Stayzilla founders are in deep trouble and it’s time we stand up for them.


[Stayzilla founder, Yogi and his colleague Sanchit and their families are in BIG trouble. The company had shutdown earlier, but the goons are threatening them and unfortunately, there has been very little support from the police and other government agencies (rather, they are using their power). Here is a series of events that happened post the shutdown. As we speak, Yogi is in custody.]

What is it that you can do? Least : Tweet this to Prime minister who has been extremely passionate about #startupIndia and can surely help protect an entrepreneur and his family.

@PMOIndia The StartupIndia program has no meaning if entrepreneurs have to go through this #HelpAFounder [Tweet this]

I want to bring to light the problems that me and Sachit are facing. We are also seeking any help that you have to offer. I had announced that Stayzilla will be rebooting its operations on Feb 23rd. While things are progressing well with respect to the reboot (more on that later), I have realized that while we all want India to Start-up and Stand-up, the regulatory framework + corruption does not let one pick up after they fall. Instead it works overtime to bury them.

Here are the facts on 2 cases. The first case is against a politician who was our Landlord. We have video and audio proof of an assault and then a verbal threat to kill. The second case is against us from a media agency with whom the company had a dispute over deficiency of services and to whom we had asked to take it up in court. The stark difference in the approach taken by the police in these 2 cases should tell you something important.

Case 1 : Landlord

We had been working out of our office in Bangalore for roughly a year. When we got to know in end of January that the next 3–5 weeks was going to be touch and go, we thought it would be better to sit down with the landlord and explore various options and prepare for contingencies. In the initial meetings I had to bear a lot of verbal insults of being called a failure multiple times and how a failing company is destroying the reputation of his building. I ignored all those repeated insults to find any common ground with the Landlord. Over multiple meetings he started getting even more agitated demanding immediate payment (for which he had accepted a post dated cheque of March 7th) and became violent.

He assaulted my admin staff in front of me threatening to kill him with the revolver in his car. The video and audio (in Kannada) is there below for your perusal.

After this assault I got to know from my admin team that he has been a regular source of trouble for them with him insulting and accosting them at every turn. In fact the smoking area in the company was moved from the ground floor (adjacent to the bike park) to the terrace because he used to pass comments on any women staff who took their breaks there. Unfortunately, this was brought to my attention almost towards the end. I was not able to find any CCTV footage beyond a month old and proceed in the right legal manner. And so decided to pursue the latest assault instead of ignoring it through the right legal means. The key reason was the fact that this was a perennial problem and the behaviour I had witnessed was not a one off thing. All of us after all make mistakes once in a while.

I went to the Police Station the same night with my complaint and evidence to register my case. After trying to persuade the in charge to take the case, we returned back with only a promise that the complaint will be heard by a senior officer who can decide the next steps. We went the next day in the morning at 9:30 am. We got an FIR filed by 2pm after various officers got to know that I had video evidence of the assault and that the media had started getting interested in it. I assured them that I am after justice and not revenge and that if an FIR was filed, I would like to quietly have the matter resolved by them while me and my team were protected.

Just as the FIR was filed, I found out that the land lord had returned to the office with a lot of his folks roaming in front of the office in bikes and on feet. I again had to escalate the matter to a senior official to get him out of the office because everybody in the police station still refused to do anything about it. Keep in mind the FIR was already filed by then. The senior officer was informed by my Lawyer that he would inform the media and have a reporters with TV Cameras at the office with in 1 hour. The senior officer acted fast and got 2 flying squads to the office to contain the Landlord.

When I got to the office I found 10 Policemen there to protect. ~4 of them inside with the land lord, remaining outside. The Landlord was comfortably seated and the policemen were pleading with him to leave the premises, which he did after 2 & 1/2 hours of cajoling. I thanked the police and told them that I understood their compulsion. I also asked them to tell me honestly if the FIR was enough to protect me or if I should look at other alternatives like going to the public. I was assured that there would not be any problem further. My lawyer on the other hand suggested we should take an injunction from the court against him or any of his persons entering into the premises. It made sense to me to seek the protection of the court looking at how helpless the police seemed to be and we got our injunction. In parallel we also sent a notice that we are vacating and asking for our deposit back.

Case 2 : Media Agency

Almost a month later, on March 9th, 2 policemen in Bangalore came home in mufti and stated that I am wanted in the station for questioning. I called my lawyer immediately and was informed by him that if there wasn’t a summons or a warrant, I don’t have to go. I got back to the cops whom I seated at my home and informed them of the same. I then asked them for more information on the reason they wanted me. I was told that there is a case against me by somebody from Chennai for cheating, intimidation and etc. I recognized the name of the complainant and informed them that there was a dispute between 2 companies and we had asked the other company to take it up in the court. I don’t personally owe anybody money and I am wondering how can they get confused on such a basic matter as this was a clear civil case. I also pointed out that we have been asking the other company to take it to court if they felt they were wronged as we felt within our right. I also pointed out that my company is also owed close to 7 crores from various debtors but I am not going around filing false criminal cases against them.

I was then made to speak with the inspector who told me that until now they had not filed a complaint or registered an FIR at that point and to come to the police station. I told him that this complaint was filed in Chennai already and that my lawyer had interacted with the police in Chennai and appraised them of the whole matter and about the bogus nature of the complaint. I also informed him that we have been verbally threatened on call multiple times by owners of that company. And that I din’t understand why I had to go to 2 stations in 2 different states for the same case.

The Inspector then lay down the line stating that sending mufti policemen was the first way, the second way was that they will file an FIR and send uniformed policemen and have me arrested and jailed. After being taken aback for a split second, I realized that as long as I fear going to the Jail, I will always succumb to baseless threats. I then told him if it was my fate to go to jail, I will. Post which I will win this baseless case in court and prove him wrong. Ended the call with that.

The mufti policemen at home were still trying to convince me to go to the station to respect the their superior’s wishes (“after all we are all in the same locality and will keep seeing each other” said one). I learnt that the Inspector from the Chennai police station was there at the Bangalore station and was the source of the complaint. I was shocked. Just the previous night my Lawyer had stated to me that he had met the Chennai Inspector over the weekend and that he had guided my lawyer to respond to the false complaint first and then provide our complaint on the threats and harassment from the owners of the media agency. My lawyer was asked to bring the draft response on the following Monday to settle the matter?—?13th March?—?as the Inspector was taking a personal trip for 2 days. That’s when I realized that things are not neutral as the Inspector had communicated one thing to my lawyer while doing something else and was acting in bad faith.

 

The same day policemen went to Sachit’s house asking for him, went to my home over the weekend asking for me. When my parents or his parents asked for the reason, they said that there was some complaint and that they did not know what it was about. My father lost it and asked them how they could be looking for a person with know what they were looking for and if they were just trying to create nuisance.

We immediately called his wife and kids to my home. 8 hours later they were safe with us. In the meanwhile, our lawyer got his known colleagues in Chennai activated and the next Monday (Fen 27th) we went there to handle this (while giving this interview on the same day). We met up with the lawyer and he advised us that he would first go to the station to understand the case and then call us there. He finally managed to meet the Inspector only on Sunday as he was also busy with other things.

On Sunday, I got to know that the complaint filed against us had false accusations like Sachit going to the vendor’s office to threaten with 2 henchmen of some MLA. That I used to call him and threaten him of dire consequences if he pursued the matter. I laughed and said I had never spoke to him and would love for him to get any call records proving the same. And that Sachit was the one who was threatened by people visiting office and on call. We even had the CCTV footage of those henchmen coming to our office. At that point I thought that this vendor was smart to have used his illegal actions as the template of his complaint against us. Now in hindsight, with the bad faith shown, I am not sure if it was the vendor who was smart or was he being guided by the Inspector/higher ups to protect himself better.

The same day, my lawyer gave the gist of the case outlining that this was between 2 companies (where Stayzilla had already paid over 80% over a period of 3 years, where cumulative amount paid is 6.5 Crore Rupees) and that the dispute began with a “severe deficiency of services” and we have repeatedly asked the other party to go to court if they felt there was any wrong. It was also pointed out that the Pvt Ltd company had certain protections offered in terms of these kind of cases. Further the call recording of the vendor and his family threatening Sachit and his family was also shared. My lawyer walked away with the impression that the Inspector was professional and that it made sense to work with him to close the case and followed his instructions to first close this case before filing the real case of threat, intimidation, outraging the modesty of women next.

It is curious that after giving that advice and before our response could be perused, he came to Bangalore to pursue this further. Infact when my lawyer in Chennai got to know that the Inspector was there in Bangalore, he tried reaching the Inspector multiple times through unanswered calls.

Observations

I have always quietly felt that all knowledge/IT/BPO workers in Bangalore are only looked at as a source of revenue which can be gotten by shaking them down. This is across all Govt Depts. This is while we pay and bring in the bulk of the taxes to the city. We have no one to blame except our own apathy. A politician who is not in power and with an FIR filed with irrefutable proof is molly cuddled and to this day has not been taken in. While even a false case from a party who threatens brothel cases is enough to get us to the threatened with an open arrest. We need to organize and get across the message that we wont put up this.

Second observation is how can some-one think that they can get false brothel cases filed against someone working in a bank for over a decade with an impeccable record, without the backing of some members of the police force?

(Update 1, Sachit also got some doll delivered to his home on March 9th with the image of his son. We are still figuring out what this means.)

Third observation is that there is no use of having jumped so many hoops to be a Pvt Ltd company thinking that it will limit individual liability, when people at senior levels in Police don’t even understand the difference…or can pretend not to know it. Incompetency or Maliciousness, it is disappointing.

Next Steps

I am going to follow through this to its logical conclusion.

— written by Yogendra Vasupal

(published by Rupal Yogendra at 2:22 am on March 15/2017/reproduced from here.)

Yogendra has currently been remanded in Police custody without any CONFESSION (contrary to the information published by Times of India(online) Article dated March 14/2017 time 11.21 PM by Rachel Chitra)

He was taken to the magistrate at 10.00 PM though courts do not function after 6 PM. His whereabouts from when the cops took him into custody today from 11.am to 6.00pm where not known and the lawyer and our family had to go from one station to another looking for him. This shows how money and influence can supercede true and thorough investigation in a country which talks so much about start-ups and culture. Now after the inappropriate article by Times of India(online-above mentioned), wondering if it has anything to do with Jig Saw Solution and Advertising owner, Mr.Aditya C.S’s dad being a part of the press and wielding his influence there also.

Also: Read the other side of the story – on Stayzilla’s pending payment details.

Update on Stayzilla Case.

23 thoughts on “Stayzilla founders are in deep trouble and it’s time we stand up for them.”

  1. After sifting through the facts and analyzing the situation, one glaring fact that surfaces loud and clear. It is the due diligence that Syazilla management should have been proactive about. They already were forewarned by the reactions from thee landlord, and since the non-payment was due to a dispute on service-delivery, the company should have already taken proactive legal recourse, and not wait for the agency to use their closure as a platform and re-christen the dispute as a potential NPA. Further, any legal team that relies on a police inspector’s assurance and guidance, is definitely not a security-centric legal team. The definition of FIR is FIRST INFORMATION REPORT, and a lawyer knows better than the common man, what weightage it carries in the Indian legal eco-system for insulation from over-zealous or maliscious intent laden FIR’s against citizens. Further, the communication with a creditor where there is a dispute has to be articulated by the lawyers and should be routed via the same, Sanchit and Yogi have dealt with some of these issues in an amaterish manner, which has empowered the agency to get as bold as they did. It has become a lesson for all enterpreneurs in India to learn, that when you form a legal entity to conduct business, you have to be equally sensitive and conscious of the legal ramifications of your actions or inactions in this case. I know my reply will get responses that this is hind sight commentary, but legal, financial and management experts hired by firms are simply to insulate the entity and its management from such situations. I hope and pray, that in the future, law is treated more proactively. Shiva!

  2. Damn it, if you owe money to someone you should pay them. Either you have misused the alotted fund to fail this company or have taken excess loans and have not used the funds correctly to prosper the company. I honestly disagree with the threats you are facing but you should must be prosecuted in legal forms.

  3. There are obviously two sides to this story as with all other stories. The startup eco system in the country is going through very troubled times right now and almost all of it is due to flawed business models and blind copying of business ideas from the Western countries without modifying or fine tuning them to suit the Indian scenario. PE’s are risk takers by nature and pump in billions into what they feel may be a sound investment. However a total lack of business acumen, experience and knowledge in most of these 20 something start up founders is leading to the disaster that the eco system is going through right now. Easy availability of funds is giving rise to irresponsible and immature business models. As a consequence related industries like ad agencies, placement consultants etc are all suffering by association with the flawed start up eco system. However at the end of the day every business man start up or service provider has to evaluate the risks and reward in any business transaction before he enters it, simple as that. It is purely up to our political class and their henchmen the police to keep their noses out of potential civil matters. However the chance of a commission on recovered money would have been too tempting for some local political goon to pass up and he would have got cops to act on his influence and the promise of quick money to them as well. Nothing justifies the kind of language and means employed by the ad agency in this particular case. At the same time it is the responsibility of a company to pay off its vendors service providers and land lords or at least put in place a guaranteed future payment mechanism that is mutually acceptable. Let’s not forget that Kingfisher Airlines was also a start in some sense of the word and if the entire country feels Mallya is a criminal and has done something wrong, then the same logic should apply to any other corporate.

  4. @ashish A bit late in the day. My first startup, I went through this as well. Dealt with goons, police heavy-handedness for otherwise a very small civil disagreement. That was the worst moments of my life. I blamed it on Kolkata and their anti-business culture. This is sad to see these happening in other parts of the country as well.

  5. Why is it that people from IIT/IIM/IISc keep posting their achievement in every other sentence they speak?

    “I am from IIM, blah blah blah… I am from IIT blah blah blah”

  6. Well every business is at constant risk. A nation as a whole pays the price. If Indians want a flourishing economy with a lot of jobs then it comes at a price. The price is risk. Without taking risk no aspiring entrepreneur can startup a company. The cost of failure is as important as the fruits of success.
    India should create a safety net for failing startups. It should create very strict lending policies which even private lenders should mandatorily conform to.
    Lenders should clearly know what is the risk involved when the borrower goes delinquent.
    Harassment of such sort will lead to fear in aspiring entrepreneurs and will severely impact the progress of this country.
    A nation without laws is not a nation. We are not barbarians.

  7. Many months back, i posted a property of mine on Stayzilla’s BNB service. The website was so tacky, never allowed me to upload more than 1 MB in terms of file size, and their ‘verification’ service, never showed up after many months! I was already making good money on the property thanks to Airbnb, their rival and whom Stayzilla desperately wanted to imitate.

    The issue here is simple – neurotic founders who just want to show their narcissism by celebrating proudly when they are ‘funded’ by VCs etc. Traditional and family business, like ours and many other vendors are arm twisted using clever language to provide virtually free services to them. Ironically, the same laws / legal / political system that Stayzilla’s founders cry hoarse against is of no use when we as vendors try to assert our rights using the same system!

    The issue is not just with Stayzilla, but plenty of these “educated promoters” run start ups. They have little business acumen and only fancy connections to VCs, who open their purse strings for them!

    I wish the VCs all the best, because they are going to need it the most to recover even a single paisa from Stayzilla!

  8. very contrary point, why not they produce proof that they are paying landlord and vendors on time.
    All payments in any company are normally thru banking system, so easy to produce.
    Putting statement rather than doll picture is credible thing. Correct me if I am wrong.
    I am from IIM and doing business.
    Do you know about traditional way of arranging funds?
    Morgage against your home, no VC money to burn.
    What if someone doesn’t pay and declares his company bankrupt.

  9. We’ve seen one side of the story.
    It isn’t my place or any others who are in support or otherwise of the said people involved.
    Let both sides produce facts & come up with their arguments in the right way.
    What can be seen is what Yogi has produced which are not facts about payments or about promises made. He has however put up the facts on being abused/threatened while none about the conversations earlier with the said company.
    Let Aditya come out with his facts too. Yogi was smart in recording everything and putting it out there. Just worried as why only when under duress. To be completely guilt free – he should have posted all the details of the conversations with Aditya.
    When a person has to pay up over 1.75cr to a small advertising agency, things tend to get out of hand. Just like Yogi felt that it was right to not pay people and walk away, Aditya(not supporting him) thought he could get away with threatening people and get his money. Both are wrong & we should only be supporting the facts.
    Ideally, the venture funds/capitalists should plan to have some sort of control over money or a corpus fund(lack of better words) to pay back the vendors to the companies if in case the such a scenario occurs.

  10. I am with the founders here. In any case the cops should have told the complainant that the matter is a civil matter. What action the cops are going to take for threatening calls by vendor? This is a pathetic situation and extremely disheartening for people who are planning for a start up here in India. Also please be aware that the international investors are watching. No wonder our talents are going out of the country where there is really a thing called “ease of doing business”
    Long way to go NaMo.

  11. It’s very privileged to expect people to stand up for a startup that blew investor money on an imperfect business model. I wonder if they paid vendors on time. I’ve never had issues with vendors when they’ve been paid properly.

  12. This has to be taken up seriously and bring to the knowledge of PM and Home minster. They are always will come take legal steps, but can not take take law into their hands

  13. Came upon this article after many people shared this on FB/other platforms. The other side of the story has to be heard. We have seen in multiple cases that social media can be a very dangerous tool, propagating the views of the party which is the most tech-savvy.

    I am very much in a traditional family owned business in KA. I have been in similar situations where I have been unable to pay vendors/creditors for a long period and from my experience (have dealt with politicians, local goons, etc etc), I have never seen anyone use filthy language like what was used in the recordings. Even when it is a very extreme situation, I have sat down with the parties, and eventually resolved conflicts amicably. Never has anyone (again, local politicians, self styled goons etc) used language like this with me. It is also surprising that two unconnected people from two different cities/states are using such language against the same guy.

    Moreover, having heard the IT style/heavily English jargon laden language that the person used in the alleged conversation with the police, another insight into this is that local language really matters. The minute one is dealing with cops, government officials etc, 90% of the problem is made easier if you use simple, local language, which the founder was obviously fluent in. So am pretty sure that irritated the TN cop (they are most likely bound to get irritated with such talk).

    Anyway, while I empathize with the founders, I feel there is more to the story than what this article lets on.

    Also, with regard to the impression that if you are a Director of a Pvt Ltd company, you have no legal liability if things go wrong, then people are very much mistaken. Startups are encouraged to register their company as one for ease of VCs getting in/out, and not much more than that.

  14. Unfortunately, the difficulty in running a startup in India goes beyond the business issues. It’s more about dealing with these “forces” and the corrupt that prevents one from turning an entrepreneur and not regretting it.

    We faced a similar issue in my earlier organization (not a startup) where a creditor very conveniently turned an issue about disputed outstanding payment (a civil case) into a criminal case by claiming that the promoters of my company physically abused him. That too, in a city the promoters had never visited. The local police from the city came looking for him and to save the embarrassment, the promoters had to pay heavy legal fees and “settle” the matter with the creditor. In summary, there was no justice, no discussion on who owed who. It was just who has the guts to be a criminal and work with the police to harass the other party.

    I don’t know if Stayzilla promoters were right in holding the balance payment or the advertising company was right in claiming it. Still, if the facts mentioned above are corrupt, it only provides another example of how businesses are run in India and why an educated person with no political influence/connection is better off going abroad or taking a regular job in India.

    Wish, I could offer a solution to Yogi but I don’t have any political connection.

  15. I think this is an one sided view of the whole thing.
    What did the Stayzilla team promise their creditors and did they keep their payment promises?
    If there was a cheque bounce i believe it would be a step towards issue of arrest warrant if they had failed to respond to legal notice or summons.

    Lets hear more before jumping to conclusions or making martyrs of them.

  16. Startups now should stop demeaning the old school business’s and instead learn the art from them. In India you cannot function without backing of powerful people who can get you out of trouble and also get work done. Just see how Mallya flew off so luxuriously
    If anyone hopes re-monetization would fix corruption, he is the biggest fool

  17. So sad. This is how system works in India. Just imagine, if it happens to the founders of a well know startup, what about the plight of ordinary citizens and marginalised sections.

  18. I don’t understand why even our educated people don’t shun these political types. Why patronize them by becoming their tenants? Why encourage them by paying hefty donation to their schools just because their names contain “international”? When things go bad, they’ll end up being called son of a whore like these people have been, or their kids will get sexually abused with no action against molesters. Why enter a heavily asymmetric biased power relationship like this when they know the realities of our law and justice systems? Do some due diligence and rent from decent people even if it’s a little expensive.

  19. While I understand that people do make mistakes it should not be the case where others have to suffer due to our actions. House owners and media agencies are people just like the rest of us they also have families and kids etc. Why should the landlord or an agency take the losses because of someone else’s “mistakes”. Is it not the duty of the Company to pay their rent for the office space they utilize or pay the advertising agency specially when already paid was ” 80% over a period of 3 years, where cumulative amount paid is 6.5 Crore Rupees” what about the remaining 20 % which is roughly around 1.6 crores pending over 3 years . Why should other business suffer ?

  20. My thoughts and prayers to the Stayzilla team. I’m facing a similar legal trouble with my business. I understand how unsympathetic this governance can be towards business community. Everyone only wants to gauge professionals with their net worth. A police inspector said to me, kind of a confession, “Everybody in India makes mistakes and not everybody can be punished, so this allows people to go beyond their rights”. I also believe in karma, what goes around comes around.

  21. This whole thing of the institutions not understanding the difference between a proprietorship and private limited hits home hard.. very very hard. While we tried various places for business debt for growth (what’s the fun of being profitable if you can’t raise debt and have to resort to equity!?), the very first thing asked for is personal collateral; starting from the banks. The collateral-free debts talked about in the news are as mythical a thing as unicorns are. Any support from the government should start with fixing this or so I hope.

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