In a further setback for Yogendra Vasupal, the founder of the shut online home-stay start-up Stayzilla, a Supreme Court division bench has dismissed an appeal by him challenging the insolvency proceedings ordered by the Chennai bench of National Company Law Tribunal (NCLT).
In a further setback for Yogendra Vasupal, the founder of the shut online home-stay start-up Stayzilla, a Supreme Court division bench has dismissed an appeal by him challenging the insolvency proceedings ordered by the Chennai bench of National Company Law Tribunal (NCLT). Vasupal, once a poster boy of the start-up community, moved the apex court after the National Company Law Appellate Tribunal (NCLAT) dismissed Stayzilla’s appeal against the insolvency order. Stayzilla was caught in a web of legal tangle after Chennai-based Jigsaw Solutions — one of its vendors — raised a criminal case over a payment dispute with Vasupal which eventually led to the arrest of the founder and subsequent one-month jail term for him.
The case subsequently went to the NCLT with the tribunal issuing an order initiating a corporate insolvency resolution process (CIRP) and appointed an insolvency resolution professional (IRP). In the SC, the civil appeal filed by Vasupal was disposed off as dismissed on March 21, 2018, by judges Adarsh Kumar Goel and Rohinton Fali Nariman. Matters took a turn for the worse for the start-up when Jigsaw moved the NCLT, five months after Vasupal was granted bail by the Madras High Court, in the case filed by the company alleging default of payment.
Jigsaw, an advertising agency, run by CS Aditya, filed a petition requesting for initiation of corporate insolvency as an operational creditor under section 9 of the Insolvency & Bankruptcy Code, 2016, against Inasra Technologies, the company which owns Stayzilla. Jigsaw had submitted before the NCLT that Stayzilla engaged the company for various advertisement campaigns at different geographical locations such as baggage tags, billboards and bus-shelters.
The services were provided based on the purchase orders and invoices were raised and Stayzilla was bound to make a total payment of Rs 1.69 crore, along with contractual rate of interest at 18% per annum. Jigsaw further argued that the same had not happened despite the demand notice given on May 8, 2017. However, Stayzilla alleged fraud and forgery of documents against Jigsaw for making bogus claim. It has been argued by Stayzilla that there was no legitimate dues, much less unpaid operational debt as stated in the demand notice.
The Vasupal camp maintained that the criminal charges foisted on him were part of pressure tactics to settle a civil dispute. Vasupal on February 23, 2017, had announced that he would be bringing to a halt the operations of Stayzilla in its current form, and looking to reboot it with a different business model.
Stayzilla had raised close to $30 million in funding so far, besides an undisclosed amount in its Series A round, from investors, including Nexus Venture Partners and Matrix Partners. In February 2015, it raised $15 million in Series B funding led by venture capital firm Nexus Venture Partners, with participation from existing investor Matrix Partners India. The jailing of Vasupal saw the start-up community and veterans in the information technology sector rallying behind the troubled co-founder of Stayzilla, seeking fair treatment for him.