The twists and turns in Rahul Yadav's 4B Networks saga continue, with an advertising agency now filing a complaint against him alleging that he used deceptive practices, resulting in unpaid dues for services rendered amounting to Rs 10 crore.
A first information report (FIR) has been registered by the Mumbai police against Yadav and Sanjay Saini of 4B Networks for cheating. The complaint was filed by Vikas Om Prakas Nowal at the Economic Offences Wing, Mumbai. Nowal's Interspace Communication Private Limited carried out an advertising campaign for Yadav's 4B Networks.
The charges in the FIR are under Sections 406 (Punishment for criminal breach of trust), 409 (Criminal breach of trust), 420 (Cheating) and 34 (Acts done by several persons in furtherance of common intention) of the Indian Penal Code.
Sources close to the development say that a lookout notice has been issued against Yadav.
According to the FIR, Interspace put up a total of 83 advertisement hoardings at different places in Pune from April to August for a campaign that 4B Networks had run. Interspace also generated 14 invoices for the work completed and sent them to 4B Networks. Yadav and Saini did not raise any dispute, but the payment was not made. The FIR alleges that while a few payments were made in the beginning, the company refused to pay later on.
The unpaid dues for a year’s worth of services rendered amount to Rs 7.3 crore. With interest, the total amount stands at Rs 10 crore.
Nowal first approached the National Company Law Tribunal, and then went to the cops.
Queries sent to Yadav were unanswered at the time of publishing.
This is not the first time that Yadav has been accused of such practices. Employees and other vendors have accused him of non-payment of dues and salaries, even though he has repeatedly raised money from Info Edge for this purpose.
Info Edge, which owns more than 59 percent of the company, wrote down its entire investment of Rs 288 crore in the startup. In fact, after the investment of Rs 276 crore that Info Edge made was exhausted, the company had given Rs 12 crore in debt financing to the company to pay employees and vendors — which too wasn’t done.
A forensic audit was initiated by Info Edge after this, but according to a stock exchange filing, Yadav did not provide details here too. The audit was initiated after 4B Networks, under Yadav, failed to provide the company with information about operations and management, details and particulars of financial transactions, and transactions with related parties, which it says it was contractually obligated to receive.
Info Edge approached the Delhi High Court, and two companies went into arbitration last week as mandated by the court.
4B Networks was started in November 2020 by Housing.com founder Yadav, and was created to enable real estate developers and brokers to communicate with each other and conduct their business through its platform. It also helped in loan origination for end consumers.
Info Edge founder and executive vice chairman Sanjeev Bikhchandani recently said that investing in 4B Networks was a mistake.
The Delhi High Court order states that 4B Networks and Yadav “shall not sell, transfer, alienate, encumber or otherwise create any third party rights or interest directly or indirectly in the assets and properties” of 4B Networks. It also requires them to preserve all books, records, accounts, databases, servers, any other devices, documentation or information till the application for interim measures of protection by the arbitrator.
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