The story

Ms. Anjali, a bright and ambitious young lawyer from Navnagar, was looking for an opportunity to make a mark in the burgeoning field of legal technology. She came across an online post by two engineers, Mr. Vikram Singh and Mr. Rohan Mehra. They were the founders of a tech startup called “VidhiBot Innovations,” which aimed to create AI-driven solutions for legal research. They claimed to be on the cusp of being accepted into a prestigious incubation program at the Indian Technology Institute, Avantipur. Their team consisted solely of engineers, and they were desperately seeking a legal expert to join as a co-founder.

The offer was enticing: a significant equity stake and a key leadership role. However, there was a catch – the position was unpaid until they secured their first round of funding. Trusting their vision and the promise of a future partnership, Anjali resigned from her stable law firm job and dedicated herself completely to VidhiBot. For over eight months, she worked tirelessly, drafting foundational legal documents, creating compliance frameworks, and providing invaluable legal strategy that shaped their product. Her work was crucial in their successful admission into the incubation program and subsequent funding round.

The moment the funding was secured, the founders’ attitude changed. They presented Anjali with a junior-level employment contract, offering a modest salary but completely reneging on the promise of equity and a co-founder title. They argued that her contributions, while helpful, were not foundational enough to merit a stake in the company. Anjali was left feeling betrayed and exploited, having invested her time, expertise, and career on a promise that was broken.

Advice in such cases

Such situations are a complex mix of civil and criminal wrongs. If you find yourself in a similar predicament, it is crucial to act strategically and not emotionally.

• Gather all communication records, including emails, text messages, chat logs, and any informal notes that document the promise of equity or a partnership.
• Document your work. Compile a portfolio of all the legal documents you drafted, strategies you developed, and any other contributions you made to the company.
• Do not sign any new agreements or accept any compromise offers, like a low-level employment contract, without legal review, as it might weaken your original claim.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

The legal recourse in such cases can be pursued through both civil and criminal law.

• Section 318 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section addresses the offence of ‘Cheating’. If it can be proven that the founders had a dishonest intention from the very beginning to induce you to work for free without any intention of fulfilling their promise, a criminal case for cheating can be initiated.
• Section 316 of the Bharatiya Nyaya Sanhita, 2023 (BNS): This section deals with ‘Criminal Breach of Trust’. If you were entrusted with specific responsibilities and domain control based on the understanding of a future partnership, and that trust was violated for wrongful gain, this section may apply.
• The Indian Contract Act, 1872: A verbal agreement is a valid contract in India. Your case can be filed in a civil court for specific performance of the contract or for damages for the breach. The doctrine of promissory estoppel can also be invoked, which prevents a person from going back on a promise if the other party has acted upon it to their detriment.

If you are the complainant

If you are the founder against whom such allegations have been made, your approach should be cautious and well-documented.

• Review all your communications with the lawyer. Understand what was promised, whether explicitly or implicitly.
• Avoid making any admissions of guilt or making further conflicting promises. All communication should be handled carefully.
• Gather evidence of the work performed and try to assess its value objectively. If you made an offer of employment, ensure it is documented as a good-faith attempt to recognize their contribution, even if it fell short of their expectations.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

If you are the lawyer who has been wronged, like Anjali, taking systematic steps is key to seeking justice.

• First, send a formal legal notice to the founders through your advocate, detailing the terms of the original agreement, your contributions, the breach of promise, and your specific demands (e.g., grant of promised equity or monetary compensation).
• If the legal notice does not result in a satisfactory resolution, you can proceed with filing a civil suit for breach of contract and/or a criminal complaint under the relevant sections of the BNS.
• Preserve all evidence meticulously. This is the foundation of your case.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

Initially, the police might be hesitant to register a First Information Report (FIR), often viewing the matter as a “civil dispute.” They may advise you to approach the civil court. However, if your complaint and evidence clearly indicate the elements of cheating or criminal breach of trust (i.e., dishonest intent from the outset), you can insist on the registration of an FIR. If the local police refuse, you have the option of approaching the Superintendent of Police or filing a private complaint before the Magistrate under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).

FAQs people normally have

Is an agreement made over email or WhatsApp legally valid?
Yes, under Indian law, contracts formed through electronic communication like email and WhatsApp are legally valid and enforceable, provided they fulfill the essential elements of a contract.

What if I don’t have a written contract?
A verbal agreement is also a contract. While harder to prove, it can be established through witness testimony, circumstantial evidence, and the conduct of the parties. Your consistent work and the founders’ acceptance of it can be used to prove the existence of an understanding.

What evidence is required?

To build a strong case, you should gather the following:

• All written communications: Emails, text messages, social media DMs, WhatsApp chats where the role, equity, or partnership was discussed.
• Proof of work: Copies of documents you drafted, presentations you made, and any other material that demonstrates your contribution.
• Witnesses: Any person who was aware of the arrangement, such as a mutual friend, a mentor, or an incubator staff member.
• Proof of detriment: Evidence that you left your previous job or rejected other offers based on this promise.

How long will the investigation take?

The duration of legal proceedings can vary significantly. An investigation following an FIR can take several months. A civil suit is a much longer process and can take several years to reach a final verdict. However, the filing of a criminal complaint often puts pressure on the opposing party to come to a settlement. Many such cases are resolved through mediation or out-of-court settlements once legal proceedings are initiated.

Advocate Sudhir Rao, Supreme Court of India