DIRECTOR GENERAL (INVESTIGATION AND REGISTRATION) vs MULTILINK INVESTMENT And TRADING CO. PVT. LTD.

A complaint was received from Shri Ram Niwas, President, Bajrang Dal, District Sangrur alleging therein that Multilink Investment and Trading Co. Pvt. Ltd. had floated a scheme by the name of "Goldmine" and had in furtherance thereof, circulated forms charging Rs. 200/- as service charges from gullible members. It was further complained that the scheme envisaged that every member participating in it would enrol four members and each member in addition to contributing Rs. 2,050 + Rs. 100 would, in turn, enrol four new members and in this manner the chain would go on and the aforesaid Company had made more than Rs. 2 crores by selling these forms. The main allegation in the complaint is that it is a fake scheme arid the public is being misled and it constitutes an unfair trade practice.

ON receipt-of the complaint, the Director General (Investigation and Registration) (the DG) was asked to investigate and submit his Preliminary Investigation Report (PIR). It has been reported in the PIR that Multilink Investment & Trading Co. Pvt. Ltd. has floated a scheme under the name and style of "Goldmine" and the scheme envisages a participant to sign a form duly filled in and four new forms with his name printed on it are issued to him and he is further required to introduce four new participants who will return gifts of Rs. 2,050 + Rs. 350 and the scheme will thus carry on with four additional participants being enrolled at every stage until the 6th stage when the original member will cease to be a participant in the scheme. If the chain continues, the participant/ member will receive large amounts as gifts from other participants. It transpires from the PIR that the respondent does not ensure the continuance of the chain or that the new participants/ members joining it will go on making the gifts but it only administers the scheme and receives an amount of Rs. 200/- as service charges for meeting administrative expenses such as cost of stationery, postage, maintenance of accounts etc. It has been concluded in the PIR that the respondent has introduced the aforesaid scheme with a view to getting financial benefits for itself and a participant''s job is to identify like-minded persons and enrol them as members and each one has to pay Rs. 2,050/- and the respondent receives service charge of Rs. 200/- from each one of the members. It has been further mentioned that the respondent has earned an income of Rs. 35,41,394/- and Rs. 81,48,817/- respectively in the years 1995-96 and 1996-97. While the respondent gets an amount of Rs. 200/- for enrolment of every member, the gift amount of the members depends on the enrolment of new members by an existing participant and the scheme thus attracts the provisions of Section 36A(1), (ii), (iv), (vi) and Section 36A(3) of the MRTP Act, 1969 (the Act for brief) and, therefore, an enquiry may be instituted against it. An application under Section 12A of the Act for injunction was also filed to avoid irreparable loss and injury to the general public.

A Notice of Enquiry on the basis of the PIR as well as a notice in respect of the DGs application under Section 12A of the Act were issued to the respondent. A reply was filed to the Notice of Enquiry as well as to the interim relief application on behalf of the respondent. Before however, the respondent filed its reply to the interim relief application, an order came to be passed on 14th December, 1999 by the Commission, restraining the respondent from floating any other scheme as it was felt that any such new scheme might be against the public interest. It was also observed in the Commission''s order that prima facie, a case of unfair trade practices, on the part of the respondent, had been made out by the DG and balance of convenience was also in favour of the general public as gullible people were likely to be misled into making investment of their hard earned money in such high risk schemes and, therefore, the respondent should be restrained from floating such like new schemes. It was however, observed in that order that the present scheme should not be discontinued so that the chain of gifts admissible to the participants was not broken.

WE have heard the Advocate for the DG as well as that of the respondent and also considered the respondent''s reply filed to the interim relief application. A list of participants/ members of the scheme has also been placed on record. It has been stated by the respondent that more than 1,90,000 persons have participated in the scheme from all parts of India and will suffer irreparable loss or damage if an injunction is granted and the respondent is restrained from conducting the present "Goldmine" Scheme. It has also been stated that the participants in the scheme have joined the same after understanding-its salient features. As pointed out above, by way of an ex parte ad interim order, the respondent has already been restrained from floating any new scheme which is likely to mislead the gullible public or lure them by high returns into making investment of their hard earned money. As the present scheme ''Goldmine'' has more than 1,90,000 participants, the chain will be broken and they may not get the benefits/gifts to which they are entitled in accordance with the terms and Condition Nos. 2 and 3 of the impugned scheme. Moreover, as an enquiry on the basis of the PIR submitted by the DG has been instituted and is pending, it would be appropriate if it is disposed of expeditiously, on merits. For the present, the ad interim ex-parte order which was passed on 14th December, 1998 is affirmed. The 12A application accordingly, stands disposed of. However, if the DG and/or any person/ member/participant affected or aggrieved by the impugned scheme approaches the Commission with an application regarding deleterious effects of the Goldmine Scheme, the Commission would reconsider it in the light of the new material. NOE disposed of.