Telangana High Court
M/S Blulife Marketing Private ... vs The State Of Telangana on 27 December, 2022
Bench: K.Surender
HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
*****
Writ Petition No.43621 OF 2022
Between:
M/s.Bluelife Marketing Private Limited. ... Petitioner
And
The State of Telangana,
rep. by its Principal Secretary,
Home Department & others ... Respondents
DATE OF JUDGMENT PRONOUNCED: 27.12.2022
Submitted for approval.
THE HON'BLE SRI JUSTICE K.SURENDER
1 Whether Reporters of Local
newspapers may be allowed to see
Yes/No
the Judgments?
2 Whether the copies of judgment
may be marked to Law
Yes/No
Reporters/Journals
3 Whether Their Ladyship/Lordship
wish to see the fair copy of the
Yes/No
Judgment?
__________________
K.SURENDER, J
2
* THE HON'BLE SRI JUSTICE K. SURENDER
+ W.P. No. 43621 of 2022
% Dated 27.12.2022
# M/s.Bluelife Marketing Private Limited. ... Petitioner
And
$ The State of Telangana,
rep. by its Principal Secretary,
Home Department & others ... Respondents
! Counsel for the Petitioner: Sri Tej Prakash Toshniwal
^ Counsel for the Respondents: Government Pleader for Home
>HEAD NOTE:
? Cases referred
3
THE HONOURABLE SRI JUSTICE K.SURENDER
WRIT PETITION No.43621 OF 2022
O R D E R:
The present writ petition is filed questioning the FIR
registered by the Chevella Police under Section 420 of the Indian
Penal Code and Sections 4, 5 and 6 read with 3, 2 (C) of the Prize
Chits and Money Circulation Schemes (Banning) Act, 1978.
Further the Petitioner seeks directions of this Court to defreeze the
bank accounts of its associates and also set aside the order of the
Respondent/police to discontinue the broadcast of the website of
Petitioner.
2. A complaint was lodged by the 14th respondent who was
impleaded vide order dt.20.12.2022 in IA.No.3 of 2022 that he met
a person who explained about Petitioner company which is Blue
Life Marketing Private Limited Company regarding a business
scheme run by the petitioner and also saw You Tube videos which
showed about the scheme to earn more money in less time. After
watching the videos the 14th respondent was interested in joining
the scheme and he transferred an amount of Rs.2,500/- to phone
No.9491906035. He was also informed that he would receive
products within five working days. After joining the
firm/company, the persons responsible in running Blue life
Marketing Private Limited were forcing him to join other persons
for getting more commission. Since the Pyramid scheme which is
now adopted by the Company is illegal, he requested to take
action.
3. After registration of crime, the case was transferred to
Economic Offences Wing. During the course of investigation, the
accounts of the Blue Life Marketing Private Limited and seven
others associated with the company were frozen.
4. The economic offences wing of Cyberabad Police
Commissionerate addressed a letter to Axis Bank, requesting to
freeze the said eight accounts. Further a notice was also sent to
Graylogic Technologies Private Limited, which was maintaining the
website of the Blue Life Marketing Private Limited. The said
freezing of the accounts and also blocking the website of Blue Life
Marketing Private Limited was for the reason of the said company
being involved in multi-level marketing activities which is in
violation of the Prize Chits and Money Circulation Scheme
(Banning) Act, 1978.
5. The counsel appearing for the petitioners would submit that
only stolen property can be seized and the Police have no
authority to either freeze the bank accounts of the petitioner
company or block the website. Economic Offences Wing,
Cyberabad, is assuming that the business carried out by the
petitioner Company is Pyramid scheme which is banned. The said
assumption is incorrect and the business carried out by the
company is not in violation of any of the penal provisions of any
enactment. The counsel further argued that the Police/4th and 5th
respondents have no power to order such freezing of accounts and
also directing blocking of broadcasting of the website of the
company.
6. Counsel further argued that the State Government has
issued a notification with concurrence of the Central Government
on 09.09.2016 which is called the "Telangana Direct Selling
Guidelines, 2017". In accordance with the said guidelines, only a
Nodal Officer who is appointed shall have the powers to deal with
such direct selling undertaken by the petitioner Company.
According to the notification a direct seller means a person
appointed or authorized, directly or indirectly, by a Direct Selling
Entity through a legally enforceable written contract to undertake
direct selling business on principal to principal basis.
7. Further, the Network of Direct Selling means a network of
direct sellers at different levels of distribution, who may recruit or
introduce or sponsor further levels of direct sellers, who they then
support. However, a direct selling would not include a Pyramid
scheme.
8. Perused the record. The allegation against the petitioner
Company is that they were not indulging in any direct selling but,
were promoting a Pyramid Scheme. In the said Pyramid Scheme,
according to Police the complainant was inducted and was asked
to get more members. The circulation of money is banned under
the Prize Chits and Money Circulation Schemes (Banning) Act,
1978. According to the said Act a money circulation would mean
any scheme for making of quick or easy money which basically
promises consideration on the enrolment of members into scheme.
9. In the present case even according to the complaint,
respondent No.14 was asked to pay introductory amount of
Rs.2,500/- and was asked to enroll members to get benefits. The
said procedure adopted by the Company squarely falls within
money circulation scheme.
10. Clause-8 of the Telangana Direct Selling guidelines Order,
2017 reads as follows;
"Clause 8: Prohibition of Pyramid Scheme & Money
Circulation Scheme:
1. No person or entity shall promote a Pyramid Scheme,
as defined in Clause 1 (11) or enroll any person to such
scheme or participate in such arrangement in any
manner whatsoever in the garb of doing Direct Selling
business.
2. No person or entity will participate in Money
Circulation Scheme, as defined in Clause 1 (12) in the
garb of Direct Selling of Business Opportunities."
11. Clause-1 of the Telangana Direct Selling guidelines Order,
2017 regarding Direct Selling issued by the Government is
extracted for reference.
"Clause-1
6. Direct Selling means marketing, distribution and sale
of goods or providing of services as a part of network of
Direct Selling other than under a pyramid scheme;
Provided that such sale of goods or services occurs
otherwise than through a "permanent retail location" to
the consumers, generally in their houses or at their
workplace or through explanation and demonstration of
such goods and services at a particular place."
12. Learned counsel relying upon the notification argued that
only the Nodal Officer under the said notification is competent to
conduct any enquiry, cannot be accepted. The said notification in
fact has no applicability in the facts of the present case and even
under clause-8, Pyramid scheme or money circulation scheme
cannot be permitted under the garb of doing direct selling
business. The modus adopted by the petitioner cannot be said to
be 'Direct selling' as according to the complaint, respondent 14
was asked to enroll members for getting benefits, which is a
'pyramid scheme' in the process of circulating money. Such
activity of promising consideration on the enrolment of members
into scheme is made punishable under The Prize Chits and Money
Circulation Schemes (Banning) Act, 1978.
13. In the said circumstances, when the respondent Police are
competent to investigate and this Court finding that prima facie
the activity of the Company falls within the meaning of a 'pyramid
scheme' under the Prize Chits and Money circulation Schemes
(Banning) Act, 1978 and not 'Direct Selling' Business, the request
for de-freezing the accounts and broadcasting the website of the
petitioner company is refused.
14 The Respondent-Police have not filed any details of the
victims or the persons who are in the Pyramid scheme and the
amounts paid by them. Further, it is not brought to the notice of
this Court that the amounts lying in the 8 accounts which were
frozen by the investigating agency had funds accrued from the
Pyramid scheme. The present writ is not decided on the basis of
the evidence collected during the course of investigation to
ascertain whether the petitioner company was involved in Pyramid
scheme as claimed by the respondent-police or "direct selling" as
claimed by the petitioner.
15. In the said circumstances, this Court deems it appropriate to
direct the petitioner to approach the concerned Criminal Court. In
the event of the petitioner filing such application seeking de-
freezing of accounts and permission for broadcast of the website of
the petitioner company, the concerned Trial Court shall decide on
the basis of the CD file and also the evidence collected by the
prosecution till date and pass appropriate orders. The findings in
the present writ petition are made on the basis of record available
and the Trial Court is at liberty to draw its own conclusions
whether the petitioner company is a "direct selling" company or
involved in money circulation.
16. Accordingly, the Writ Petition is disposed off.
Miscellaneous Petitions, pending if any, shall stand closed.
__________________
K.SURENDER, J
Date: 27.12.2022
Note: LR copy to be marked.
B/o.tk
THE HON'BLE SRI JUSTICE K.SURENDER
WRIT PETITION No.43621 OF 2022
Dt. 27.12.2022
tk
