Amid a series of legal cases and allegations, Rahul Yadav and Sanjay Saini, co-founders of the beleaguered 4B Networks, have turned to a Mumbai Court in a bid to secure anticipatory bail. This move follows a First Information Report (FIR) filed by Vikas Nowal, the country head and co-founder of Interspace Communications, against Yadav for purported fraud and cheating in collaboration with the Economic Offences Wing (EOW).
Sources from CNBC-TV18 report that Yadav and Saini are seeking anticipatory bail in connection with the FIR, which alleges criminal breach of trust and fraud amounting to INR 10 crore ($1.34 million). The FIR invokes sections 406, 409, 420, and 34 of the Indian Penal Code. The Mumbai police is expected to contest this anticipatory bail application.
The co-founders have been under interrogation by the agency for several days. Throughout the questioning, both Yadav and Saini consistently assured the agency that they intended to fulfill the owed payment to Interspace. However, they have refrained from disclosing the reason for the initial default.
The controversy revolves around the advertising agency Interspace Communications, which was empaneled by Broker Network to conduct outdoor ad campaigns in February 2022. The FIR claims that Interspace installed 83 ad hoardings in Pune between April and August 2022. Vikas Nowal alleges that Broker Network defrauded Interspace by failing to make the INR 10 crore payment for the ad campaigns conducted in 2022.
This situation was initially brought to public attention in June this year, when it was reported that Interspace was one of the vendors that had not been paid by the troubled startup.
Coincidentally, during the same period, the Delhi High Court, while addressing an arbitration case filed by Innov8, a coworking space provider, noted that 4B Networks had lost the right to respond to the matter. The forfeiture of this right occurred due to the startup’s failure to file a response despite being granted a “last opportunity” to do so. This pertained to the unpaid rent of INR 1.08 crore owed to Innov8.
Adding to the challenges faced by Broker Network, it is currently entangled in another arbitration process involving its investor, InfoEdge. After investing INR 288 crore in the startup led by Rahul Yadav, InfoEdge had to write down the investment due to allegations of financial misconduct.
This situation escalated when Yadav declined to disclose details of financial transactions and related-party activities during a forensic audit initiated by InfoEdge, ultimately leading to formal arbitration proceedings. The investor has also engaged the Delhi High Court in a legal dispute against Yadav and Pratik Choudhary, both parties to the shareholders’ agreement of 4B Networks. Info Edge has revealed that the High Court has directed Yadav and Choudhary to refrain from selling, transferring, or alienating any assets or properties of 4B Networks and to preserve all relevant records and information.
