In a significant development, the Karnataka High Court (HC) has revived the legal battle between B2B supplies platform Town Essentials and Tata-backed grocery delivery giant BigBasket. The HC overturned a previous ruling by a commercial court in Bengaluru, which had directed Town Essentials and DailyNinja to settle the matter through arbitration, according to a report by The Economic Times.
The next hearing for the case is scheduled for June 12, 2023. Justice Sreenivas Harish, in an order dated May 24, set aside the commercial court’s decision and dismissed the application filed under the Arbitration and Conciliation Act. The judge directed the parties to appear before the trial court on the specified date.
BigBasket has declined to comment on the matter, but Town Essentials director Amar Krishnamurthy expressed satisfaction with the HC’s decision. He stated, “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 have been 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 an injunction against BigBasket.”
The dispute revolves around BigBasket’s acquisition of micro-delivery platform DailyNinja in March 2020. Town Essentials alleges that it had an exclusive contract with DailyNinja since October 2017 to provide sourcing, warehousing, and backend supply services. The lawsuit claims that BigBasket, after acquiring DailyNinja, transferred customers to its own platform, BBdaily, without informing Town Essentials. This allegedly caused significant losses for the B2B supplies platform.
Town Essentials approached a commercial court in August 2021, which referred the case to arbitration for resolution by July 2022. Concerned that BigBasket might not be covered by the arbitration due to its contract with DailyNinja, Town Essentials sought relief from the HC in August 2022. The court agreed to hear the plea, leading to the restoration of the lawsuit.
Town Essentials seeks a temporary injunction on BigBasket’s micro-delivery business operations and claims damages amounting to INR 36.22 crore (approximately USD 4.9 million). The company also wants BigBasket to procure all supplies from Town Essentials until the case is resolved. Besides BigBasket’s founders and related companies, Town Essentials has named Supermarket Grocery Supplies and Innovative Retail Concepts as defendants in the lawsuit.
The legal battle comes at a challenging time for BigBasket, as it faces fierce competition from Zomato’s B2B procurement arm, Hyperpure. Additionally, BigBasket’s B2B division has reported significant losses, with a net loss of INR 177.9 crore (approximately USD 24 million) in the financial year 2021-22. The ongoing legal dispute adds to the challenges for BigBasket, already grappling with a slowdown in the market and reduced consumer spending. This lawsuit places BigBasket among several Indian startups, including Blinkit and BharatPe, embroiled in legal cases.
