A Delhi court has directed founders of e-commerce firm Snapdeal to respond by August 31 to allegations of cheating with regard to the ideation of the marketplace model it currently operates.
Snapdeal co-founders Kunal Bahl and Rohit Bansal, and former senior vice president of finance Vijay Ajmera were summoned by the court on May 17 after former entrepreneur Gaurav Dua accused Ajmera and Bahl of copying his marketplace concept on the pretext of collaborating with him.
In 2005, Dua had started an e-commerce firm called Indianretail.net, which allowed offline retail brands to sell on the Internet. The company was a refined version of another online retail venture that Dua floated in 1999, called Marketsindelhi.com. Dua claims he also applied for a patent on the said business model in the middle of 2007, and he got the certificate in January 2008.
Dua says he met Ajmera at broadcast firm NDTV Convergence, where both used to work before Ajmera left for Snapdeal. In 2010, Ajmera helped him create a business plan for the purpose of fund-raising and, in the process, gained access to the idea, Dua claims. According to him, Ajmera interacted with him for nine months over 2010 and 2011 to extract trade secrets.
Dua further claims that Ajmera made him meet an investor with doubtful credentials in January 2011, but Dua didn't divulge many details. Ajmera, however, said the investor 'Yogesh' needed more clarity to invest, Dua says.
Snapdeal, run by Jasper Infotech Pvt. Ltd., pivoted from a deals and coupons site to a marketplace in September 2011.
“Snapdeal.com was operating as a daily deals site, an absolutely different business model. However, Ajmera, Bahl and Bansal used the opportunity to launch a new business based on my plans, which they had fraudulently taken from me,” Dua says.
Dua claims that when he confronted Ajmera on the matter, the latter offered compensation and a job at Snapdeal with stock options. “Between 2011 and 2014, they said they would help me raise funds, and that I could get a job with stock options as compensation,” he says.
However, when communication from Ajmera and Bahl started getting infrequent, says Dua, he became suspicious and realised he had been defrauded.
“We went to police in December 2014 but they did not do anything. Then, we went to court and it asked the police to submit a report...Then the trial happened. Four months down the line, the court also took cognisance of cheating under Section 417,” he says.
The first plea, for cheating, fraud and intellectual property rights (IPR) infringement, was rejected by the court in December 2016.
“IPR infringement was on part of Snapdeal and not others [other e-tailers], as they have evolved the model to suit themselves....But they [Snapdeal] have extracted from me how to go about it in a criminal fashion,” Dua says.
Dua then filed a fresh petition for cheating, fraud and breach of trust in March 2017, which the court accepted.
“The allegations made in the revised petition filed by Mr. Gaurav Dua are absolutely baseless and devoid of any merit. A previous complaint filed by Mr. Dua in this regard has been dismissed by the competent court and was found to be baseless and without any merit...The revised petition is an abuse of the process of law and has been filed with malicious intent to harm the reputation of the named individuals. The company intends to take all legal remedies against Mr. Dua in this regard,” a Snapdeal spokesperson said.
Indianretail.net is not functional anymore. Dua now works as a consultant for multiple projects. Prior to this, he also worked as chief marketing officer at roadside assistance provider Cross Roads India.
After spending six years at Snapdeal, Ajmera left the e-tailer in June 2016. He is currently co-founder and CEO of FundsCorner, a digital lending platform that provides working capital to small businesses, his LinkedIn profile shows.
The hearing comes at a time when the beleaguered e-commerce firm is already grappling with numerous seller complaints, and a merger with Flipkart seems imminent.
Last week, VCCircle reported that scores of seller disputes can be traced to data discrepancies in Snapdeal’s seller management function, including data loss and technical bugs.
Prior to that, Bangalore-based apparel-seller Rajdhani Cotton filed a petition with the commissioner of police, Delhi, alleging that that the e-commerce marketplace owes it Rs 67.6 lakh for business transactions between April 2014 and April 2016, but it has withheld payments “in a fraudulent manner.”
Last month, 11 Snapdeal executives, including co-founder Kunal Bahl, were summoned by a Bangalore metropolitan court over a complaint filed by an events company. Dream Events, which runs Bangalore Fashion Week, alleged that the e-commerce firm violated a financial contract and owed it dues.