The Founder and CEO of the now shut Chennai-based startup Stayzilla has been remanded to police custody on complaint of non-payment of dues by vendors.

According to a leaked email that was sent on Tuesday, Stayzilla co-founder Sachit Singhi said that one of Chennai-based Stayzilla’s vendors Jigsaw Advertising was harassing the founders in order to recover money that Stayzilla owes them, adding that Jigsaw had lodged a complaint at the Mylapore police station against both Vasupal and Singhi, accusing them of fraud.

Vasupal, who had shut Chennai-based Stayzilla last month, was arrested in the Tamil Nadu capital on complaint by Jigsaw over pending dues of Rs 1.7 crore.

According to Rupal Yogendra, co-founder Stayzilla and wife of Vasupal, he was taken to the magistrate around 10 pm.

The issue became public when an emergency email by co-founder Sachit Singhi to investors Nexus Venture Partners and Matrix Partners asking for ‘help’ was made public on social media.

In February, the online homestay marketplace had said that it was shutting down because of an unviable business model. The start-up counted Matrix Partners and Nexus Venture Partners among its investors.

Priyank Kharge, Karnataka’s Minister IT and BT, took to Twitter immediately and said he will be working on the case and will be with Yogendra if he is on the right side of the law.

Various startup CEOs and investors from firms such as Matrix Partners, MobiKwik, Freshdesk and others have come forward to expressed support for Vasupal on social media.

Vasupal pointed the deficiencies in the system when a company tried to wind down operations in India. About 90 percent startups fail in the country; however, winding down is a painful procedure which can take up to three years.

“There is no use of having jumped so many hoops to be a private limited 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,” Vasupal said, in the blog which was saved as draft and published today by his wife.

In an email to Mint, Jigsaw accused Stayzilla’s founders of committing fraud, including embezzlement of funds.

“(We) have proof that these guys have siphoned money from the company accounts into their personal accounts (not Salary) and into accounts of their own family members who hold no position in the company,”

Jigsaw’s Aditya C.S. said in an email.

Aditya also said,

“These startups get funding, they spend carelessly, they live a hunky-dory life and keep our payments on hold, and then shut shop saying we don’t have money. People doing genuine business like us have to bear the brunt… I AM NOT SCARED of their tantrums, my case is genuine and will fight it in the courts and I trust the courts.”

He also claimed that, in December 2016, when he had asked Stayzilla regarding the dues, Sachit had criminally intimidated him and said that Aditya will face dire consequence if he continues demanding payment of the dues.

According to the reports, Aditya has filed a complaint with the Central Crime Branch in Chennai on March 8 and a FIR under IPC section 420 (fraud), 406 (criminal breach of trust) and 506 (criminal intimidation) on March 13. Speaking on the reason behind filing a case of intimidation instead of a Civil case, he said, “It is my lawyer’s prerogative to file a case with the Central Crime Branch. I cannot comment on that.”

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Sangeeta Ghosh

Sangeeta is an engineering graduate and is passionate about painting and music. She is always blooming with new ideas and is a real go to person when you are searching for one. Exploring good dining places across the city is her favourite off-field indulgence. At KnowStartup, she is an integral part of the editorial team.


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