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Mass Value Insurance Consultancy Pvt Ltd Rep. by its Managing Director P. Nagarajan v/s Union of India represented by its Secretary to Government Ministry of Finance, New Delhi & Others

    W.P.No.18434 of 2011 & M.P.No.1 of 2011

    Decided On, 07 March 2012

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE VINOD K. SHARMA

    For the Petitioner: I. Pothiraj, Advocate. For the Respondents: R1 - B. Manohar, Advocate, R2 & R3 - R. Ravichandran, A.G.P.



Judgment Text

(Prayer: Writ petition is filed under Article 226 of Constitution of India for the issuance of writ of mandamus forbearing the respondents from interfering with the activity of the petitioner in selling the consumer products, health apparatus, household articles and other products, through their coordinators by using the Referral Marketing system is legal and not in contravention of the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act., 1978 and consequently forbearing the respondents by themselves of their subordinates or agents or men form in any manner interfering with the lawful business activities of the petitioner by either freezing the accounts or interfering in the conduct of the seminars and promotional meetings held for the coordinators and prospective coordinators.)

1. Petitioner has approached this court, with a prayer for issuance of writ, in the nature of prohibition, restraining the respondents from interfering with the activities of the petitioner in selling the consumer products, health apparatus, household articles and other products, through their coordinators by using the Referral Marketing system.

2. It is the submission of the petitioner, that Referral marketing system is is legal, and is not in contravention of the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act., 1978.

3. The petitioner has not placed on record any order passed by any authority showing interference with the functioning of the petitioner. The petitioner is only seeking a relief in the nature of declaration, that their activities are not covered under a particular Act, therefore, the respondents be prohibited from interfering in its functioning.

4. In support of his contention, the learned counsel for the petitioner referred to the submissions made in the affidavit filed in support of the relief which reads as under:

11.) The petitioner submits that its trading activity is not in anyway involving the issue of chance in that there are no draw of lots for the distribution of prizes. There is no promise of easy or quick money held out to the coordinators. The coordinators are given training in marketing strategy and the techniques of marketing and are also educated about the merits of the products in the coordinator meetings and there is no other activity that takes place during the meetings and seminars. Therefore, the element of chance and promise of quick money being absent, there is no necessity for even investigating the activities of the petitioner company.

12.) It is submitted that when the trading is the activity that is promoted by the involvement of the public as coordinators and the whole world being the shop, there is no question of the petitioner's activities being construed in any manner to be money circulation schemes. The selling of products and the distribution of the commission for such sales is also different from Prize Chits. The system only results in helping in advancing the socialist intentions of the fathers of the Constitution in that the wealth is evenly distributed without being concentrated in one place or person or group of persons. The public at large are given more opportunity to earn money according to the labour put in by them.

13.) It is submitted that since the actions of the respondents in harassing the petitioner and its coordinators has resulted in a decline of the trading activities, the petitioner has been affected illegally. Though the 1st respondent has clearly held that the MLM/RM activity will not come under the Prize Chits Act, the state authorities have not taken cognizance of the same and are indulging in harassing the petitioner. The petitioner, left with no other alternative or efficacious remedy, is approaching this Hon'ble Court for the issue of a writ of Declaration declaring that the activity of the petitioner in selling the licensed and insurance policies of Reliance Life Insurance Company and selling the same through its coordinators by using the Referral Marketing system is legal and not in contravention of the provisions of the Prize Chits and Money Circulation Schemes (Banning) Act., 1978 and consequently forbearing the respondents by themselves of their subordinates or agents or men form in any manner interfering with the lawful business activities of the petitioner by either freezing the accounts or interfering in the conduct of the seminars and promotional meetings held for the coordinators and prospective coordinators for the following amongst other."

Learned counsel for the petitioner vehemently contended, that the activity of the petitioner is lawful and not in violation of any act. The respondents therefore have no jurisdiction to interfere with the activities of the respondents.

5. These submissions cannot be accepted, as the respondents are the authorities, which can act only by passing written orders. No individual has been impleaded against whom such allegations can be levelled. The submissions made in affidavit cannot be accepted as gospel truth. In any case, in absence of any order of the respondents, it cannot be known, whether the action is in accordance with law or not; nor can respondents be prohibited from performing their duty.

6. This court cannot issue a general declaration as claimed, as it will result in interfering with the right of statutory authorities from enforcing law, if there is any breach of Law by the petitioner.

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/>7. The writ petition otherwise is also in the nature of civil suit. The averments need to be proved by evidence, the truth of allegations specially in absence of person being impleaded as party cannot be gone into in writ jurisdiction. 8. It is needless to record, that no declaration as claimed is called for as the authorities, as well as the petitioner are bound by the law of the land, and no declaration is required from the High court in exercise of writ jurisdiction, to direct the respondents to follow Law. 9. No merits. Dismissed. No costs. Connected miscellaneous petition is closed.
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