Dispute Between Info Edge and 4B Networks to Be Resolved through Arbitration
By : Legal Era
Update: 2023-07-27 16:15 GMT
Dispute Between Info Edge and 4B Networks to Be Resolved through Arbitration
The dispute between Info Edge and its portfolio company, 4B Networks, has escalated to arbitration due to the failure of the proptech startup management to provide the necessary information for a forensic audit of its transactions.
Noida-based Info Edge, known for investing in various tech startups, had made an investment in 4B Networks through its subsidiary, Allcheckdeals India (AIPL).
According to a stock exchange filing, Info Edge stated that despite AIPL's initiation of a forensic audit and multiple requests for crucial information to facilitate the audit, the management of 4B Networks did not furnish any such details or cooperate with AIPL advisors for conducting the forensic audit.
In June, Info Edge initiated a forensic audit and engaged Deloitte India to conduct the audit. The decision to conduct the audit was necessitated as the startup, 4B Networks, had not provided crucial information related to its financial transactions and other relevant aspects. Such information was contractually obligated to be provided to AIPL under the shareholders' agreement and articles of association of 4B Networks.
As a result of the situation and the lack of cooperation, Info Edge took the step of writing off its entire investment of ₹288 crore in 4B Networks earlier this year.
“In the aforesaid backdrop, AIPL filed a petition before the Delhi High Court for interim measures of protection under section 9 of the A&C Act and subsequently under section 37 of the A&C Act against 4B Networks, Mr. Rahul Yadav and Mr. Pratik Choudhary,” Info Edge said in the recent stock exchange filing.
As of July 24, the High Court has issued an order directing 4B Networks, along with Rahul Yadav and Hitesh Choudhary, to refrain from selling, transferring, alienating, encumbering, or creating any third-party rights or interests directly or indirectly in the assets and properties of 4B Networks. This order comes ahead of the scheduled appearance of the parties before the arbitrator on August 14.