporation, united States of America and is engaged in manufacture/marketing of its various products through a network of distributors. Petitioner No. 2 in W. P. No. 20470 of 2006 and all the three petitioners in W. P. No. 20471 of 2006 are distributors of the 1st petitioner. The 1st petitioner approached Government of India, ministry of Industry, Department of Industrial development with an application dated 2. 6. 1994 to convey approval of Government of India for setting up a wholly owned subsidiary of Amway corporation of United States of America in India for the purpose of establishing and developing a direct selling business of products. The government of India, Ministry of Industry, department of Industrial Development, Secretariat for Industrial Approval, Foreign Collaboration-II section conveyed to the Amway Corporation, its approval of the said proposal, namely, to set up the wholly owned subsidiary in India, to establish and develop a direct selling business of products which shall be sourced from local independent indian manufacturers particularly small scale units by providing technology support to products of international Standard, vide its letter dated 26. 8. 1994. The approval was subject to certain conditions which inter alia include the condition that the proposed Indian subsidiary does not envisage any manufacture by itself and that if it decides to take up the manufacturing also, it shall obtain prior approval from Government of India as per the prescribed policy and procedure and a further condition that the approval is made a part of the foreign collaboration agreement to be executed between the Amway Corporation of USA and the Indian Company and that the approval is valid for a period of two years from the date of issue within which period Amway Corporation was required to file agreement with the Reserve Bank of India/authorised Foreign Exchange dealer. Condition No. 13 of the approval stipulated that the company shall not manufacture the items reserved in the small scale sector without prior approval of the Government

( 4 ) THE conditions contained in the original approval dated 26. 8. 1994 were amended from time to time on the applications made either by Amway corporation, USA Or by the 1st petitioner on issues such as foreign equity participation, rescheduling of fresh marketing period etc. A significant amendment to the initial approval was the amendment dated 4. 8. 2004 whereby the 1st petitioner was permitted to set up its own units for manufacturing a number of personal care and cosmetic products, home care range of products, nutrition and wellness range of products and surfactants. By the same proceedings the government of India permitted the 1st petitioner to import products such as fragrance, deodorants, shampoos, conditioners, cleansers etc.

( 5 ) ONE A. V. S. Satyanarayana, Director of Altus systems Private Limited, Basheerbagh, hyderabad (Respondent No. 8 in W. P. No. 20471 of 2006) lodged a complaint in the CID Police Station, hyderabad which was registered as FIR No. 10 of 2006 dated 24. 9. 1996. In his complaint, mr. A. V. S. Satyanarayana stated that he was approached by Smt. M. Padmavathi and Sri M. Ramu introducing themselves as Amway Distributors; that they informed M

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