Based on an application filed by a financial creditor of Rahul Yadav’s 4B Networks, the National Company Law Tribunal, Mumbai has initiated insolvency proceedings against the Info Edge-backed realty tech startup.
As such, a moratorium has been imposed against the continuation of pending legal proceedings against 4B Networks, its investor Info Edge said in a BSE filing on January 19.
However, Info Edge also said that the proceedings against 4B Networks founder Rahul Yadav and senior executive Pratik Choudhury will continue.
“We are analysing the implications of this development, exploring available remedies, and considering appropriate legal steps to be taken, as advised,” Info Edge said.
Info Edge had filed a complaint with the Economic Offences Wing (EOW) of the Mumbai police over an alleged cheating of Rs 288 crore, its investment value. It accused 4B Networks, Rahul Yadav, and other senior executives of financial irregularities and embezzlement of funds.
The Mumbai police had, in August, filed a first information report (FIR) based on a different complaint against Yadav and Sanjay Saini of 4B Networks for cheating. The complaint was filed by Vikas Om Prakas Nowal at the EOW, Mumbai. Nowal's Interspace Communication Pvt Ltd carried out an advertising campaign for Yadav's 4B Networks.
Employees and other vendors have accused him of non-payment of dues and salaries, even though Yadav has repeatedly raised money from Info Edge for this purpose.
A forensic audit was initiated by Info Edge but Yadav did not provide details. 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 in August as mandated by the court.
The investor has suffered a total loss of Rs 532 crore from writing off its investment in Rahul Yadav’s proptech startup, it had disclosed in a note to investors during the quarterly results announcement on November 7.
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