Saarthi Raises Serious Allegations Against Edtech Unicorn Classplus In the legal battle against the alleged denial of justice, Kapil and the investors' legal and criminal complaints name Classplus and its founders Mukul Rustagi and Bhaswat Agarwal, as well as chief financial officer Sankalp Aggarwal

One of the prominent startups in the Indian edtech ecosystem, Classplus is facing a lawsuit in the Delhi High Court along with three police complaints, according to a The Morning Context report, citing close sources aware of the matter.

It is reported that the co-founder of Saarthi Techpro has filed the lawsuit and police complaint with a long list of serious allegations which raises concerns over cheating, extortion, criminal breach of trust, mental harassment, defamation, theft of immovable property, misappropriation of funds and some more.

Paras Batra, Serial Entrepreneur and founder of Leaf, who is also an investor of Saarthi, has shared, "It's appalling and completely unacceptable that Classplus has failed to honor its commitments to us investors. After numerous attempts to reach out, we've been met with nothing but silence, no money, and no settlement. This isn't just a breach of contract; it's a breach of trust, and it carries the stench of deliberate deception. We entered this agreement expecting professionalism and integrity, but what we've experienced is anything but. Rest assured, this matter is far from over, and we will take all necessary steps to ensure justice is served."

Founded in 2018 by Mukul Rustagi and Bhaswat Agarwal, Classplus is a mobile-first SaaS platform that allows educators to teach online as well as create and sell digital content to students beyond their immediate neighborhoods. In 2022, the platform claimed to have 100,000-plus teachers who are using the platform to teach over 25 million students across 3000-plus cities in India and have raised over $90 million in funding from leading investors like Tiger Global, GSV Ventures, and Alpha Wave Global.

On the other hand, founded by Chiraag Kapil, Saarthi is creating a live educational tournaments platform for the next billion users in vernacular languages. More than 100 million students study for competitive exams every year and online platforms are becoming the new channels of exam preparation and practice, as per the company's official website.

While observing the allegations against Classplus, the media report states that, the founders of both companies met each other for the first time in late 2021. In October, it is said that an acquisition proposal was put forward and according to Saarthi, the transactional terms of transferring the business and employees from Saarthi to Classplus seem a bit complicated. But within weeks, the transfer was done and Saarthi co-founder Chiraag Kapil came on board as a key executive and the young firm's investors witnessed a 4 times growth to their investments in less than two years.

Reportedly, the negotiations began in November 2021 and as per the lawsuit, by then Classplus and Saarthi had already started to work together almost as one. But in December 2021, the term sheet came in which the clauses didn't match with what they had been discussed.

The Morning Context report further mentioned that Kapil was terminated a few weeks later and Saarthi's investors never received their agreements, let alone the equity they were meant to receive. In the legal battle against the alleged denial of justice, Kapil and the investors' legal and criminal complaints name Classplus and its founders Mukul Rustagi and Bhaswat Agarwal, as well as chief financial officer Sankalp Aggarwal.

"Classplus's failure to pay us (Saarthi's investors), despite numerous attempts to resolve the issue, is more than just negligence—it's a glaring sign of bad faith. We investors were left abandoned and deceived, and we demand immediate action. This isn't just business; it's a matter of principle, and we won't rest until it's rectified," noted Ayush Banka, investor of Saarthi and co-founder of Leaf.

Quoting a close source with an identity of anonymity, who has seen the developments at Classplus before and after Saarthi, the news report said, "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."

For now, both Classplus and Saarthi have reportedly filed their responses in the Delhi High Court and the Court is supposed to hear the matter next in September.

Subsequently, according to a press statement shared with us by Saarthi, "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."

Responding to these allegations, Classplus has revealed in a press statement that, "Saarthi was a pre-revenue company when we conducted the deal. Both founders of the company got cash payouts from Classplus on day one of their journey with us. Chirag left in Aug 2022 while Saransh, the other co-founder stayed for more than a year, till May 2023. There is no merit in the allegations made against us due to the same reasons and facts."