Stayzilla founder’s bail plea rejected due to pending police custody application

Yogendra Vasupal, Founder of Stayzilla, 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.

This is the first time the startup world has seen a battle of this magnitude. While everyone from Vijay Shekhar Sharma to Bhavish Agarwal to Sharad Sharma has shown their support for Yogendra, little seems to have gone in his favour.

The case, which was clearly a civil one, has seen alleged threats and intimidation from the plaintiff - vendor Jigsaw Advertising’s Aditya C.S. While the Stayzilla incident is big, the startup world has seen some other disastrous consequences of battling with the real world.

TinyOwl’s founders would not have expected to be locked up in their own office by their own employees, but that did happen. Slogans were raised by laid off employees outside Snapdeal’s office, and Roadrunnr’s office was vandalised.

Traditional Indian businesses have had to deal with all sorts of issues, from government corruption to union trouble. But many startup founders, who spend their days dreaming of disrupting the existing world order with tech, forget that they need to do business in the real world, with all its messy complications.

Many entrepreneurs, when they think of starting up, worry about building the product, raising funds, and hiring the right talent. Not many think of or are prepared for the practical issues that could crop up.

Also, disputes over payments between vendors and clients aren't by any means restricted to the startup world. The problem here, however, is the alleged power that the vendor wields. Initially, the police had claimed that Yogendra had confessed to threatening Aditya and defaulting on the payment. However, this wasn’t the case.

The money that Stayzilla owes Jigsaw is not being contested. What is being questioned is the means and tactics used to get that money out. Over the past week, there have been other voices that have said that vendors get a raw deal, that civil proceedings take a long time and they are cheated out of their money. The question then arises of how startups are to deal with this situation.

How do startups, especially the ones that are shutting down, manage vendor payments? Also, what backing or support do founders have in these cases? While Karnataka and Telangana are known to have strong ministers who support entrepreneurs, what about other states? Also, what protection will founders have in case of vendettas?