It’s a New Dawn for Direct Selling as Judiciary meets Legislature

Michael Ferreira and Malckolm Desai have been granted bail after having been in custody for more than 6 months. For the uninitiated, the two were arrested on charges of cheating and other sections of the Indian Penal Code following a complaint filed by one Gurupreet Singh Anand a resident of Mumbai. Their crime? They are shareholders in Vihaan Direct Selling (India) Pvt Ltd a sub-franchisee company of QNet the global direct selling company alleged to be involved in a multi-crore multi-level marketing scam.

Anand had filed a complaint stating that his wife was cheated by independent representatives of the company of Rs30,000 by selling to her a medical product. It however appears that leave alone the bio disc that he claims to have bought, neither Anand nor his wife bought any product from the company. On the contrary, his wife is said to have placed an order for an online education product from QNET, which she subsequently cancelled and even issued ‘stop payment’ instructions on her cheque for Rs 30,000.

QNet has on many occasions tried to clear the air around its business model where there is no money laundering involved and that it is neither a deposit taking company nor a chit fund. In fact, the company, during the investigations had cooperated with the authorities and numerous documents, as many as 50,000 pages, had been submitted to EoW Mumbai with all company details including business model over the past 3 years, as and when required by them.

The Supreme Court last week finally stayed all further proceedings in the 19 FIRs filed against QNet, its sub-franchisee Vihaan Direct Selling (India) Pvt Ltd and its shareholders granting them bail based on protection of fundamental rights.

This SC order passed on the basis of the petition filed by the company and its stakeholders is likely to bring about sweeping changes in the setting of the Direct Selling industry in India which has been going through rough times due to lack of an organised regulatory framework. It also comes at a time when the Government is looking at setting up a proper regulatory framework for the industry and has already issued model guidelines for the purpose.

For QNet and Vihaan it marks the end of a very difficult period spanning the past three odd years which now look like a deliberate, well thought out and carefully crafted campaign to malign the company and its business model.

The developments post the SC order of staying all FIRs and granting bail to Michael Ferreira and Malckolm Desai have come in just at a time when the model guidelines have been issued to ensure that the industry falls in proper line of regulation and paves the way for the development of the sector which is billed to be among the leading economic sectors going forward, more particularly from the point of view of managing the menace of unemployment in a country of a billion plus people.