Positive News for QNET Sub-Franchisee Vihaan Direct Selling in the High Court of Karnataka

The Hindu reports that the High Court of Karnataka, India, will not allow the state government to take any coercive measures against Vihaan Direct Selling (India) Pvt. Ltd., a sub-franchisee of QNET, at this time. The High Court of Karnataka directed the government to hold off while examining the correctness of invoking the provisions of the Karnataka Protection of Interest of Depositors in Financial Establishments Act of 2004 (KPIDFE Act) against Vihaan Direct Selling.

According to The Hindu article, the High Court of Karnataka counseled the QNET sub-franchisee to cooperate with the authorities during the investigation. It reached this decision because of complaints lodged by individuals claiming the company enticed them to make monetary donations.

QNET’s Sub-Franchisee Vihaan India Is Not a Financial Establishment

Chief Justice Ritu Raj Awasthi and Justice Suraj Govindaraj comprised the Division Bench. They advanced the interim order while listening to the petition filed by the direct selling company QNET’s sub-franchisee Vihaan India, which questioned the legality of using the provisions of the KPIDFE Act and challenging some of its provisions.

Vihaan India explained that it’s not a financial establishment but instead is an e-commerce-based direct selling company. That means that the provisions of the KPIDFE Act cannot be used against Vihaan India since it’s not dealing with any aspect of financial activities, including deposit collection.

QNET: Direct Sales Is Not a Scam

QNET is a Hong Kong–headquartered direct sales corporation, and Vihaan is its Indian franchisee. According to reports, 22 cases were registered against the company in India by members of the public, which triggered the investigation under the KPIDFE Act.

QNET is one of Asia’s leading e-commerce-based direct selling companies, offering a variety of lifestyle and health and wellness products for the purpose of helping people live their best lives. Unfortunately, it’s been mistaken for a scam or pyramid scheme. However, it follows a grassroots business model energized by the power of e-commerce and has helped empower millions of entrepreneurs in India and around the world. QNET’s distributors are located in more than 100 countries worldwide.

“Many businesses around the world use the direct sales business model to promote unique products and services,” says QNET CEO MalouCaluza. “For many people, direct selling offers them a great platform to become microentrepreneurs. Distributors can build a sales business promoting such products when they sign up as distributors of a direct selling company, like QNET.”

The direct sales company has a physical presence in more than 25 countries worldwide through subsidiaries, branch offices, franchisees like India’s Vihaan Direct Selling, and agency representatives.  QNET is a member of the Direct Selling Association in multiple countries. It’s a member of the Hong Kong Health and Food Association and the Health Supplements Industry Association of Singapore. It is also involved in worldwide sports sponsorships; these include being the direct selling partner of Manchester City Football Club and the African Club League Championships of the Confederation of African Football.

This is the latest in a string of favorable court rulings for QNET. In October 2016, after three years of QNET defending its business model in Mumbai, Justice Sri Ramachandra Rao of the Hyderabad High Court granted a stay on all legal proceedings against the company in the state.

Then, in early 2017, the High Court of Karnataka rescinded all criminal proceedings against QNET in a cybercrime case. “When the activities of these companies do not constitute either money circulation scheme or prize chit, the criminal offences do not even remotely apply to such activities and consequently charging the accused for such offences is unsustainable,” the court held. Also in 2017, the Supreme Court of India ordered a stay on all proceedings against QNET and Vihaan Direct Selling Pvt. Ltd. That order halted all first information requests against the company across India.

In 2019, courts ruled that Vihaan Direct Selling fully complies with the guidelines issued by the Union Ministry of Consumer Affairs. During that legal matter, the QNET Distributors Welfare Association filed a petition before the Telangana High Court alleging that state police authorities did not follow the state’s notification on the direct selling guideline and were inaccurately registering criminal cases against independent representatives of Vihaan. The High Court agreed and, in February 2019, ordered the Telangana government, the Hyderabad police commissioner, and the Cyberabad police commissioner to refrain from taking any action against QNET distributors. According to a statement, “The action taken by the police has no civil and criminal law conformance and is in direct contempt of the order granted by the Supreme Court of India that has directed all states including the state of Telangana not to take any coercive action against the company.”