Rallying behind Stayzilla founder Yogendra Vasupal who was arrested for alleged non-payment of dues, entrepreneurs said laws need to be followed but any action "beyond the provisions of law would raise insecurity for startup founders".
"Any actions that go beyond the provisions of the law and create undue fear and harassment would raise the insecurity for start up founders and raise the cost of failure in an unacceptable way," IT industry body Nasscom said.
It added that it has sought support from senior state government officials and the ministry to resolve the issue.
Vasupal, co-founder of travel-based startup Stayzilla, was arrested last night in a case of alleged non-payment of dues to a Chennai-based advertisement agency.
He was produced before a local magistrate today and is currently lodged in the Puzhal jail near Chennai, according to sources.
Last month, Stayzilla had announced shutting down of its operations.
Flipkart co-founder Sachin Bansal also expressed his support for Vasupal and tweeted: "Let the law take its course, but intimidation of #stayzilla founders crosses a line. It's unhealthy for entrepreneurship in India".
"We stand together with entrepreneurs. @PMOIndia, #StartupIndia needs your support!," he added.
Naveen Tewari, founder of InMobi, tweeted, "Entrepreneur bachao, Desh bachao" @InMobi provides full support to @stayzilla Founder!," he wrote.
Indian Angel Network, which was one of the early investors in Stayzilla, said the episode has shocked the entire startup community.
"There are challenges in every business and startups have more than their fair share. It is imperative that the legal and regulatory framework supports and encourages new ventures to emerge and scale," it said.
IAN added that "unlawful treatment" in such situations will trigger a sense of fear in young minds and put the brakes on the Prime Minister's Startup India dream.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)