Info Edge invested INR 276 Cr as equity investment as well as INR 12 Cr as bridge funding and the entire amount has been attached in the complaint
It’s imperative to note that the complaint filed on August 22, 2023 has not yet been registered as an FIR by the EOW
The investigation agency is probing another case involving Broker Network and Rahul Yadav in an FIR filed by Vikas Nowal
Internet giant Info Edge has filed a complaint with the Economic Offences Wing (EOW) of Mumbai Police against Broker Network founder and former Housing.com cofounder Rahul Yadav over alleged cheating to the tune of INR 288 Cr.
Besides Yadav, the EOW complaint names 4B Networks Private Limited, and cofounder and director Pratik Chaudhary as well as Devesh Singh (Yadav’s brother-in-law), Yadav’s wife Karishma Khokhar, and RY Advisory LLP, the partnership firm which was set up by the Broker Network founder.
Key employees and business heads involved with Broker Network such as Sanjay Saini, Vivek Jagtap (former CTO), Ashish Chandna, and Manish Agrawal have been named as co-accused in the complaint.
It’s imperative to note that the complaint filed on August 22, 2023, has not yet been registered as an FIR by the EOW. A copy of the complaint, seen by Inc42, is signed by Allcheckdeals India Private Limited’s Amitendra Singh Antal, Info Edge’s senior lead counsel. Allcheckdeals is an Info Edge subsidiary created to invest in startups.
Sources close to Broker Network and Info Edge corroborated its existence, but Info Edge declined to respond to questions about the complaint.
Overall, Sanjeev Bikhchandani-led Info Edge invested INR 276 Cr as equity investment as well as INR 12 Cr as bridge funding to pay employees and vendors, through Allcheckdeals. Info Edge has attached the entire amount in the complaint.
The complaint has been filed for the alleged commission of offences under Sections 415, 418, 420, 405, 406, 411, 421, 422, 424, most of which deal with cheating and dishonesty, concealment of properties, as well as misappropriation of funds.
Besides this, Mumbai Police’s EOW is probing another case involving Broker Network and founder Yadav, which has been registered as an FIR.
Info Edge Vs Rahul Yadav: Financial Web Untangled
Many parts of Info Edge’s complaint deal with the transfer and routing of funds as exposed by Inc42’s original deep investigation into the financial web created by Yadav at Broker Network. Several key former employees at the company pointed out the syphoning of funds and invested capital by Yadav as well as many of the others named in Info Edge’s complaint.
For instance, the criminal complaint points to the use of related entities such as RY Advisory, Aceuser Private Limited, Kult App Private Limited and 4B Realtech Private Limited, all of which figured in Inc42’s original investigation in June this year.
Further, the complain names E-Cipher Technologies LLP, Rush Techmart Solutions Private Limited, and Switchme Technologies and Services Private Limited, as being part of the alleged syphoning and routing of funds.
Much of the syphoning has been alleged to have been done as part of payments to vendors as well as loans against advance salary taken by key employees, who soon quit the company. The loan amount has been alleged to have been transferred either to Yadav or the companies named above and other entities controlled by Yadav and/or his family.
“From December 2022-January 2023, the Accused no. 2 [4B Networks] advanced a loan of Rs. 10,00,00,000/- to 4B Realtech. The Complainant company [Allcheckdeals] has reasons to believe that a substantial amount from such loan was transferred by 4B Realtech to Aceuser Pvt. Ltd,” Info Edge alleges.
The Noida-headquartered internet giant also claimed to believe that transactions were made with a view to deliberately moving money from 4B Networks through multiple entities. Even as the complaint lists a range of allegations, it also hints at a more extensive network of questionable transactions.
“The transactions are not isolated incidents but rather part of a larger pattern of illegal, suspicious, and unwarranted activities. We strongly suspect the involvement of the accused persons and other parties in a broader range of similar transactions,” the complaint reads.
The EOW complaint comes after Info Edge claimed Yadav and others at Broker Network have been uncooperative in forensic audits of the company’s books and financials, after the company wrote off the entire investment in Broker Network. This led to an investigation into the books and accounts by Info Edge, which also empanelled a Big Four audit firm to look into the books and cash flow.
The alleged resistance led to legal proceedings before the Delhi High Court and an arbitral tribunal. Those arbitration proceedings are still pending, and as per sources close to Info Edge, the EOW complaint has been filed to account for the possibility that those proceedings might not yield results for Info Edge.
Rahul Yadav’s Second Brush With EOW
While the eventual fate of Info Edge’s complaint is uncertain as the EOW has not yet registered an FIR, the agency’s Mumbai wing is probing another case involving Broker Network and founder Yadav.
The FIR filed by Vikas Nowal, country head and cofounder of Interspace Communications, has been registered under sections 406, 409, 420, 34 of the Indian Penal Code. The EOW at Mumbai Police had issued a lookout notice against Yadav in August, and his bank account is said to have been frozen, with searches conducted at his residence.
Interspace Communications is an advertising agency that was empanelled by Broker Network to carry out outdoor advertising campaigns in February 2022. In his FIR, Nowal has alleged that the company has defrauded Interspace, which is owed INR 10 Cr by Broker Network (4B Networks) for the activity undertaken in 2022.
The FIR claims that a total of 83 ad hoardings were installed by Interspace in Pune from April to August 2022. The issue is related to Broker Network having multiple vendors for several activities but not paying their invoices till date, more than a year after the work was completed.
At the moment, it’s not clear whether these two cases will be combined and investigated as one by the Economic Offences Wing. Sources close to Info Edge did not offer much clarity on any approaches by the EOW, but told us that the agency has been given access to all books and documents related to the Broker Network.