Zostel claims victory in legal row with OYO
- The term sheet executed between the two parties in 2015, promised ZO Rooms’ shareholders 7% of Oyo.
The Arbitral Tribunal has ruled in favour of Zostel Hospitality Pvt. Ltd., which owns Zostel Hostels and ZO Rooms, in a legal battle against Oravel Stays Pvt. Ltd, the parent of Oyo Rooms, which may lead to shareholders of ZO Rooms to now own 7% in Oyo.
The term sheet executed between the two parties in 2015, promised ZO Rooms’ shareholders 7% of Oyo. The Arbitral Tribunal, in a ruling by former Chief Justice of India AM Ahmadi on March 6, ordered the document to be binding.
“However, as Definitive Agreements have yet to be executed, the Tribunal holds that the Claimant is entitled to take appropriate proceedings for Specific Performance and execution of the Definitive Agreements as envisaged for itself and its shareholders under the term sheet,” said the order.
According to Zostel Hospitality, ZO Rooms and Oyo had entered into talks for a merger in 2015, executing an agreement on November 26 that year. ZO Rooms completed its obligation under the agreement and transferred the business but Oyo failed to transfer 7% to the ZO Room’s shareholder, which eventually led to the recently concluded arbitration, the company said.
Now, Zostel will take the judgment to Oyo to fulfil the obligations under the term sheet and transfer the shares.