UPDATE: In response to this article, Snadeal’s spokesperson has said that:
The company is yet to see the complaint filed against it. The company will take all appropriate legal steps to defend it and its employees against all baseless allegations.
PREVIOUSLY: As Snapdeal continues to fight — both externally and internally — for its survival, there’s a fresh legal battle that has started against the company, by an event management firm. And such is the seriousness of the matter, that a Bangalore city court has order the entire Snapdeal top brass — including founder Kunal Bahl — to appear before the court. A complaint will also be registered against the company under IPC Section 420, wherein if found guilty, the executives named could serve upto 7 years in Jail.
The order has come in lieu of a complaint filed by event management firm Dream Merchants, which is the force that drives Bangalore Fashion Week — for which Snapdeal had signed a three-year long contract. The latter blamed that the company executives didn’t show up at the time of payment (Rs 25 lakh in January 2016) as promised under the contract.
It left the organisers short of funds and the company had to manage the event all by itself. While there was a 60-day exit clause, Snapdeal violated the contract by backing out 15 days before the event (scheduled to take place in February 2016).
Since it ignored the dues till March 31st, Dream Merchants reached out to the city court. The court has asked all the aforementioned parties to appear at the court before May 27th for settlement of the matter. In talks with ET, Feroz Khan, founder Dream Merchants said,
No reason was provided. Despite no funding, we went ahead with our event incorporating their logos. Snapdeal did not honour the invoice or notices sent later. They kept passing the buck. Amit Maheshwari, the then vice-president of marketing (fashion vertical) at Snapdeal, who had initiated the collaboration, refused to pick up our calls.
In addition, he said that the title sponsorship contract was also violated amounting to about Rs. 75 lakhs for the July 2016 edition of BFW (the second edition of the fashion show). Tied by clauses of their contract, Dream Merchants were unable to approach other e-tailers — restricted in the paperwork.
As per the summon issued against Snapdeal under IPC’s Section 420 (cheating and dishonestly inducing delivery of property), the personages involved in the matter can be served with a jail term of up to seven years. Well, it seems this complaint spells even more trouble for Snapdeal, which is already stuck amid several troubles. It is currently facing a funding crunch, which is due to investor’s boardroom battle. SoftBank has tried injecting fresh funds into the company at a lower valuation, but early investors denied it. The Japanese giant is now looking to sell Snapdeal to Flipkart (possibly!) and FreeCharge’s sale could also be underway.