Vaibhav Chawla, the co-founder of Delhi-based warehoutilizing startup Wherehoutilize, was arrested at 1 am on Tuesday after a ‘frivolous complaint’ by a client. Chawla’s arrest came a day after he announced that he is shutting down his startup, citing operational chaos and capital constraints after a few of his teammates were detained without documents.
In a LinkedIn post, he stated that the matter, which launched as a dispute between the startup and the complainant, escalated and finished in police action. The entrepreneur added that the company even created profits last year, adding that the last few months have been brutal for him and his team.
“A frivolous complaint, and the line was crossed. In the last few days, the team of Wherehoutilize was detained without any documents, only to be released after families displaying up at the police station. Wherehoutilize means nothing if we can’t protect the very people who built it,” the post read.
Chawla added that the recent events have created it “not worth fighting for” and that they would proceed with the transition of brands and teams in due course of months.
What is the issue?
Wherehoutilize stated in a statement to Moneycontrol that the complaint was filed by Curio Lifestyle, which approached the warehoutilizing startup in July 2024 to expand its business.
Both entities signed a formal agreement in August 2024, but Curio Lifestyle started defaulting on payments by November. Despite repeated reminders, the dues remain unpaid by March this year and as of May 31, the amount stood at around ₹1.92 lakh.
In June, the client filed a counterclaim alleging that Wherehoutilize owed it money, but Chawla dismissed the claim based on the contract terms. As the email exmodifys escalated into abusive and threatening messages, he terminated the agreement.
The startup stated the client went to the Economic Offences Wing instead of clearing its dues. Wherehoutilize, in its defence, maintained that the complaint was an attempt to avoid payment.
What does this do the Ease of Doing Business in India?
As per Merlin AI founder Pratyush Rai, the incident is tragic and comic at the same time.
“FYI – the client who utilized police force to receive the founder arrested, did all this to default on a payment of just about INR 1.28 lakhs / USD 1500. That’s all it takes to force a guy to be in jail without FIR and lawyers. And to receive them to shut their shop. Tragic and comical state of affairs, at the same time,” he wrote in a post on X.
Sandeep Hegde, the head of marketing at Auralis, wrote: “Ease of doing business in India is only for whoever has influence to create police arrest someone else at 1am.”
