{"id":6047,"date":"2026-04-30T16:51:09","date_gmt":"2026-04-30T16:51:09","guid":{"rendered":"https:\/\/thelawyerworld.com\/blog\/?p=6047"},"modified":"2026-07-13T13:10:22","modified_gmt":"2026-07-13T13:10:22","slug":"three-high-court-rulings-shape-qnets-india-operations-since-2017","status":"publish","type":"post","link":"https:\/\/thelawyerworld.com\/blog\/three-high-court-rulings-shape-qnets-india-operations-since-2017\/","title":{"rendered":"High Court Rulings Shape QNET&#8217;s India Operations Since 2017"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><strong>Key Takeaways:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Karnataka High Court ruled QNET&#8217;s model falls outside the Prize Chits and Money Circulation Schemes Act &#8211; the main statute used against direct sellers in India.<\/li>\n\n\n\n<li>The Supreme Court stayed all 19 FIRs nationwide in 2017, then expanded that to 60+ FIRs by 2019 after state police kept filing cases despite the order.<\/li>\n\n\n\n<li>Two separate statutes were tried against Vihaan (Prize Chits Act and KPIDFE Act). Both failed in court on the same ground &#8211; the company sells products, not deposits or prize chits.<\/li>\n\n\n\n<li>In 2024 the company went on offence, winning an injunction against an advocacy group for making unverified defamatory claims and pressuring logistics providers.<\/li>\n\n\n\n<li>A news article claiming Vihaan was &#8220;shut down&#8221; was ordered removed by a Bangalore court after the underlying NCLT case turned out to have been withdrawn with no findings against the company.<\/li>\n\n\n\n<li>Every court that examined the actual business model &#8211; from the Karnataka High Court to the Supreme Court &#8211; reached the same conclusion across eight years of proceedings.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"wp-block-paragraph\">QNET&#8217;s business in India runs through a sub-franchisee, Vihaan Direct Selling (India) Pvt. Ltd., registered in Bengaluru, which sells wellness products, home care items, luxury Swiss watches, personal care lines and vacation packages through an e-commerce direct selling model, with upwards of 600,000 registered distributors across the country.<\/p>\n\n\n\n<p class=\"has-text-align-center wp-block-paragraph\"><span style=\"text-decoration: underline;\">QNET Has Spent Nearly a Decade in Indian Courtrooms. The Record Shows the Courts Keep Siding With Them.<\/span><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The company has attracted its share of criminal complaints over the years, and from several states at that. FIRs under the Indian Penal Code and the Information Technology Act. Prosecutions attempted under the Prize Chits and Money Circulation Schemes (Banning) Act of 1978. An attempt by the Karnataka government to classify Vihaan as a financial establishment taking deposits, press conferences by advocacy groups branding the company a scam, news reports claiming its operations had been shut down altogether.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Yet whenever these allegations actually reached a courtroom and a judge sat down with the evidence, the outcome has gone one way. That pattern, running through the Karnataka High Court, the Supreme Court of India, the High Courts of Telangana and Andhra Pradesh, and the Bangalore Civil Court between 2017 and 2025, is what follows.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">February 2017: The Karnataka High Court Quashed the FIR and Chargesheet Outright<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The court went further. After examining company materials and chargesheet documents, the ruling\u00a0<a href=\"https:\/\/www.qnetindia.in\/news-and-events-articles\/press-release-articles\/qnet-and-supreme-court-important-legal-verdicts-india\/\" target=\"_blank\" rel=\"noopener\">concluded that QNET<\/a>\u00a0and Vihaan&#8217;s marketing activities fell outside the scope of the <a href=\"https:\/\/www.indiacode.nic.in\/bitstream\/123456789\/1628\/1\/197843.pdf\" target=\"_blank\" rel=\"noopener\">Prize Chits and Money Circulation Schemes (Banning) Act of 1978<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The court determined that the company&#8217;s operations did not meet the statutory definitions of either a &#8220;Money Circulation Scheme&#8221; under Section 2(c) or a &#8220;Prize Chit&#8221; under Section 2(e) of that Act. Because the company&#8217;s activities did not satisfy those definitions, the court held that charges under Sections 4 and 5 of the Act were &#8220;unsustainable.\u201d<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The matter came up before Justice Anand Byrareddy, and by then the complaint had travelled a fair distance. There was an FIR. There was a chargesheet against QNET and Vihaan under the Indian Penal Code and the Information Technology Act. The state CID had investigated and charges stood filed, which is to say this was not some preliminary complaint tossed at the admission stage but a prosecution the state had built and committed to.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The court quashed the lot, and the ruling did not mince words about why. Justice Byrareddy observed that this was &#8220;a typical case where criminal legislation which is not even remotely applicable to the circumstances of the case have been invoked to substantiate the charges.&#8221; Whatever dispute existed, in the court&#8217;s view, was one between a consumer and a direct seller, properly a matter for the Consumer Protection Act rather than the criminal courts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">The court held the Prize Chits Act simply does not apply to QNET&#8217;s model<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The Prize Chits and Money Circulation Schemes (Banning) Act of 1978 is the statute most commonly pressed into service against direct selling companies in India. The standing argument is that multi-level compensation is really money circulation dressed up as product sales, and if that argument sticks, the company is finished, because the 1978 Act is criminal legislation with no room for a civil settlement. The stakes on this specific question were the whole game.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Justice Byrareddy went through QNET&#8217;s company materials and the chargesheet documents against the definitions in the Act itself and held that the business answered neither the definition of a &#8220;Money Circulation Scheme&#8221; under Section 2(c) nor of a &#8220;Prize Chit&#8221; under Section 2(e), and that the charges under Sections 4 and 5 were &#8220;unsustainable.&#8221;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A finding that the QNET model as operated through Vihaan sits outside India&#8217;s principal anti-pyramid statute, delivered not on technicality but on examination of the materials. Every proceeding described below rests on that foundation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">March 2017: The Supreme Court Stayed All 19 FIRs Against the Company Nationwide<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Weeks after the Karnataka ruling, a two-judge bench of Justice Pinaki Chandra Ghose and Justice Rohinton Fali Nariman passed an interim order staying all 19 FIRs pending against QNET and Vihaan across India, on essentially the grounds Karnataka had already laid out: the business model does not constitute a money circulation scheme under the 1978 Act. One state&#8217;s ruling had become a nationwide freeze covering every pending FIR and every ongoing investigation.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">State police kept filing cases anyway, and the courts kept stopping them<\/h4>\n\n\n\n<p class=\"wp-block-paragraph\">Compliance on the ground was another matter. The Cyberabad police in Telangana went on registering fresh cheating cases against QNET&#8217;s independent distributors despite the apex court&#8217;s order, and the QNET Distributors Welfare Association was compelled to move the High Courts of Telangana, Karnataka and Andhra Pradesh for protection. All three granted it, directing that no coercive action be taken against the distributors.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Even that did not settle it. By January 2019 the Supreme Court had to issue a further directive covering more than 60 FIRs, specifically ordering no coercive action against Vihaan or its directors. When the country&#8217;s highest court has to repeat its own order two years on, the problem is no longer legal ambiguity. The law was clear. Some state police forces simply weren&#8217;t following it.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">2022: Karnataka&#8217;s Deposits Theory Under the KPIDFE Act Failed As Well<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">With the Prize Chits route closed, the Karnataka government invoked the Karnataka Protection of Interest of Depositors in Financial Establishments Act of 2004 against Vihaan, a statute meant for entities taking deposits from the public.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Vihaan&#8217;s answer was simple enough: it is a direct selling company, it sells products, it accepts no deposits, and the KPIDFE Act has no application to it. A division bench of Chief Justice Ritu Raj Awasthi and Justice Suraj Govindaraj accepted that position, passing an interim order protecting Vihaan from coercive action under the Act while directing the company to cooperate with the investigation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Second statute, second bench, same line drawn between what Vihaan actually does and what regulators kept insisting it does.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">April 2024: Vihaan Went on Offence and Won an Injunction Against Its Accusers<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Everything to this point had been Vihaan answering what others brought. In 2024 the company took the fight to its accusers.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">On April 2, 2024, <a href=\"https:\/\/bengaluru.dcourts.gov.in\/\" target=\"_blank\" rel=\"noopener\">the City Civil and Sessions Court of Bangalore<\/a> granted an interim injunction against the Financial Fraud&#8217;s Victims Welfare Association and four named individuals, Gurupreet Singh Anand, Phanindra, Anuja Kotecha and Surendra Mukaitra. The court&#8217;s language was pointed:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8220;The words expressed by the defendants are extreme, and shocking. Which is clear cut case of blackmailing the company, which is working by registering under the provisions of the law of this court. The defendants on the guise that they have a right to speak cannot make such defamatory and derogatory statements against anybody.&#8221;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The order restrained the Association from making unverified statements about QNET&#8217;s business, from organising press conferences to discredit the company, and from disseminating defamatory content targeting Vihaan and its business partners. Proceedings also brought to light the Association&#8217;s attempts to disrupt QNET&#8217;s supply chain by pressuring logistics providers, India Post, Blue Dart and TCI Corporation among them; a separate Karnataka High Court order confirmed India Post services to Vihaan continue uninterrupted.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">January 2025: Organiser.org was ordered to pull its &#8220;shutdown&#8221; article<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">On December 26, 2024, the news portal Organiser.org carried an article claiming Vihaan&#8217;s operations had been shut down on the strength of a National Company Law Tribunal proceeding. The article mischaracterised the NCLT order. The case in question, <a href=\"https:\/\/nclt.gov.in\/sites\/default\/files\/pdf_cause_list\/11.09.2024_1.pdf\" target=\"_blank\" rel=\"noopener\">C.P No.109\/BB\/2019<\/a>, had been disposed of as withdrawn in September 2024 with no objections from either party; there was no direction to cease operations and no finding against Vihaan at all.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Vihaan sued, and in <a href=\"https:\/\/www.republicworld.com\/initiatives\/qnet-india-region-franchise-vihaan-direct-selling-wins-order-against-misinformation-by-organiserorg\" target=\"_blank\" rel=\"noopener\">January 2025<\/a> the Bangalore Civil Court directed Bharat Prakashan (Delhi) Limited, publisher of Organiser.org, to take the article down immediately and refrain from spreading further misinformation until the next hearing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Around the same period TV9 Kannada expressed regret on-air for the inconvenience its earlier coverage had caused Vihaan, QNET and its office bearers, and the Karnataka High Court quashed the FIRs in Criminal Case No. 100\/2018, registered at HSR Police Station in Bengaluru.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Hyderabad fire chargesheet named neither QNET nor Vihaan<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">A blaze at the Swapnalok Complex in Hyderabad in March 2023, a building where Vihaan held office space, had set off a round of media speculation about QNET&#8217;s involvement. When the Hyderabad Police filed its chargesheet in January 2025, neither QNET nor Vihaan figured among the accused; responsibility was laid at the door of the building management for failing to maintain fire safety measures.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The Regulatory Framework Underneath All of This<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">None of these rulings happened in a legal vacuum. India&#8217;s Direct Selling Guidelines came from the Ministry of Consumer Affairs in September 2016, months before the first Karnataka ruling, defining legitimate direct selling and marking it off from pyramid and money circulation schemes, with enforcement placed in the hands of state governments. The Consumer Protection (Direct Selling) Rules, 2021 then codified those protections nationally. Pyramid schemes banned, money circulation schemes banned, direct selling proper, where compensation flows from product sales and not recruitment, explicitly permitted and regulated.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">QNET&#8217;s position through every proceeding has been that its model complies with both frameworks: distributor earnings come from product sales through the e-store, the company charges no registration fee, accepts no deposits, sells no shares and makes no job offers. Whether every individual distributor trading on the QNET name follows those rules is a separate question, one the company itself concedes, which is why it maintains a complaint mechanism at <a href=\"mailto:integrity@qnet.net\">integrity@qnet.net<\/a> for reporting misrepresentation by unauthorised individuals. The gap between what an official model prescribes and what people on the ground do in its name runs through the entire direct selling industry.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">What the courts were asked to judge, though, was the model itself, against the actual company materials and operational data. On that question, from Justice Byrareddy in 2017 to the Bangalore Civil Court in 2025, the answer has not changed.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways: QNET&#8217;s business in India runs through a sub-franchisee, Vihaan Direct Selling (India) Pvt. Ltd., registered in Bengaluru, which sells wellness products, home care items, luxury Swiss watches, personal care lines and vacation packages through an e-commerce direct selling model, with upwards of 600,000 registered distributors across the country. QNET Has Spent Nearly a Decade in Indian Courtrooms. The Record Shows the Courts Keep Siding With Them. The company has attracted its share of criminal complaints over the years, and from several states at that. FIRs under the Indian Penal Code and the Information Technology Act. Prosecutions attempted under<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6047","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/posts\/6047","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/comments?post=6047"}],"version-history":[{"count":6,"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/posts\/6047\/revisions"}],"predecessor-version":[{"id":6614,"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/posts\/6047\/revisions\/6614"}],"wp:attachment":[{"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/media?parent=6047"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/categories?post=6047"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/thelawyerworld.com\/blog\/wp-json\/wp\/v2\/tags?post=6047"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}