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Counter in Amway-20471

Counter in Amway-20471

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05/09/2014

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IN THE HIGH COURT OF JUDICATURE OF ANDHRA RADESH
AT HYDERABAD
(Special Original Jurisdiction)
WRIT PETITION NO: 20471 OF 2006

Between:
1. K. Rajashekar Reddy S/o K. Laxmikanth Reddy
Aged 24 years, R/o Himayathnagar, Hyderabad.

2. DVSL Deepak S/o D Ramachander Rao,
Aged 31 years, R/o 24-87/4 Anand Bagh,
Malkajgiri, Hyderabad 47

3. G V Triveni Prasad S/o G V Chalapathi Rao
Aged 53 years, R/o Picket, Secunderabad.

\u2026PETITIONERS
AND
1. Union of India, rep. by Secretary

Govt, Ministry of Home,
New Delhi.

2. Union of India, rep. by Secretary,
Ministry of Consumer Affairs, Food
& Public Distribution, New Delhi.

3. Govt. of Andhra Pradesh, rep. by
Secretary, Home Department,.
Secretariat, Hyderabad.

4. The Director General of Police,
Govt. of Andhra Pradesh,
Hyderabad.

5. The Superintendent of Police
CID (Economic Offences Wing)
Hyderabad.

6. The Dy Superintendent of Police (EOW)
CID., Hyderabad.

7. Amway India Enterprises
(a Private Company with unlimited liability)
Having its registered office at C-3, Qutub
Institutional Area, New Delhi -16

\u2026RESPONDENTS
* * *
COUNTER AFFIDAVIT FILED ON BEHALF OF THE RESPONDENT
NO. 3 to 6

I, S.Ashok Kumar S/o. Late Satyanarayana, aged about 55 years, Deputy Superintendent of Police, Economic Offences wing, C.I.D., Hyderabad r/o. Hyderabad, do hereby sincerely and solemnly affirm and state on oath as follows:

1.

I am the 6th respondent herein authorized to file the affidavit on behalf of respondents 3 to 5 also as such, I am well acquainted with the facts of the business of the respondent. I have read the averments in the affidavit filed by the petitioner and deny the various allegations made therein except those that are specially admitted in this counter affidavit.

2.

It is humbly submitted that Sri K. Rajasekhar Reddy S/o. K. Lakshmikanth Reddy r/o. Hyderabad and others though styled themselves as Distributors of the 7th respondent company have not produced the authorization of the petitioner\u2019s company about such authorization or his legal distribution ship of such 7th respondent company or trade licences issued by the Government for carrying on the business of respondent and hence unless and until they furnish the authorization proof they have no locus standi to file this writ and the same is liable to be rejected.

3. Preliminary Submission:

It is humbly submitted that before submitting the parawise remarks to the affidavit filed by the petitioner, I submit few words about the business operations and other aspects of the petitioner\u2019s business.

4. Direct selling Business :

It is humbly submitted that India is citadel to Direct selling in the world. Direct selling means no intermediary and no retail profit in the selling. There will be no resell in between the manufacturer

and end consumer. In Direct Selling both the manufacturer and end consumer are beneficiaries. Manufacturer sells with not intermediatories thus avoiding the costs involved in this regard and the consumer gets the goods at a lesser price as they are getting directly from the manufacturer. By this way the Consumer gets the goods/services at a lesser price.

It is humbly submitted that the Milk man is the best example of direct selling. Milk man has a buffalo, he draws milk from buffalo and sells milk directly at our doorstep without any intermediary or further resell. If there is any reselling then it is a retail business and not direct selling. Like Milk man, our Ryot Bazaars and recently factory outlets, exhibitions, malls, centrals are the best examples of direct selling as there is no intermediary and resell business except direct selling by the company.

It is humbly submitted that it is clear that direct selling means selling of goods directly by the manufacturer to end consumer without any resell or retail profit.

5. Scheme of Petitioner\u2019 company:

It is humbly submitted that petitioner\u2019s company Amway India Enterprises (shortly called as Amway) is a subsidiary of foreign company, and it was permitted by the Foreign Investment Promotion Board (shortly called as FIPB) of Government of India in the year 1994 only to develop direct selling business.

After starting of commercial operations in India, the petitioner\u2019s company has floated a scheme instead of developing direct selling with the end consumer. The petitioner company is running a scheme wherein members are enrolled into the scheme by sponsoring of new members by already enrolled members. The new member is called as \u2018Independent Business Owner\u2019 or \u2018Amway Business Owner\u2019 and he has to pay an entrance fee of Rs.4,400/- (Startup Kit) for which the company is claiming that it will sell products and business kit, distribution ship as well as literature. Subsequently the new enrolled member has to sponsor more members, for which the

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