It has emerged that there was no legal contract drawn between both parties defining terms of the service, so Stayzilla might not be able to claim ‘deficiency of services’.

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Atom Stayzilla Saturday, April 08, 2017 - 20:18

It’s been nearly a month since Stayzilla co-founder and CEO Yogendra Vasupal was arrested for non-payment of dues and alleged fraud to vendor Jig Saw Advertising Solutions. After his bail plea was rejected by both a special magistrate court and a session’s court in Chennai, Vasupal has now appealed to the Madras High Court. As the bail appeal proceeds at a slow pace, it is now becoming evident that legally speaking, Vasupal could be on weak grounds to claim ‘deficiency of services’.

Stayzilla owes Jig Saw a sum of nearly Rs 1.7 crore for the advertising services provided by the latter. While Jig Saw’s owner Aditya CS has, in the past, produced proof of the amount owed, Vasupal, in his blog post the night before he was arrested, claimed that there was deficiency of services. “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 post says. But Stayzilla might find it difficult to prove it court.

Lack of a solid contract?

For starters, in order to make the claim of ‘deficiency of services’, there needs to be a formal agreement signed between both companies that define expectations of the service, which if not met, services can be called deficient. There was no Service Level Agreement signed between Stayzilla and Jig Saw Solutions, according to Aditya.

Early stage investor Vijay Anand says, “Since there were no terms of service defined, ‘deficiency of service’ is hard to prove - technically not even a point. If you are going to take these matters to court, if you don’t have things well defined and in black and white, the law won’t be on your side.”

The News Minute spoke to Vasupal’s wife Rupal, who, while neither confirming nor denying the existence of a legal contract, says that in the case of there being no valid contract between both parties, a court arbitration will be the right step for this. “Why does Aditya not let the court decide then? Why should a criminal case be filed?” she asks.

Stayzilla signed off on locations

With regard to the outdoor campaigns that are specifically said to be under dispute, Stayzilla claims that the placements of outdoor ads were not proper, thus rendering the campaign useless. But mails were sent to Stayzilla detailing every location and the schedule planned for execution on November 23, 2015. According to the mail trail viewed by The News Minute, Stayzilla responded in December with purchase orders for the same. Post this, the outdoor campaign was executed and an invoice was raised by Stayzilla.

Two invoices were raised by Jig Saw on April 4 for the outdoor ad campaigns. The invoice clearly states that all payments are to be made within 30 days from the end of the campaign. It also states that all queries and disputes pertaining to billing shall be sent to Jig Saw Solutions within seven days from the date of receipt of the invoice.

In fact, Stayzilla even made a payment of Rs 22.9 lakh to Jig Saw for printing and installation of outdoor ads. “The payment for printing and installing in the approved locations was given to me. Rental, however, they have cheated me with. If they have paid me for installation, how can they claim deficiency of services?” questions Aditya.

When a payment is made after a detailed plan is sent and approved by the company, a claim of deficiency of services holds no ground, says Aditya. Ideally, Stayzilla should have raised an issue back in November 2015, when the first mail with a detailed plan was sent to them, experts point out.

The only communication made by Stayzilla that may even point towards a dispute is the mail CFO Sanchit Singhi sent to Aditya on when and how they would clear his payment. “On the billboard campaigns, I need to discuss internally and revert on this later,” the mail reads. No proof was presented by Stazyilla’s counsel to validate its claim of deficiency of services during the case either, according to Aditya. Further, out of the Rs. 17 crore owed, Stayzilla still owes its vendor Jig Saw a sum of nearly one crore rupees for baggage tags, for which there seem to be no deficiency raised so far.

In fact, as reported earlier by The News Minute, an audit confirmation letter was given to Jig Saw acknowledging a balance of Rs 1.6 core.  

Rupal says that there was a dispute with regards to the performance of the hoardings, which was communicated to Aditya by CFO Sachit Singhi. When asked for the proof, she said she will not reveal them. “We have reserved proof of these mails for the court and let the court decide,” Rupal says.

Jigsaw intimidating me, says Vasupal’s wife

Rupal also claims that Jig Saw has been intimidating Rupal and her family for an out-of-court settlement. Claiming this to be an ‘extortion tactic’, Rupal says that they will not settle and will take the legal route.

However, Aditya has refuted these claims, saying he did not approach anyone for an out-of-court settlement. “But if they are willing to pay my dues, yes, I will withdraw my complaint,” Aditya says, adding that a few mediators spoke to him regarding withdrawing the complaint if his dues are paid.

What’s further interesting is that Aditya claims that Stayzilla’s lawyers approached his lawyers for a settlement. “I asked them to write to me. She introduced me to someone named Ravindra over email who wanted to facilitate settlement. Ravindra said he will convince my vendors that Stayzilla will take up liability directly but won't pay any money or give any cheques. But their offered failed,” he adds.

To this, Rupal maintains her stand there is no question of a settlement with a criminal case on Yogi. “This has been the stand from the beginning. We or our lawyers haven't digressed. Mediators do connect to facilitate this for Aditya and eventually fall out once they are apprised of Aditya's intentions,” she says.

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