Flipkart's Sachin Bansal expresses solidarity with Stayzilla CEO

The logo of India's largest online marketplace Flipkart is seen on a building in Bengaluru, India, April 22, 2015. After losing top engineering talent for years to America's tech heartland of Silicon Valley, India is luring them back as an e-commerce boom sparks a thriving start-up culture, unprecedented pay, and perks including free healthcare for in-laws. Picture taken April 22, 2015. To match INDIA-ECOMMERCE/WORKERS. REUTERS/Abhishek N. Chinnappa - RTX1BBUK

India's top investors and startup CEOs came to express solidarity with Stayzilla founder Yogi Vasupal who was arrested this week on complaints by vendors of non-payment of dues. Vasupal remains in police custody as the lawyers could not apply for bail in time today.

Flipkart's co-founder Sachin Bansal tweeted saying “Let the law take its course, but intimidation of #stayzilla founders crosses a line. It's unhealthy for entrepreneurship in India.”

The Indus Entrepreneurs (TiE), a global entrepreneurs organisation also backed Stayzilla CEO. In a statement, R Narayanan, President, TiE Chennai said that: “The recent arrest of Yogi, perfectly shows the stiff resistance that the eco-system and the players are displaying when it comes to ‘change’."

“We have a situation which has reared its ugly head and promises to send Tamil Nadu back to the medieval period,” he added.

Various startup CEO and investors from firms such as Matrix Partners, MobiKwik, Freshdesk and others have already expressed their support for Vasupal on social media.

"There are challenges in every business and startups have more than their fair share. It is imperative that the legal and regulatory framework supports and encourages new ventures to emerge and scale. Unlawful treatment in such situations will trigger a sense of fear in young minds and puts the brakes on the Startup India dream," Indian Angel Network issued a statement on the matter. IAN is one of the early investors in Stayzilla which had invested in 2012.

Chennai-based online homestays aggregator, Stayzilla shut down its operations last month due to tougher competition from bigger rivals and a tighter business environment.

The internet and mobile association of India also expressed concern over his arrest. In a statement issued today, the Internet and Mobile Association of India (IAMAI) urged the Tamil Nadu Government to release Vasupal, and withdraw the FIR against him.

"Such a criminal case against a signatory of a corporate private limited company for a corporate liability is unprecedented and unheard of. Previously, for similar cases such as the one involving ‘Askmebazaar’ the founder was not criminally charged as an individual. If this becomes a norm, then the start-up ecosystem in India will suffer," said a statement by IAMAI.

As per a blog post earlier written by Vasupal and posted this week, his cofounder Sachit got veiled threats to his child's safety in the form of some scary dolls delivered to his home on March 9 with the image of his son. The company was shut down last month, and the CEO was booked on charges of non payment of dues to its vendors on Tuesday night.