Defrauded by Stayzilla, woman proprietor writes to Modi

Bengaluru: The woman proprietor of Chennai-based advertising Jigsaw Solutions, which was allegedly defrauded of Rs 1.69 crore by Stayzilla, on Monday urged Prime Minister Narendra Modi and his government to address issues of funding and transparent business models at the earliest.

Radha Shekhar, in a letter to Modi, said this was needed to avoid any suffering women entrepreneurs like her face at the hands of a few 'unscrupulous businessmen' posing as start ups.

Jigsaw had alleged Stayzilla had defrauded it of about Rs 1.69 crore for services it rendered since last year.

Yogendra Vasupal, co-founder of Stayzilla, an online hotel and homestay booking company, was arrested on March 14 for alleged cheating and criminal intimidation. He has twice been denied bail.

Radha also wrote to IT Minister Ravi Shankar Prasad. She alleged Stayzilla has indulged in unethical business practice which should be strongly discouraged, "instead of letting them take cover behind the startup ecosystem."

"If not, any blind support to a fraudulent company would totally undermine the trust in start ups, even as many are folding up due to poor business practises and mindless spending."

Radha said as a small player her firm is heavily dependent on timely payments of bills by the clients, since it has to pay its vendors.

Her firm did not have any issues with most clients, including Kotak Mahindra Bank, who have been clearing its dues in time, barring Stayzilla, she said.

Radha said that for more than a year since January 2016, Stayzilla had been dodging payments totalling Rs 1.69 crore after ad campaigns were carried out for them through airline boarding passes and outdoor billboards. Repeated efforts to clear the dues were met with evasion, she said.

She claimed Stayzilla had got large funding in March 2016, despite which it had resisted paying the dues.

Radha said a legal notice from one of her clients forced her to file a complaint with Chennai police after the sudden announcement of closure of Stayzilla on February 23.

There was no prior intimation of closure to creditors,just a blogpost on their website of 'failed business model', which was reported by the mainstream media. Later the two promoters went underground. This was further proof that the company wanted to escape all its liabilities, she said.

Radha pointed out that after a probe,Chennai police had arrested Vasupal and remanded him to custody, "while his CFO Sachit Singhi continues to abscond to this day."

She said it seemed her firm was being 'wrongly painted' by the startup community as posing a threat to them for taking legal recourse, whereas her firm had sought action against only one startup for cheating them.

Faced with a concerted outcry in support of a defaulter, they reached out to the media to explain their side of the story, she said.

She noted that in consequence, Karnataka IT Minister Priyank Kharge had stated that supporting Stayzilla's founder would be akin to supporting a defaulter like Vijay Mallya.