Yogendra Vasupal, the CEO of hotel room aggregator Stayzilla, which shut down last month, has been arrested over cheating charges by a firm called Jigsaw Advertising.
Vasupal who had announced the halt of his firm's operations last month was arrested in Chennai on complaint by Jigsaw over the pending dues of almost Rs 1.7 crore.
Rupal Yogendra, wife of Yogendra Vasupal who co-founded Stayzilla, has said that he was taken to the magistrate around 10 pm on Thursday.
Rupal's statement came after Sanchit Singhi, co-founder of the startup sent an email asking investors to help Vasupal who could not be contacted after the arrest.
His last location was tracked at the commisioner of police department, Singhi claimed in the email, the Economic Times reports.
Vasupal was arrested after he wrote a detailed blog about two separate cases he was involved in.
While the second case was about Jigsaw, the first case was pertaining to a 'politically influential' landlord in Bangalore who had allegedly threatened Vasupal and his staff.
He wrote: "We had been working out of our office in Bangalore for roughly a year. When we got to know in end of January that the next 3-5 weeks was going to be touch and go, we thought it would be better to sit down with the landlord and explore various options and prepare for contingencies."
"In the initial meetings I had to bear a lot of verbal insults of being called a failure multiple times and how a failing company is destroying the reputation of his building... He assaulted my admin staff in front of me threatening to kill him with the revolver in his car." Vasupal also embedded a video in his blog to corroborate his claim.
Vasupal's wife, Rupal updated Vasupal's same blog post after his arrest. She wrote: "Yogendra has currently been remanded in Police custody without any confession."
"He was taken to the magistrate at 10.00 PM though courts do not function after 6 PM. His whereabouts from when the cops took him into custody today from 11.am to 6.00pm were not known and the lawyer and our family had to go from one station to another looking for him. This shows how money and influence can supersede true and thorough investigation in a country which talks so much about start-ups and culture."
Citing an 'inaccurate' media report, Rupal said she wondered if the arrest had "anything to do with Jig Saw Solution". She claimed that the owner of Jigsaw is "part of the press" and could be wielding his influence.
Started in 2005, the Chennai-based online hotel room aggregator decided to wrap up operations last month because of intense competition in the market.
The company raised about $34 million with investors like Matrix Partners India and Nexus Ventures Partners in its four rounds of funding.