The Chennai Bench of the National Company Law Tribunal (NCLT) has issued an order to commence the corporate insolvency resolution process against Inasra Technologies, which ran the online accommodation aggregator Stayzilla, in a petition filed by its vendor Jigsaw Solutions.
The tribunal has also appointed an interim resolution professional (IRP) to take care of Inasra Technologies’ management.
The dispute between these two firms has been going on for several months. One of the Stayzilla founders, Yogendra Vasupal, was earlier arrested and put in prison for almost four weeks in a related matter.
Jigsaw, the operational creditor according to the NCLT order, has filed an application against Inasra Technologies, on account of default in payment of the outstanding debt to the tune of Rs 1.69 crore, along with an interest at 18 per cent per annum.
An order issued by Ch Mohmmed Sharief Tariq, member (Judicial) and S Vijayaraghavan, member (Technical), NCLT, Chennai, said that it is established that the Corporate Debtor has committed the default in making the payment of the outstanding deb along with interest.
Admitting the application, order added, “…we order the commencement of the Corporate Insolvency Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed.”
It has appointed an IRP to take charge the management of the startup and declared moratorium with effect from the date of the Order, which is September 15, on various aspects, till the completion of the process.
Vasupal said that he is shocked and speechless after the order. “One thing is for sure though. It is important for companies to be proactively litigous when they find any issues with vendors. As under this act, these vendors can become operational creditors and take the companies to insolvency,” he said.
“This act is draconian and biased against companies. It is a new act, so nobody’s fault but there will be casualties till it reaches a better balance, similar to Domestic Violence Act,” he added. It has raised funds from Matrix Partners, Nexus Ventures and others in the past, according to reports.
Despite the social media campaign and others, the NCLT order proves that Inasra Technologies owes money to Jigsaw, said Aditya C S of Jigsaw.
Jigsaw was engaged by the Inasra Technologies for various advertisement campaigns at different geographical locations through baggage tax, bill boards and bus shelters. The vendor has raised demand notice for the payment in May 8, 2017.
Inasra Technologies, in a reply, has denied the claim in the beginning and in the subsequent paragraphs levelled various allegations against Jigsaw including cheating, fraud and forgery of documents for making bogus claim. It also said that a criminal case is pending before the trial court on the same matter and the application cannot be considered till the issue is decided by the trial court.
The tribunal, observing that the pendency of the criminal case does not fall within the purview of the term ‘dispute’, rejected Inasra’s plea as devoid of any merit.
The issue came to the light after Stayzilla announced its plan to halt operations with its existing model, with plans to restart with a different business model.
Source: Business-Standard 