What is the entire Stayzilla controversy?

In this image is a logo of Stayzilla, a hotel aggregator startup. Photograph:( Others )

WION New Delhi, Delhi, India Mar 17, 2017, 10.02 AM (IST)

In what goes on to be another unfortunate event in the world of Indian startups, the controversy around hotel aggregator startup Stayzilla and the arrest of its founder Yogendra Vasupal has raised more concerns about the fate of Indian startup culture.

It all began early this week, when Stayzilla founder Vasupal, on Tuesday, was arrested by the Chennai police over fraud charges and non-payment of dues. Vasupal was arrested after Jigsaw Advertising, one of Stayzilla’s vendors, lodged a complaint against him citing unpaid dues worth Rs 17.2 million ($262,000).

The dispute between Stayzilla and and the advertising company had been taking place for quite some time, and Vasupal kept an account of events that transpired in the last few weeks between the two of them. But after Vasupal was arrested on Tuesday, his wife and Stayzilla co-founder Rupal Yogendra made the post public by publishing it on blogging platform medium.com, asking everyone for help.

“Help! I need everybody…If you are seeing this line, it means that the pre-saved draft was published without the time to remove a line. Likely, because I am under duress with no time to edit,” the blog started with these lines.

Vasupal, in the same blog post, also included the video and audio files of assaults and verbal threats by the advertising company.

But ever since the arrest of Vasupal, the startup community has come together in support of the company’s founder and has taken it to Twitter to show their solidarity with Stayzilla. Various startup founders including those of Flipakrt and Snapdeal have condemned the arrest, calling it a blow to India’s startup dream.

Here’s what budding entrepreneurs, successful startups, and other concerned said in support of Stayzilla.


Karnataka IT Minister Priyank Kharge also tweeted saying, “Spoke to TN IT Pr Secretary Mr. Ramchandran on @stayzilla issue. Have asked his intervention on the merits of the case & do the needful”.


People in the startup community are upset by the fact a business dispute like this shouldn't have led to Vasupal's arrest; it instead should been treated as a civil case.

“A default on payment is usually a civil case unless there is an intention to cheat, wherein it would become a case of defraud and can attract criminal complaints,” ET quoted corporate lawyer Vaibhav Parikh of Nishith Desai Associates as saying, adding, “Usually, a civil case, even for a small amount of non-payment, can stretch for years, which is why it is now becoming a norm to file criminal cases for defraud.”

Vasupal’s  story is similar to other stories of failed startups where businesses collapse as the fundings dry up. Failing to sustain, Vassal, last month, had announced the it would bring a halt to the operations of Stayzilla in its current form and would look to reboot it with a different business model.

Stayzilla, which aimed to become India’s answer to Airbnb, was co-founded in 2005 and was earlier known as Inasra.com. It was later rebranded as Stayzilla in 2010. Unlike popular OTAs like MakeMyTrip which offer both ticket booking and hotel reservation, StayZilla focused solely on room bookings.