India Accelerator drags SustainKart founder to court, alleges financial misrepresentation
Investors allege that SustainKart founder Kanthi Dutt manipulated financial reports to portray a more favourable performance and seek additional funding.
(IA) has initiated legal proceedings against Kanthi Dutt, Founder of Hyderabad-based , for allegedly misrepresenting the company’s financial data.
The move comes after investors, including IA and various high-net-worth individuals, discovered inconsistencies in revenue and sales data presented by the company, while its Goods and Services Tax (GST) filings indicated significantly lower income.
India Accelerator invested $294,780 in SustainKart in 2023, to enhance its offerings and expand its market presence through a compulsory convertible debenture subscription agreement.
Investors allege that Dutt manipulated financial reports to portray a more favourable performance, seeking additional funding on this basis.
"The situation with SustainKart is highly concerning, given the serious discrepancies and financial misrepresentations that have emerged. The inflated revenue figures and manipulated sales data reported by the founder, Kanthi Dutt, have fundamentally violated the trust placed by investors," Munish Bhatia, Co-founder of India accelerator.
The alleged discrepancy has led investors, including IA, to seek legal recourse. The investors are demanding that Dutt return approximately $800,000, along with accrued interest, alleging that his actions breached fiduciary duties and constituted fraudulent misrepresentation of the company's finances.
"Alongside other stakeholders, we are taking legal action to protect our investors interests and hold the responsible parties accountable. This case underscores the critical importance of transparency and ethical practices in building a trustworthy startup ecosystem, and we remain committed to pursuing all necessary legal avenues to address these issues," he added.
Additionally, Dutt is also facing legal troubles related to his fine jewellery brand, Tritiyaa. Co-founder Srija Tippala has filed an FIR in Hyderabad, accusing Dutt of forging her credentials and ousting her as the company's director, replacing her with his mother, according to an Inc42 report. Tippala claims she was unaware of the changes until discovering them through an RTI application, shortly after investing over Rs 2.5 crore into the company
Recently, Shilpa Reddy, the celebrity fashion designer and former founder of SustainKart, clarified her position regarding the eco-friendly ecommerce platform. According to Deccan Chronicle, she stated that her values no longer aligned with the company's direction, leading her to step away from the organisation.
She emphasised that she had distanced herself from the organisation over a year and a half ago and no longer had any affiliation with the company or its co-founder, Kanthi Dutt.
Founded in 2021, SustainKart offered a diverse range of organic and sustainable items across various categories, including beauty, wellness, food, home decor, fashion, and pet care and claimed to feature over 1,100 brands with 93,000 SKUs. It recently shut down its operations.
(The copy was updated with additional inputs.)