• QNET is the QI Group’s direct selling subsidiary.
• QNET operates through its sub-franchisee, Vihaan. It is incorporated under the Companies Act, 1956 and allotted No. U52399KA2011PTC060730.
• Vihaan is also registered under the GST Act
• As per the direct selling guidelines issued by the Ministry of Consumer Affairs (MCA) in September 2016, the nodal authority for the direct selling industry is the Ministry of Consumer Affairs and its state counterparts.
• The situation surrounding QNET in India and in Mumbai particularly, appears to be some form of orchestrated sustained attack on the company to undermine our reputation and prevent us from competing fairly and openly in India. The allegation is over a claim of fraud over a non-existent commercial transaction amounting to Rs.32,000 which was escalated to the Economic Offences Wing (EOW).
• After a 3-year-long investigation arising from this, the case went up all the way to the Supreme Court of India, which in March 2017 has stayed all pending FIRs and investigations into the company. You may read the news report about it here.
• On a similar matter, Please note that the Karnataka High Court has also passed an order quashing the FIR against the company and its executives. In the order the court states that the business of QNET does not constitute offences under the PCMC Act, or the charge of cheating under IPC. In fact, the order goes on to refer to the advisory from the central government on the guidelines for the direct selling industry that specifies that all activities of such business must be guided by the provisions of the Consumer Protection Act, 1986.
• QNET’s business model is sound and fair and we stand by it. Unfortunately, a lack of legislation for direct selling in India has led to many companies, including us, being investigated under various Acts, such as Prize Chits and Money Circulation (Banning) Act that have nothing to do with what direct selling companies do. However, we are hopeful that with the introduction of the model guidelines for direct selling from the Ministry of Consumer Affairs, the situation will change.
• The complaints to SEBI were related to allegations that QNet was a money circulation scheme. As per the order from the Karnataka High Court, this has already been clarified that QNet does not fall under the purview of PCMC Act. QNet is a direct selling business and sell products and services.

According to a report by FICCI-KPMG India’s INR 98.5 billion direct selling industry is growing at a steady pace and retail sales are predicted to reach INR 645 billion by 2025.  The report cites that 18 million Indians will be self-employed distributing direct selling products by 2025.

In 2016, India’s Ministry of Consumer Affairs, Good and Public Distribution issued The Direct Selling Guidelines 2016 as guiding principles for State Governments to regulate the direct selling business. These guidelines aim to strengthen the existing regulatory mechanism on direct selling, prevent fraudulent business practices, and protect the legitimate rights and interests of consumers.

QNET is in full compliance with these guidelines. As of June 2019, the guidelines are implemented in the states of Goa, Kerala, Tamil Nadu, Andhra Pradesh, Telangana, Odisha, Mizoram, Sikkim, West Bengal, Chhattisgarh, and Rajasthan.

The situation surrounding QNet in India and in Mumbai particularly appears to be some form of orchestrated sustained attack on the company to undermine our reputation and prevent us from competing fairly and openly in India. The allegation is over a claim of fraud over a non-existent commercial transaction amounting to Rs.32,000 which was escalated to the Economic Offences Wing.

After a 3-year long investigation arising from this, the case went up all the way to the Supreme Court of India, which in March 2017 has stayed all pending FIRs and investigations into the company. You may read the news report about it here.

On a similar matter, Please note that the Karnataka High Court has also passed an order quashing the FIR against the company and its executives. In the order the court states that the business of QNet does not constitute offences under the PCMC Act, or the charge of cheating under IPC. In fact, the order goes on to refer to the advisory from the central government on the guidelines for the direct selling industry that specifies that all activities of such business must be guided by the provisions of the Consumer Protection Act, 1986.

QNet’s business model is sound and fair and we stand by it. Unfortunately, a lack of legislation for direct selling in India has led to many companies including us being investigated under various Acts, such as Prize Chits and Money Circulation (Banning) Act that have nothing to do with what direct selling companies do. However, we are hopeful that with the introduction of the model guidelines for direct selling from the Ministry of Consumer Affairs, the situation will change.

The complaints to SEBI were related to allegations that QNet was a money circulation scheme. As per the order from the Karnataka High Court, this has already been clarified that QNet does not fall under the purview of PCMC Act. QNet is a direct selling business and sell products and services.

The biggest challenge the Indian direct selling industry faces today is that of regulatory uncertainty and lack of legislative support in expressly recognizing the industry as falling outside the prohibitions of the PCMC Act.

The PCMC Act is a ‘banning’ act and not a ‘regulating’ act. It sets out a framework to ban certain activities, which come under the purview of ‘Prize Chits’ and ‘Money Circulation’. QNet’s business, in the definition in the said Act, is neither prize chits nor money circulation. The Act deals with the banning of a scheme, which is aimed at making quick or easy money and on the happening of a contingent event. In the case of QNet, we neither fall under the category of making quick and easy money, nor is there any event which is contingent in nature. Also, there is no ‘entry fee’ or periodical subscription required here pursuant to Section 2(c) of the Act.

Section 2(c) the PCMC Act defines “money circulation schemes” as:
“… any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions”

The Act bans all illegal money circulation schemes. It does not regulate the direct selling or MLM industry.

Please note that the Karnataka High Court has also passed an order quashing the FIR against the company and its executives. In the order, the court states that the business of QNET does not constitute offences under the PCMC Act, or the charge of cheating under IPC. In fact, the order goes on to refer to the advisory from the central government on the guidelines for the direct selling industry that specifies that all activities of such business must be guided by the provisions of the Consumer Protection Act, 1986.

QNet as a matter of policy adheres to strong principles of legal business, transparency and corporate governance. All documentation pertaining to the operations of its Indian Franchisee Vihaan Direct Selling (VDS) and its financial transactions have been provided to the investigators at the EOW.

Additionally:

• Vihaan’s financial accounts are audited with a clear traceable history of all financial transactions. All documents demonstrating the same have been already submitted to the EOW.
• All taxes including GST, erstwhile VAT and service tax, and all other applicable taxes have been duly paid.
• QNet’s business runs on an eCommerce platform. All product sales transactions are transparent and cleared through a third-party payment gateway, cheques or through Demand Drafts.
  All commission paid to the IRs are post TDS deduction.

QNet has also publicly refuted any and all allegations of money laundering which has been carried in the media in the past. As such, this allegation remains completely wild and speculative in nature.

QNet or Vihaan does not ask for any investments, deposits or registration fees. Vihaan operates QNet’s business in India, which is a direct selling business that promotes a number of products and services in the area of nutrition, wellness and lifestyle to customers in India through an e-commerce portal. We offer products ranging from INR 1490 onwards.

Customers have two options
a) They can simply buy a product because they have a need for it, or like it and choose to remain retail customers.
b) They can sign up to be distributors of the products (official term for this is independent representative or IR). When they sign up as IR, they will receive commissions on volume of products sold. That is the only way to earn money at QNet.

No. Vacation packages are simply one of the products available through QNet. Just as a customer would buy a nutrition product from the company, they can buy a vacation product from the company.

Vihaan, the sub-franchisee of QNet in India is involved in the business of buying and selling of goods and services and uses the direct selling model for sale of its products. Vihaan sells various products to the end customers on payment of the purchase price through its e-commerce portal. The products are then sent to the buyers within a short, reasonable period, thereby completing the process of sale between Vihaan and the buyer. The buyer also has the option to return the product within 30 days of purchase for a full refund. Hence, the entire procedure is strictly in compliance of the provisions of the Sale of Goods Act as well as the model direct selling guidelines from the Ministry of Consumer Affairs.

The purchaser thereafter has no right to the money paid to the company and the same cannot be treated as a ‘deposit’ for the purposes of Maharashtra Protection of Depositors (in Financial Establishments) Act, 1999, as the said transaction of taking advance against order for goods and services falls within the exception of section 2(c)(v)(d) of the MPID Act.

Therefore, no offence under the MPID Act can be attributed to the company when there is no deposit scheme involved in the business of Vihaan, which is the most important aspect for bringing a company under the purview of the MPID Act. Further Vihaan is not a financial establishment as it does not accept any deposit and neither does it accept any money or valuable commodity for any return in any form in the future.

• QNet operates through its sub-franchisee, Vihaan. It is incorporated under the Companies Act, 1956 and allotted No. U52399KA2011PTC060730.
• Vihaan is also registered under the GST Act
• As per the direct selling guidelines issued by the Ministry of Consumer Affairs in September 2016, the nodal authority for the direct selling industry is the Ministry of Consumer Affairs and its state counterparts.

QNet has organized a number of events and conferences for its independent representatives all over the world, where certain Bollywood actors have been present as invited guests or as motivational speakers. This is not an unusual business practice all over the world by different companies to promote brand awareness. Celebrities are often invited to be part of international events by corporate entities. This does not make them a business partner or shareholder of the company.

We have established an SOP to first verify the identity of the person either through their PAN card or Aadhar card.

• All new IRs receive a phone call from our support team and they follow a detailed checklist of questions to ensure the person is aware of the business he/she has signed up for and understands what product they have purchased.
• This is followed by a standard KYC check.
• A cancelled cheque is obtained for verification of their bank account.
• Then a One Time Password (OTP) is issued to the registered mobile number of the independent representative, so as to authenticate his/her registration process.
• Only after this, the IR’s registration is successfully completed with QNet.
• ID Cards are issued after due verifications.

After this, the new IR can login to their Virtual Office on the QNet website and find all the relevant documents related to their business.