Stayzilla founder's wife breaks her silence, says this is game of character assassination

Today, the nine-day struggle between Stayzilla Founder Yogendra Vasupal and Jigsaw Advertising's Aditya C.S. met with yet another stalemate. Yogi was denied bail by the Special Metropolitan Magistrate Court in Chennai today. The judge, M.M. Kabir, said that the court denied bail on the grounds that the police custody application is pending.

It has been over nine days since Yogendra was taken into judicial custody on an FIR filed under Sections 420, 407, and 506 (I) of the IPC. Started on March 14, the case has seen a rallying of the who’s who of the startup ecosystem. From Twitter hashtags to appeals to the government, everyone has rallied to help the Stayzilla founder.

Earlier this month, Stayzilla put out a blog post stating that they would be discontinuing their operations. It came as a shock to most in the ecosystem, as Yogendra, more popularly known as Yogi, has always been an affable entrepreneur, and everyone has a good word for him.

Following the rejection of bail today, his wife and family have written a new blog post on Yogendra's Medium account. The blog went on to explain and clarify the things shared by Aditya with the media.

While Stayzilla claims to have settled Jigsaw Advertising’s payments, the latter claims otherwise. The main contention is that Stayzilla owes Jigsaw Advertising Rs 1.56 crore.

When YourStory reached out to Aditya on the matter, this is what he had to say in an e-mail response:

"How long will advertising agencies and media houses bear losses because of irresponsible wannabe entrepreneurs who manage to get funding just to live a 5-star life for a few years and then finally shut shop and expect the hard working small-time business people to suffer? They cheat us, and if the system takes action, they cry foul. I AM NOT SCARED of their tantrums, my case is genuine and will fight it in the courts and I trust the courts.

ALSO, these guys have cheated the public. Now what? "We have made all refunds and competitors are planting bad reviews"? Or are they going to say people are jealous? Give me a break guys!

They take bookings for the summer holidays from lakhs of people, up to Rs 4,000 per head as an advance and shut shop on the 24th of Feb. MY CALCULATION: 2 LAKH BOOKINGS X Rs 4,000 PER BOOKING = RS 80 CRORES!

 I also have proof that these guys have siphoned money from the company accounts into their personal accounts (No, not salary) AND INTO ACCOUNTS OF THEIR FAMILY MEMBERS, who hold no position in the company.

Enough of crying foul and throwing toys out of the pram, own up to your unethical business practices.”

Clarifications given

In her blog, the family clarifies these allegations with proof, especially with regards to Aditya's statement:

 I also have proof that these guys have siphoned money from the company accounts into their personal accounts (No, not salary) AND INTO ACCOUNTS OF THEIR FAMILY MEMBERS, who hold no position in the company.

The blog says:

Stayzilla started with seed funding from family and friends, who are also shareholders in the company. Some facts about Yogi and Sachit that need to come out in the open —

1. Salaries drawn by Yogi (Rs.2,01,523/- gross per month) and Sachit (Rs.2,17,789/-), in spite of being the CEO and CFO respectively, are much lesser than most of Stayzilla’s department heads, who they hired personally.

2. Not a single share of Yogi and Sachit was sold by them till date, despite repeated offers from investors and pressure from family members.

3. Unfortunately, banks could only provide corporate credit cards in the names of individuals and not in the name of the company. The same were taken in the name of promoters for an online biz like ours to make online purchases of tools and softwares like GITHUB, AWS, JIRA etc.

4. Before such grants of corporate credit cards from banks, in the past, our online payments for Servers etc. were made using Yogi’s mother’s Amex card, which still continues to be the registered card with our server company till date.

5. The monthly payout to Yogi’s dad that was ‘exposed’ and categorised as siphoning (cheap trick), which also got wrongly picked by some media without verification. It is actually the monthly rental under a Rental Agreement for Yogi’s dad’s apartment that is Stayzilla’s registered office in R.A Puram, under Inasra Technologies Pvt Ltd since 2013 till date. This was not formalised in the initial years of occupation since 2007, but was done in 2013 after investments were received.

Even during formalisation, the rent was kept low at Rs 55,000 monthly rental for his dad’s 1,800 sq ft in comparison to Rs 90,000 monthly rental for a space of 2,000 sq ft that was being used as an extended office space in the apartment complex from an unrelated party.

Has Yogi shut operations or is it a reboot?

The tone of the e-mail raises valid questions with regards to payments that are due to businesses by startups. And it is a fair point, as, according to an article by The Economic Times, Snapdeal is yet to settle Rs 1.2 crore in dues to its vendors. This isn’t the first time a vendor has cried foul against a startup founder.

Late last year, OYO Rooms had also received a notice from one of its vendors, again an agency, where OYO had defaulted on payments. Disputes over payments between vendors and clients aren't by any means restricted to the startup world. So, what is different in Stayzilla’s case? The problem here is the alleged power that the vendor wields. Yogi’s blog post on Medium reflected that he has been receiving threats from the media agency and a local politician.

Initially, the police had claimed that Yogendra had confessed to threatening Aditya and defaulting on the payment. However, this wasn’t the case.

From the beginning, Stayzilla has just said that they are rebooting operations.

The blog says:

All Yogi wanted was a complete restructuring (reboot) of Stayzilla and had begun discussions with prospects in the accommodation and tourism space. He even attended a travel summit in Delhi in the 2nd week of March to begin his discussions on the reboot. He was in the process of liquidation of assets that were not generating revenue and focus on vehicles which had a good opportunity in the current system. Company was also in the parallel process of collection from debtors and other payoffs.

Making a criminal case out of a civil case

“If, in a contractual relationship, where a company has agreed to pay a particular agency or organisation for certain services, for whatever intervening circumstances, like the business shutting down or the company running out of cash, the company is not able to make that payment, then it is, in nature, a civil dispute. Filing a criminal complaint is a way of arm twisting the individual involved to pay the agency or organisation out of court. Once a person gets arrested, he is under pressure to try to settle it one way or the other. In a civil case, the court decides whether there is a liability. If the court’s verdict is yes, then the company needs to make the payment. If it does not, then it leads to civil imprisonment,” says a renowned lawyer working for one of the top law firms in the country.

The blog also adds:

Company is still ACTIVE. So criminalising a person who was solely and earnestly working towards these closures has blocked the path for everyone else. It is not only hurtful to Stayzilla’s existing partners but also demoralising for entrepreneurs across.