Vendors accuse HomeShop18 of Rs 200-crore fraud by not paying dues

Vendors of now-defunct HomeShop18 on Friday alleged that the teleshopping firm committed a fraud of Rs 150-200 crore by not paying them the dues even after selling their products on its network and collecting money from customers.

"HomeShop18 has fraudulently not paid around Rs 200 crore collected from the customers on behalf of 150 sellers, who have sold their products through its platform from March," Khatter said at a press conference here.

The HomeShop18 Vendors Association, which claimed to represent around 150 vendors of the company, has filed a complaint with the police and the Ministry of Corporate Affairs.

"The dues (of Rs 150-200 crore) have been accrued since March this year and the company closed its business in June," HomeShop18 Vendors Association President Himanshu Khatter said told PTI.

Reliance did not respond to e-mail and repeated phone calls seeking comments.

Reliance Industries bought HomeShop18 as part of a 2014 deal to acquire Network 18 Media and Investments Ltd from its founder Raghav Bahl. Network18 owned TV channels (CNBC TV18, CNN-IBN, CNN Awaz), websites (firstpost.com, moneycontrol.com), magazines (including the licence for Forbes India), and entertainment channel (Colors, MTV and Homeshop Entertainment), among other businesses.

According to its business model, HomeShop18 collected money for the products sold to customers and after deducting an average commission of around 30 per cent, the remaining money was supposed to be routed to the sellers, which are mostly micro, small and medium enterprises, the association said.

"From March onwards, the default in payment started. When contacted, senior people, as well as CFO (chief financial officer), assured us saying that they were in talks with the Reliance officials for infusion of funds into the company," Khatter said.

The vendors were supposed to get the money within 45 days.

In June, the company was sold off to Skyblue Buildwell, which the vendors' association claimed to be a shell company.

The association said Skyblue Buildwell is "a sham company and all the money has been siphoned off".

"The company has been exchanging hands frequently in the last four months, which indicates a fraud being done by the directors to usurp the money of the vendors," it added.

According to Khatter, "latest ROC (Registrar of Companies) filing (FY18) shows that Skyblue had a total net worth of Rs 7.57 lakh, with no employees expenses. It reflects that it is a shell company."