More Lawsuits as Snapdeal Investee GoJavas Sued for Crores
Criminal case filed against Snapdeal founders and GoJavas directors; Snapdeal decisions have led to crores worth unpaid bills to smaller vendors who can't afford late payments.
Photo Credit : BW Businessworld,
A legal case for cheating has been filed against Snapdeal we heard.
A Snapdeal spokesperson when requested for comment on media report said, "The Company is yet to see the complaint filed against it. The Company will take all appropriate legal steps to defend it and its employees against all baseless allegations."
We want to believe this is the only case against Snapdeal. But it isn’t.
Amit Bajaj’s company, Mituj Marketing Pvt. Ltd. had been providing air freight services to GoJavas. GoJavas is a logistics provider and investee of Snapdeal. GoJavas has not been able to pay their bills because Snapdeal hasn’t been paying GoJavas. Now Amit and three other suppliers are going to courts against GoJavas. One of the companies has filed a criminal case against the GoJavas directors Anand Rai, Praveen Sinha, Kunal Bahl, Rohit Bansal, Rahul Rai and others.
Recently it was reported that GoJavas had sold a part itself to Pigeon Express. That may sound like Snapdeal’s monetary obligations to GoJavas had lessened. Not really. Amit explained, “It wasn’t a 100 percent buy out. Snapdeal is still the single largest shareholder in GoJavas with a stake of between 44 to 49 percent. Anand Rai and Rahul Rai of Pigeon Express has around 51 percent in GoJavas now.”
GoJavas has only so far filed the change in directors with RoC. The company hasn’t recorded the change in shareholder pattern with RoC (Registrar of Companies) as yet, so the exact stake break down is yet to be known.
“GoJavas stopped paying us around September 2016 for the services we were providing. Bills amounting to Rs.1.84 crore are due. We were in regular meetings for this, and then one day GoJavas admitted they can’t pay us because Snapdeal hasn’t paid them,” Amit said.
Here's an excerpt from legal notice sent by Amit's legal reps to GoJavas' parent company, QuickDel Logistics:
The source of vexation is clear.
Amit continued, “I have never come across an incident like this in my two decades as a businessman. This has been the worst case. We managed to stay afloat but it has been tough, we had to downsize and cut jobs to avoid shutting down. Rs.1.84 crores is not a small amount. This is a considerable amount for a medium scale business like ours. One crore is a normal man’s entire life savings.”
It’s not just Amit’s company. Three other companies providing similar services, No. 1 Worldwide Express, Mudita Express Cargo, Monopoly Carriers & Cargo haven’t been paid either. The companies are now going to courts. The four companies have served notice of the civil suit to get their dues back. Monopoly Carriers & Cargo has also filed a criminal case against GoJavas directors which include Kunal, Rohit and Anand in the Nagpur civil courts.
According to the new article of association, Anand Rai acts as the face of GoJavas; he indemnifies and absolves all past GoJavas directors of any responsibility. It’s perhaps an added point of frustration for vendors just trying to get their dues back.
The hassle of collecting dues is normal in a business, lawsuits for unpaid dues is also common. It maybe that the news is sensationalized purely because it’s Snapdeal and it’s a unicorn and it’s a startup - all trendy topics to talk about.
However, another B2B supplier who wished to be unnamed said, other vendors working with Snapdeal say they have been weary for a while about doing business with such ecommerce companies and will only do so under rigidly structured negotiations.
“I have been in business for 20 years and have always managed to conduct business ethically. We do business with large corporates and other startup ecommerce platforms – they are always ethical in their dealings," said an emphatic Amit.
Things only seem to be getting sticky from there as Amit says he has no idea when the bills will be settled. The matter is coming to a point where the Domestic Air Cargo Agents Association is taking up the matter with GoJavas and Snapdeal.
“We will be weary of what startups we work with hereafter. Startups are celebrated, but are running loss making businesses. What happens when they are unable to raise more funds? Small businessmen will lose their life savings.” The last defense left against bleeding unicorns seems to be the legal route as Amit concluded, “The Government has to protect small businessmen who collectively give employment to thousands.”
The likes of Snapdeal set the ball rolling for Startup India. These ecommerce pioneers built the startup kingdom. Let’s give them that.
But it’s time. We’ll just have to accept that being a superstar entrepreneur doesn’t necessarily mean one will also have the gift of basic business acumen.
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