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Apex court clears deck for probe into Amway's direct sale scheme
In what could undermine the flourishing business in India of one of the world's largest direct selling
companies Amway Corp of USA, the Supreme Court Tuesday dismissed its plea to stop an ongoing probe by
the Andhra Pradesh Police into the legality of its business scheme.

New Delhi, Delhi, India, 2007-08-14 21:45:01 (IndiaPRwire.com)

In what could undermine the flourishing business in India of one of the world's largest direct selling
companies Amw ay Corp of USA, the Supreme Court Tuesday dismissed its plea to stop an ongoing
probe by the Andhra Pradesh Police into the legality of its business scheme.

Dismissing the Amw ay India Enterprises' plea, a bench of Justices H.K. Sema and L.S. Panta asked the
Andhra Pradesh Police to complete its probe to determine the legality of the company business model.

The Andhra Pradesh Police is probing whether the scheme of selling its products through an interlinked
chain of over 450,000 individual agents is akin to luring individuals into betting or for making easy
money in violation of Section 2(c) Prize Chits and Money Circulation Scheme (Banning) Act, 1978.

The police had taken up the probe after lodging a First Information Report (FIR) against the company in
September 2006 on a complaint from one Sukumar Balaji of Hyderabad.

Following the FIR, the police had raided the premises of nine officials and the warehouses of Amway
India.

Amway India, in turn, had moved the Andhra Pradesh High Court challenging the police raids and
sought suspension of the probe into its business model.

But the high court dismissed its petition on July 7, saying that the company's scheme was merely to
enrol members for earning quick money.

The company subsequently moved the apex court, but failed to get any reprieve from it.

Amway India Enterprises is a private company with 'unlimited liability' registered under the Companies
Act, 1956, and is a wholly-owned subsidiary of one of w orld's largest direct selling companies, Amway
Corporation USA, operating in 80 countries through its subsidiaries with an annual sales turnover of
$6.4 billion.

In India, it has replicated its global business model of direct selling through interlinked individual sales
agents for the last 48 years.

In its petition, the firm had contended that its business model had been approved in June 1994 by the
secretariat of industrial approvals of the union ministry of industry in consultation with several other
ministries and departments, including the commerce ministry, finance ministry and the foreign
investment promotion board.

- Indo Asian News Service

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