Online retailer Snapdeal’s Chief Executive Officer Kunal Bahl faces a cheating case for cancelling a sponsorship contract, days after homestay start-up Stayzilla’s co-founder was arrested over unpaid dues.
A Bengaluru court ordered that a case be registered against Snapdeal’s parent Jasper Infotech Pvt. Ltd., Bahl and 10 other executives in a complaint by event management firm Dream Merchants. The e-tailer unilaterally cancelled a three-year contract to sponsor the Bangalore Fashion Week (BFW), the complaint said.
SoftBank-backed Snapdeal said in a statement that “the company is yet to see the complaint filed against it and… will take all appropriate legal steps to defend it and its employees against all baseless allegations.”
Stayzilla’s co-founder Yogendra Vasupal’s arrest in Chennai on a complaint by a marketing vendor had sparked fears among Indian entrepreneurs. Founders of several start-ups and industry bodies wrote an open letter last month demanding Vasupal’s release and a fair trial.
The Bengaluru court issued summons to Snapdeal executives to appear before 27 May. The case has been filed under Section 420 (cheating) and Section 120B (criminal conspiracy) of the Indian Penal Code (IPC).
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The 3 March order, which was reviewed by BloombergQuint, said Snapdeal caused a “huge loss to the complainant” by cancelling the sponsorship contract.
Snapdeal had signed a three-year sponsorship contract with Dream Merchants, which organises the Bangalore Fashion Week for six editions in July 2015, Feroz Khan, founder of Dream Merchants, told BloombergQuint over the phone.
The online retailer stopped responding to calls and invoices 15 days before the Bangalore Fashion Week in January 2016. “We had to put in our own money and continue with the event with the Snapdeal branding,” Khan said.
The event management company then approached the court. According to the three-year contract ending in 2018 for the biannual event, Snapdeal was supposed to put in Rs 23 lakh for the first two editions, said Khan. Snapdeal then promised to pay another Rs 75 lakh for title sponsorship, he said.
This is not the first time Snapdeal has been in the news for allegedly not paying dues. In February, All India Online Vendor Association (AIOVA), which represents 2,000 sellers on different e-commerce platforms, wrote a letter to Commerce Minister Nirmala Sitharaman over the e-tailer not paying some of its sellers.
(The article is published in arrangement with the BloombergQuint.)
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