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2021 Supreme(Online)(KER) 7903
HIGH COURT OF KERALA
P.V.KUNHIKRISHNAN, J
FIAWIN INTERNATIONAL PRIVATE LIMITED – Appellant
Versus
UNION OF INDIA – Respondent
WP(C)/15515/2020
RAJIT, SRI.RAJAGOPALAN NAIR.K.R., SRI.N.B.SUNIL NATH
The decision clarifies the regulatory framework for direct selling, emphasizing the protection of legitimate business operations under the Consumer Protection Act.
Headnote:
Consumer Protection - Direct Selling - Chapter II Sections 2(7), 2(13) - The court reinforced consumer rights and the legal framework governing direct selling practices, emphasizing the role of monitoring authorities in regulating and ensuring compliance with statutory guidelines for legitimate business operations.
Fact of the Case:
The petitioner filed a writ petition against respondents for alleged harassment by police regarding sales of imitation jewellery through direct selling, asserting compliance with applicable laws and seeking permission to continue business.
Finding of the Court:
The court noted the lack of initiation of online registration by the Monitoring Authority for Direct Selling, which could lead to unlawful practices. It held that police could act only upon valid complaints from relevant authorities and acknowledged the need for the petitioner to follow established guidelines.
Issues: Whether the police can lawfully restrict the petitioner's business operations in direct selling and the role of monitoring authorities under the Consumer Protection Act.
Ratio Decidendi: The court concluded that without valid complaints, police interference was unjustified, and compliance with the consumer protection guidelines was necessary for conducting legitimate direct selling activities.
Final Decision: The writ petition was disposed of, affirming the interim order against police harassment and emphasizing compliance with guidelines.
JUDGMENT
This writ petition is filed with following prayers:
i. Issue a Writ of Mandamus or any appropriate writ order or direction commanding the respondents 5 & 6 not to harass the petitioner by pressurizing the petitioner to stop selling the 10 % gold imitation jewellery through the Direct selling/multilevel marketing method.
ii. Issue a Writ of Mandamus or any appropriate writ order or direction commanding the respondents 2 & 3 to immediately communicate to the 5th and 6th respondent the constitution of the monitoring committee and also issue strict instructions to encourage sale by Direct selling/multilevel marketing methods.
iii. Declare that the respondents cannot stop the conduct of the business by the petitioner using the Direct selling/multilevel marketing method.
iv. Issue a Writ of Mandamus or any appropriate writ order or direction commanding the respondents 5 & 6 not to harass the petitioner by pressurizing the petitioner to close down the shop selling the
10% gold imitation jewellery.
v. Grant such other relief deemed fit to this Hon'ble court.
2. When this writ petition came up for consideration before this Court on 04.08.2020, this Court passed the following order:
“The learned Assistant Solicitor General takes notice for the 1st respondent. The learned Government Pleader takes notice for respondents 2 to 6.
Specific instructions shall be obtained as to whether the 3rd respondent, which is the Monitoring Authority of Direct Selling/MLM Committee has examined the business module of the petitioner herein as per the guidelines issued by the State and Central Government and if the same has been done, their opinion in that regard. A report stating the details shall be submitted within a period of 10 days.”
Thereafter the matter came up for consideration before this Court on 19.08.2020, on which date, this Court passed the following order:
“The police shall not harass the petitioner or summon the petitioner's officials except based on any complaint received from any person or the third respondent authority.
Urgent notice to respondents 3 and 4 by speed post.”
Again the matter came up for consideration on 11.01.2021 and this Court passed the following order:
“This Court by order dated 04.08.2020 had directed the learned Government Pleader to get specific instructions from the Monitoring Authority of Direct Selling/MLM committee, whether they have examined the business model of the petitioner as per guidelines issued by the State and Central Government.
2. In the statement filed by the learned Senior Government Pleader for and on behalf of the 3rd respondent, it is stated that though guidelines were issued by the State, the Committee has not yet started the online registration process of companies engaged in the business of Multi-level Marketing/Direct Selling. The above statement portrays an unfortunate state of affairs.
3. As per Ext.P11 Government Order, a Committee was constituted with the Principal Secretary, Department of Consumer Affairs as the Chairman and 8 other members for monitoring and regulating the activities of Multi-level Marketing/Direct Selling in the State of Kerala. I find that by G.O.(P) No.
8/2018/CAD dated 4.6.2018, the Government had approved the guidelines on Monitoring Mechanism for regulating the activities of Multi-level Marketing/Direct Selling Entity in the State. As per the Direct Selling Guidelines, 2018, guiding principles have been laid down for regulating the business of Direct Selling and Multi-Level Marketing (MLM) and strengthen the existing regulatory mechanism for preventing fraud and protecting the legitimate rights and interests of the consumers. There is a prohibition of conducting Pyramid and Money Circulation Scheme under the garb of Direct Selling of business opportunities. Under the Rules, the Direct Selling Entity is required to submit an undertaking to the Department of Consumer Affairs narrating exact details of the business and also an undertaking that they shall not promote a Pyram
