Stayzilla CEO and Co-founder, Yogendra Vasupal was arrested by the Chennai police on allegations of fraud on March 14. After being behind bars for about 25 days, Vasupal was today granted bail by Madras High Court. The bail has been granted on the condition that he should deposit a humongous sum of ₹40 lakhs within a week’s time with the court — to establish his bonafide intentions.
Judge S Baskaran, while granting bail, called the case as purely a dispute between two businessmen — here Stayzilla and Jigsaw. The counselor for Jigsaw even pushed for negotiation to settle the issue right then and there, but Vasupal’s counselors rejected the offer.
The rejection infuriated the counselors for Jigsaw — questioning Vasupal’s intentions to clear dues. In order to pacify the counsellers, the judge issued a conditional bail for Vasupal. The money attached to the bail will not be forwarded to Jigsaw until the court reaches a final judgement. Moreover, the dismissal of mediation postponed the case until today, which was earlier scheduled for Monday.
The last development in the case goes back to March 29th. Back then, Judge M Nazir Ahmed had dismissed Vasupal’s bail plea and the anticipatory bail application of co-founder Sachit Singhi for the second time. Despite amassing large support from family and friends who voiced their opinions and several proofs through various social-media platforms, Yogendra was hooked up in jail.
The primary points highlighted by the Vasupal’s friends and family included — utilizing their credit line from the bank to make online purchases of tools and software like GITHUB, AWS, JIRA etc, taking compensations much less than most of Stayzilla’s department heads, never selling their own stocks during a fundraising round. It further added that Jigsaw has used the monthly rental payout in Vasupal’s father’s name to allege him of siphoning money from the company.
It all started with Stayzilla’s decision to shut down operations across the country and take some time off to relaunch with a pivoted business model. This decision didn’t play well with one of the company’s offline advertising vendor Jigsaw, who slapped charges of defrauding against them.
It filed a complaint under 406 (Punishment for criminal breach of trust), 420 (Cheating), 506 (i) (Criminal Intimidation) of the IPC against the co-founders, Vasupal and Sachit Singhi, saying that they are responsible for managing the affairs of the company. Jigsaw stated that it still has pending dues of over ₹1.7 crore for the services rendered during the period of March- May 2016.
The case continues to highlight the kind of corrupt environment Indian startups continues to live in. Currently, the Indian startup ecosystem is facing huge criticism and is in a rather glum situation, especially after TVF CEO Arunabh Kumar was accused of sexual harassment during the same period. Two FIRs have already been filed against the Arunabh, while his whereabouts are still unknown to the police.