The High Court of Karnataka on Thursday directed the State Government not to take any coercive measures against Vihaan Direct Selling (India) Pvt. Ltd. till further orders as the court was examining the issue of correctness of invoking the provisions of the Karnataka Protection of Interest of Depositors in Financial Establishments Act, 2004, against the company.
The court, however, directed the company to cooperate with the authorities in the investigation taken up based on the complaints lodged by people alleging that the company had lured them to deposit money.
A Division Bench comprising Chief Justice Ritu Raj Awasthi and Justice Suraj Govindaraj passed the interim order while hearing the petition filed by the company questioning the legality of invoking the provisions of the KPIDFE Act, and challenging some of its provisions.
Vihaan is a sub-franchisee of QNet, a Hong Kong-headquartered direct selling and multi-level marketing company, engaged in direct selling of various products and services to consumers in India.
The petitioner-company has claimed it is not a financial establishment but an e-commerce-based direct selling company, and hence provisions of the KPIDFE Act cannot be invoked against it as it is not engaged in financial activities such as deposit collection.
The State Government has pointed out that 22 cases had been registered against the company based on the complaints lodged by the public, and the Government had appointed a competent authority under the KPIDFE Act to look into the grievances of persons affected by the company’s transactions.
Meanwhile, Senior Counsel Kamini Jaiswal, appearing for the petitioner-company, pointed out to the Bench that the Supreme Court in 2017 had stayed further proceedings initiated against the company in several criminal cases launched earlier in Maharashtra, West Bengal, Delhi, Karnataka, and Telangana.
