Stayzilla founder Yogendra Vasupal has a critical bail hearing coming up on Tuesday in Chennai. The start-up entrepreneur is in jail since March 14, after a vendor filed a case against him for alleged non-payment of dues.
Stayzilla founder Yogendra Vasupal has a critical bail hearing coming up on Tuesday in Chennai. The start-up entrepreneur is in jail since March 14, after a vendor filed a case against him for alleged non-payment of dues. Vasupal had on Friday moved the principal sessions court in Chennai appealing against an order of a lower court (the special metropolitan magistrate court) which had dismissed his bail petition. His bail application was rejected with the court stating that the police required to get his custody first and sent him to a day’s Central Crime Branch (CCB) police remand.
The arrest of Vasupal has created considerable angst among the entrepreneur community across the country which viewed the case of nonpayment of dues as a commercial dispute and not as a criminal offence.
Vasupal was arrested by the Central Crime Branch (CCB) police of Chennai on charges of cheating and criminal intimidation, based on a complaint filed by CS Aditya of Jigsaw Advertising, the vendor.
Vasupal maintained that the criminal charges foisted against him were part of pressure tactics to settle a civil dispute. However, Aditya charged that Stayzilla had allegedly failed to make payments for services rendered since February 2016 and has pending payments to the tune of R1.7 crore. Stayzilla had since shut itself down in February.
Sharad Sharma, an angel investor and founder of iSPIRT told FE, “This will have a searing negative impact on two counts: reputation of Indian start-up ecosystem and fear of entrepreneurs who may now be afraid to venture out.”
“Start-up founders are vulnerable. We need to now introduce an orderly shutdown procedure for start-ups, just like in other sectors. This will help matters in future,” Sharma added.
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Vasupal has received unstinted support from investors and entrepreneurs alike including notable personalities such as founders of Flipkart, Ola, Paytm and others like S Gopalakrishnan, Ravi Gururaj and Sharad Sharma. An open letter by the founders of various companies have spoken about the long term damage such an action on Vasupal would have on the forthcoming entrepreneurs. “Any actions that go beyond the provisions of the law to create undue fear and harassment to the founders and their families as have been reported in this case, would raise the insecurity for start-up founders, and make the cost of failure unacceptable to the vision of Start-up India. This will set a very undesirable precedent.”
They argued that Stayzilla is still a functional company and has not ceased its operations. The company has declared that it intends to restructure operations, and reboot its model and will also repay their partners and vendors.
In another letter by a large group of founders addressed to Union home minister Rajnath Singh, the start-up founders stated, “As founders, we already have enough battlefronts, from acquiring customers to funding growth and ensuring the start-up doesn’t die. You add a disgruntled vendor using position of power and influential network to make you go through hell, and suddenly, it becomes a battle lost.”