Karnataka HC Restores Lawsuit Filed By Town Essentials Against BigBasket

In a relief for Town Essentials, the Karnataka High Court (HC) has ‘restored’ the lawsuit filed by the B2B supplies platform against Tata-backed grocery delivery giant BigBasket.

Reigniting a three-year-old dispute, the HC set aside the ruling of a commercial court in Bengaluru that directed Town Essentials and DailyNinja to take the matter to arbitration, The Economic Times reported.

The matter has been listed for next hearing on June 12, 2023.

“The impugned order (of the commercial court) is set aside and the application filed under Section 8 of the Arbitration and Conciliation Act is dismissed. The suit is restored. The parties are directed to appear before the trial court on June 12, 2023,” Justice Sreenivas Harish said in an order dated May 24.

BigBasket declined to comment on Inc42’s queries on the matter. 

However, the ET report cited Town Essentials director Amar Krishnamurthy as saying, “We are glad that the high court has restored the suit filed against BigBasket entities. All efforts made by BigBasket to wriggle out of its obligations is turned down and now, based on the directions of the HC, the suit is listed on June 12, 2023 and Town Essentials will press its application for injunction against BigBasket.”

Stage Set For Legal Tangle

At the centre of the dispute is the acquisition of micro-delivery platform DailyNinja by BigBasket in March 2020. In its lawsuit, Bengaluru-basedTown Essentials has alleged that it entered into an exclusive contract with DailyNinja in October 2017 to offer sourcing, warehousing and backend supply of items for the micro-delivery platform. 

Town Essentials has claimed that BigBasket, post the acquisition, began moving the customers of DailyNinja to its own platform BBdaily ‘without keeping Town Essentials in the loop’. The petition before the HC further claimed that this caused a major loss to the B2B supplies platform. 

Subsequently, Town Essentials knocked on the doors of a commercial court in August 2021, which referred both players to arbitration for resolution by July 2022. Fearing that the arbitration would not cover BigBasket primarily due to its contract with DailyNinja, the B2B procurement startup approached the HC in August 2022, which eventually entertained its plea. 

Town Essentials wants BigBasket as part of the proceedings largely because without the Tata-owned company in the midst, the B2B procurement platform would be left fighting a company with no assets or revenues as BigBasket has taken over most of DailyNinja’s customers.

In its plea, Town Essentials has sought a temporary injunction on BigBasket from operating any micro-delivery business. The company has also sought damages to the tune of INR 36.22 Cr and directions to BigBasket to procure all supplies from Town Essentials till the case is disposed off.

Town Essentials has named BigBasket cofounders Hari Menon and Vipul Parekh as a parties to the case. Besides, the parent and other allied companies of the Tata-backed online grocery giant, Supermarket Grocery Supplies and Innovative Retail Concepts, respectively, have also been made defendants to the lawsuit.

The legal problems come at a time when BigBasket is facing resurgent competition from Zomato’s B2B procurement arm Hyperpure. Not just this, the Tata-backed company’s B2B arm has also been reporting heavy losses. Its net loss stood nearly halved year-on-year (YoY) to INR 177.9 Cr in the financial year 2021-22 (FY22). 

The legal tug of war complicates matters for BigBasket which is already reeling under the impact of a slowing market and reduced consumer spending. With the lawsuit, BigBasket has joined a growing list of Indian startups – from Blinkit to BharatPe – which are embroiled in legal cases.