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Snapdeal’s cup of woes: Online seller files police complaint, alleges fraud

02 May, 2017

Even as beleaguered e-commerce firm Snapdeal inches closer to a merger with rival Flipkart, several online sellers have complained against non-payment of dues by the company.

In the latest such incident, Bangalore-based apparel-seller Rajdhani Cotton has filed a petition with the commissioner of police, Delhi against Jasper Infotech Pvt. Ltd, the company that runs Snapdeal, and its founders Kunal Bahl and Rohit Bansal. The seller has alleged 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”.

According to Rajat Gupta, one of the promoters of Rajdhani Cotton, Snapdeal said the seller’s claims regarding the unpaid dues were not in reconciliation with its books of accounts. The e-commerce company had earlier said, he alleged, that it did not posses the statement of accounts related to the transactions under dispute. Rajdhani’s petition accused Snapdeal of using false and fabricated documents and electronic records to substantiate its incorrect claims.

“Such an accusation is not an isolated incident. We have accumulated similar data from our members where due to data and technical problems, more than Rs 1.5 crore of over 100 members is left due at Snapdeal. All cases have been duly raised by the sellers. Due to Snapdeal’s inefficient systems, sellers are forced to take legal remedy. We approached the commerce ministry with specific inputs on the Snapdeal issue. However, they failed to take any steps to bring accountability to the system” said a spokesperson for the All India Vendor Association (AIOVA).

A Snapdeal spokesperson said in response to queries from VCCircle: “All seller dues are paid/settled as per their payment cycle. Amounts/issues under occasional disputes are settled through a dispute resolution process which operates in accordance with the laws of the land.”

“The specific case cited by you is being dealt with as per the contractual terms of the agreement with the seller, as is the norm,” the spokesperson added.

Since Snapdeal’s troubles became visible earlier this year, various vendors have raised concerns around payment of dues by the company.

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 also owed it dues.

In February, a group of sellers from Snapdeal-affiliated AIOVA approached commerce minister Nirmala Sitharaman to complain against piling dues at the troubled e-commerce firm. According to the complaint, Snapdeal held Rs 300-400 crore in the form of outstanding dues and goods in transit/refunds.

In March, nearly 100 Snapdeal sellers associated with its capital-assist programme got a notice from State Bank of India, asking them to trim their outstanding loans above their drawing power. In the same month, Axis Bank withdrew sanctioned credit limits to a number of Snapdeal sellers and asked them to repay their outstanding dues immediately.

Snapdeal, which trailed competitors Flipkart and Amazon by a margin in horizontal e-commerce, has seen falling investor confidence, a consequent fund crunch and huge losses, forcing it to undertake a massive downsizing exercise that saw the company reduce headcount from 8,000 to around 2,000. The company’s lead investor SoftBank is currently looking to salvage its investment by merging it with rival Flipkart, a deal that is likely to be closed over the coming few days. VCCircle first reported that Snapdeal was exploring a merger with Flipkart.

Snapdeal’s troubles have turned out to be a big concern for hundreds of online sellers associated with the firm. Earlier, the shutdown of e-commerce firm AskMe had left many sellers in a lurch, leading some of them to lodge cases against the board members of the firm.

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Snapdeal’s cup of woes: Online seller files police complaint, alleges fraud

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