Herbo International, Crystal Vision, Best World Business Link and Robius jointly filed the writ petition demanding an interim order against the government decision. [break]
"The directive was prepared by the Department of Commerce (DoC) as per the Consumers´ Rights Protection Act (CRPA),” reads the writ, adding, "The government´s decision to annul the directive directly affects our business. Thus, a stay order should be issued by the SC to stop the government from implementing its fresh decision."
The Prime Minister´s Office, the Ministry of Law and Justice and the Department of Commerce, among others, have been named as defendants in the writ. DoC had issued the directives two months ago, allowing the network marketing of commodities.
However, knowledgeable officials said that the directives that these companies cited for regaining business legality was issued against the spirit of the CRPA.
“Going by clause 55 of the CRPA, under which DoC issued the directives, it can issue new directives. But such directives should be meant for easing the implementing of different provisions of the Act itself,” said Jyoti Baniya of Consumers Rights Protection Forum, who was one of the drafters of the CRPA.
“This clause by no means allows the government to authorize new business,” he said.
“Should DoC issue directives on Mutual Funds, if it finds a number of companies operating such business, or land action against them? It should land action, for mutual fund business can be opened by enacting a separate law. Same applies for network marketing business as well,” said a staffer at MoCS.
Based on the directives issued just about two months, Herbo and three other companies had acquired licenses to operate network marketing.
These companies had together reported having 140,000 clients when they applied for license at DoC. This means the companies themselves had admitted they were operating illegally.
Records submitted at DoC show that Herbo International had mentioned having 81,5170 clients at the time of getting its license. Crystal Vision had 25,500 clients, Robius had 17,000 clients and Best World had 16,000 clients before they gained legality.
Apart from them, 16 other companies were also in the pipeline, awaiting licenses before the government annulled the directives on Sunday.
Committee to set policy
Ministry of Commerce and Supplies (MoCS) on Monday issued a circular to the Home Ministry, seeking enforcement of a ban on operation of network marketing business, which the government imposed on Sunday.
It is also soon writing to the Home Ministry to take action against Unity Life International on charges of forgery, for operating the restricted business and working against the Consumers´ Rights Protection Act, said Commerce Secretary Purushottam Ojha. Sending such a letter is crucial to build cases against the company.
The ministry has also formed a task force to make policy recommendations to the government to decide the fate of network marketing business in the country.
The committee is led by a joint secretary at MoCS and has members from the Home Ministry, Ministry of Finance and Ministry of Law, among others. It has been entrusted with studying domestic and international contexts and practices and submitting its report to the ministry within a month.
"Based on its recommendations we will take a long-term policy decision on the business," Ojha stated.
The ministry had formed a similar committee some three years ago as well. The then MoCS Joint Secretary Tej Raj Shakya-led committee had suggested to the ministry not to open the business, saying it does not match with competition norms and puts larger consumer interests at risk.
The team had also cited the poor awareness level of consumers, a high degree of client maneuvering by agents and weak monitoring and regulatory capacity at the Department of Commerce for its recommendations against opening the business.
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