This complaint has been filed with the Hyderabad Police, and the complaint states that VSoft had conducted fraudulent and deceitful diversion of funds to a related party.
On being charged by the police, VSoft Technologies’ CEO and Chairman Murthy Veeraghanta has denied the charge straight away.
VSoft Technologies Pvt. Ltd. was formed in the year 2004 as the Indian subsidiary of the Atlanta-based VSoft Corporation. This company deals in Indian banking and financial institutions sector with technology products and platform-based BPO services in the fields of payments domain and core banking. According to an official statement, this particular complaint had been lodged after two entities decided to resolve the conflict mutually in Mauritius. The case was being judged in an arbitration court in the country, and the court was reportedly in favor of Peepul Capital in January 2015.
An order had been released where VSoft was ordered to pay $23 Million dollars equivalent to 150 Cr INR to compensate the losses by Peepul Capital which also includes the investment amount in VSoft Technologies.
Following that episode, VSoft appealed against this decision of the arbitrary court, and since then the proceedings for the same are still in progress.
Murthy Veeraghanta, VSoft’s CEO and Chairman commented on the allegations, and their timing could damage the company’s effort to grow the business ambitiously and raise funds apart from posing a risk to its efforts to obtain a license to act as a small finance bank and also for bill payments.
At the time when Peepul Capital had taken the initiative to accuse VSoft with failing to meet the promise, both parties had agreed to dissolve the agreement way back in May 2012. They also agreed not to change a few clauses and had signed a fresh agreement for the shareholders.
At present, in the complaint which has been filed with the Hyderabad Police, the equity firm claims that in accordance with the new agreement, it now has certain management and voting rights in VSoft; whereas the latter would have to obtain a vote from Peepul Capital regarding certain major and critical decisions.
As per the reports gathered from trusted sources, Peepul Capital holds 77% of the voting rights of VSoft after automatic conversion of compulsorily convertible preference shares within the new agreement.
Peepul Capital also accuses the CEO Veeraghanta and his wife Venkata Lakshmi Kameswari of diverting the funds from VSoft Technologies to a company named Smart Staffing Source over the passage of past three years. The amount of funds transferred in this process is said to be $3.7 million (25 Cr).
In response to the accusation, Veerghanta has said that Smart Staffing was provided with the money for the purpose of data entry services offered to VSoft since 2009. He also stated that this particular transaction had already been disclosed to all the concerned shareholders.
On not being able to provide the promised exit route to the equity firm, VSoft CEO had straight away blamed dull economy and unfavorable market conditions.
In turn, he has accused Peepul Capital of harassing him with false complaints to the police and regulators.
The CEO also added that the present complaint of Peepul Capital against VSoft is a clear attempt to derail the judicial process at the courts of the seat of arbitration which is appropriate for the forum to resolve the differences. This development was first reported by Economic Times (ET).