CII supports Stayzilla, says failed start-ups should not be dealt under criminal law

CHENNAI-BASED homestay start-up Stayzilla that shut down its operations last month has found backing from the Confederation of Indian Industry (CII) in the recent case, where the start-up’s co-founder and CEO, Yogendra Vasupal, was arrested on Tuesday by Central Crime Branch (CCB) personnel in Chennai after a complaint from Jigsaw Advertising over payment dues of around Rs 1.72 crore. CII said that failed start-ups “should ideally be treated by a separate ‘exit/bankruptcy law’ or ‘civil laws’, and not ‘criminal laws’".

“The legal developments around Yogendra Vasupal, founder of Stayzilla, is disturbing. The nature of the accusation invoked against Stayzilla, i.e. non-payment of dues, essentially falls in the domain of civil disputes and not under criminal charges, unless it is done with an intent of cheating. Start-ups are prone to all kind of financial vulnerabilities/stress as like any other business, and such examples of criminal proceedings against start-ups creates fear in the minds of aspiring entrepreneurs in the country,” said Kris Gopalakrishnan, chairman of CII’S Start-up Council.

Following the developments, founders of several start-ups including Flipkart, Mobikwik, Snapdeal,andinmobicameoutin support of Vasupal. “Let the law takeitscourse,butintimidationof #stayzilla founders crosses a line. It's unhealthy for entrepreneurship in India. We stand together with entrepreneurs. @Pmoindia, #Startupindia needs your support!” Flipkart co-founder Sachin Bansal had said in two tweets.

Nasscom Board member Ravi Gururaj also backed Vasupal on Twitterandsaid:“disappointed+ distressed@heavyhandedtactics against @Yogivasupal Stayzilla. Totallyunacceptable.alertingauthorities requesting help!”