Saarthi has taken legal action against Classplus, a SaaS startup, by filing a lawsuit and a police complaint. The lawsuit contains a comprehensive list of grave allegations, which include cheating, extortion, criminal breach of trust, mental harassment, defamation, theft of immovable property, misappropriation of funds, and more.
The allegations, spanning a wide range of serious offences, raise concerns about the integrity of the business dealings between the two companies. These allegations encompass cheating, extortion, threat to life, criminal breach of trust, mental harassment, criminal intimidation, defamation, theft of immovable property, criminal conspiracy, and misappropriation of funds.
The controversy traces back to late 2021 when the founders of Saarthi and Classplus first engaged. In October of that year, an acquisition proposal was presented, with seemingly advantageous terms for Saarthi. This transaction involved a complex transfer of business operations and employees from Saarthi to Classplus. Subsequently, this transition occurred swiftly, with Saarthi’s co-founder, Chiraag Kapil, assuming a crucial executive role within Classplus.
However, a few weeks later, Kapil was unexpectedly terminated, leading to a series of events that have now resulted in legal actions. Furthermore, investors associated with Saarthi have not received their stipulated agreements or the corresponding equity they were entitled to. Both Kapil and the aggrieved investors have lodged legal and criminal complaints, naming Classplus and its founders, Mukul Rustagi and Bhaswat Agarwal, along with the Chief Financial Officer, Sankalp Aggarwal, as accused.
The founder also asserted that despite retaining his position as CEO of Saarthi, he consistently faced belittlement in daily operations. This included the micromanagement of a business vertical, now under Classplus, with crucial decisions being made without his agreement and later on by May/June 2022 he was expected to function completely in accordance to the illegal whims of the employees and representatives of the respondent company, stated by a Legal suit.
Saarthi, founded by Chiraag Kapil, was on a mission to create a live educational tournament platform catering to vernacular languages and aiming to serve the next billion users. The company targeted more than 100 million students engaged in competitive exam preparation through online platforms.
The acquisition proposal negotiations between Saarthi and Classplus commenced in November 2021. According to the lawsuit, the two entities had already started collaborative efforts by that point, working almost as a unified entity. However, in December 2021, when the term sheet was finally presented, the stipulated clauses diverged from the terms that had been previously discussed.
As quoted by Morning Context from a source with an identity of anonymity, who has witnessed developments at Classplus before and after the involvement of Saarthi, the source stated, “It was a disaster of an acquihire or whatever they called it. One day, Saarthi was everything that they wanted and the next day, it just didn’t even exist for them.”
Classplus, valued at over $600 million in 2022, operates as a SaaS startup, providing tools to educators and coaching centers to create their customized applications.
Saarthi’s claims assert that the imbalanced nature of the negotiations and the subsequent events left them in a disadvantaged position. By February 2022, Classplus allegedly had access to Saarthi’s proprietary information, workforce, intellectual property, and database, even prior to formalizing any official agreements.
Both Saarthi and Classplus have submitted their responses in the Delhi High Court, and the next hearing is scheduled for September. As the legal battle unfolds, the case has attracted considerable attention from industry insiders and observers who are closely monitoring its developments.
