Edtech startup Saarthi, along with its co-founder Chiraag Kapil and a group of investors, has taken legal action against Classplus in the Delhi High Court (HC) over allegations of cheating and criminal breach of trust. The lawsuit centers around Classplus’ acquisition of Saarthi in 2022 and subsequent discrepancies in the execution of the deal.
Allegations of Unfulfilled Agreements and Unexpected Termination
The lawsuit claims that despite the acquisition, the investors linked to Saarthi have not received their stipulated agreements or the corresponding equity in Classplus. Additionally, Chiraag Kapil, who was brought on as a key executive during the acquisition process, was allegedly terminated unexpectedly just weeks later.
Police Complaint and Other Allegations
In addition to the lawsuit, Chiraag Kapil and other Saarthi investors have lodged a police complaint against Classplus and its key figures, including co-founders Mukul Rustagi and Bhaswat Agarwal, and CFO Sankalp Aggarwal. The investors involved in the legal action include Axilor Ventures, backed by Kris Gopalakrishnan, Faad Network, Ritesh Malik of Innov8, Vinod Sood, Rahul Dalmia, among others.
Disputed Acquisition Terms and Access to Proprietary Information
The heart of the issue lies in Classplus’ acquisition of Saarthi. The lawsuit alleges that the presented terms of the acquisition changed from the initial proposal, leaving Saarthi and its investors at a disadvantage. Saarthi also claims that Classplus gained access to its proprietary information, workforce, intellectual property, and database.
Future Proceedings and Industry Implications
Both edtech startups submitted their responses to the Delhi HC. The court will hear the matter in September. The dispute showcases challenges linked with startup acquisitions. This event is one of many controversies in the edtech startup ecosystem. It has experienced regulatory scrutiny, funding issues, and operational setbacks. The legal battle contributes to uncertainty in the edtech industry. It raises questions about startup stability and sustainability in this evolving sector.
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