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NCLT Intervenes To Prevent AskMe Shutdown; Orders A Status Quo Till October Hearing

NCLT Intervenes To Prevent AskMe Shutdown; Orders A Status Quo Till October Hearing

In a new development in an ongoing saga, the National Company Law Tribunal (NCLT) has stopped Getit Infoservices from shutting down its ecommerce websites – AskMeBazaar, AskMeGrocery and Mebelkart today. This order was passed in response to the petition made by AskMe MD Sanjeev Gupta against Malaysia-based Astro Group under Section 241 (1) (b) of the Companies Act.

 According to the petition filed, Gupta asked the NCLT to issue an order to maintain the status quo, reserving the present status of assets available with the company. The Tribunal has also ordered a status quo on the constitution of the company’s board of directors and said the company will not hold a board meeting till the next hearing on October 17, 2016.

Additionally, AskMe wants the NCLT to direct Astro to refrain from diluting its stake in AskMe and for not to change the board of the company. The AskMe MD also wanted to initiate a management buyout.

As per the petition, Astro owes $50 Mn (INR 300 Cr) to the company. AskMe is looking to use the funds and provide relief to the employees with the help of the NCLT.

Consumer Internet search platform was launched as a classifieds portal in 2010. In 2012, AskMe came out with Askmebazaar as an online shopping portal focussing on small and medium enterprises (SMEs). Later in 2013, Getit acquired AskMe from Network18.

When Getit Infoservices-owned AskMe finally ceased its operations, enraged vendors approached the Economic Offences Wing to register a case against the company. Allegedly, the company is accused of non-payment of $14- 22 Mn (INR 100-150 Cr) of dues and has left more than 4000 employees astray. The vendors have filed a written complaint naming 12 top executives of Astro Group and AskMeBazaar officials.

The dispute arose when more than 650 employees of the company resigned in April this year. After pumping in more than $119 Mn into the company, the existing investors, Helion Ventures and Astro holdings (which owned the majority stake), apparently saw no further growth for the company. While Helion pulled back from further funding, Astro backed out from a supposed MBO (management buyout) scheduled at the end of July this year.

The unplanned exit forced AskMe to shut down its operations amidst severe cash crunch, leaving more than 4000 employees, vendors, and other creditors in a state of despair. Earlier in August, they wrote an open letter to Astro Holding’s head requesting a release the salaries for the month of July.

Finally in August 2016, the Gurgaon-based AskMe shut down its operations and laid off its remaining staff as well. The portal was operating with over 120K merchants, in over 70 cities, including metros and Tier II cities as well. It also diversified into hyperlocal space with AskMebazaar’s next day delivery capability and in the fintech space with AskMePay’s AskMeFin. It had also invested $20 Mn in online furniture marketplace Mebelkart in August 2015 and acquired online grocery marketplace

This development was first reported in ET.