SUMMARY
Despite repeated requests, the management of Rahul Yadav-led 4B Networks failed to provide any information or cooperate with the advisors of Info Edge subsidiary for its ongoing forensic audit
Later, Info Edge moved Delhi HC, which asked Yadav to not sell, transfer, alienate, encumber or otherwise create any third-party rights or interest in the assets and properties of 4B Networks
The matter has now been referred to arbitration and the parties have agreed to the appointment of a sole arbitrator, Info Edge said
Info Edge on Wednesday (July 26) said that its wholly-owned subsidiary Allcheckdeals India Pvt Ltd (AIPL) did not receive crucial information from the management of Rahul Yadav’s 4B Networks despite the former initiating a forensic audit into the affairs of the proptech startup.
“Despite the initiation of the Forensic Audit by AIPL and repeated requests for crucial information in furtherance of the Forensic Audit, the management of 4B Networks (led by Mr. Rahul Yadav) failed to provide any such information or cooperate with the advisors of AIPL for conducting the Forensic Audit,” Info Edge said in an exchange filing.
It must be noted that Info Edge appointed Deloitte as the forensic auditor last month to look into the affairs of 4B Network, which operates Broker Network, after writing off its entire investment of INR 288 Cr in Yadav’s beleaguered startup. Info Edge invested in the startup through AIPL.
Last month, Inc42 exclusively reported about the troubles at 4B Networks, including corporate governance issues and unpaid dues of vendors and employees.
In its latest filing on the development, Info Edge said, “In light of such failure to provide information and access for the conduct of the Forensic Audit, AIPL, in the exercise of its contractual rights had issued a legal notice setting out various breaches, constituting events of default which had been committed by 4B Networks and Mr. Rahul Yadav under the relevant contractual frameworks.”
Info Edge also moved the Delhi High Court against Yadav and Pratik Choudhary, who was also a party to the shareholders’ agreement of 4B Networks.
Info Edge said that in an order dated July 24, 2023, the HC directed Yadav and Choudhary to not sell, transfer, alienate, encumber or otherwise create any third-party rights or interest directly or indirectly in the assets and properties of 4B Networks (whether tangible or intangible).
On the other hand, the court also directed the startup to preserve all books, records, accounts, databases, servers, any other devices, documentation or information.
“The matter has now been referred to arbitration and the parties have agreed to the appointment of a sole arbitrator,” Info Edge said.
However, since the filing of the petition, the business operations of AIPL have not witnessed any material impact, it added.
In February this year, during its financial results for the third quarter of FY23, Info Edge’s CEO Hitesh Oberai had said, “We are writing down the investment in light of the current state of the environment and the significant uncertainty towards funding options available to 4B in future.”
In FY22, 4B Networks reported a 20X widened net loss of INR 57.8 Cr from INR 2.89 Cr in FY21.
