Delhi HC barred Zostel’s plea to take up 7% in Oyo

The Delhi High Court outrightly refused Zostel’s plea to take up 7% ownership in Oyo, much ahead of Oyo’s IPO.

The Delhi High Court has refused Zostel’s plea in declaring 7 % ownership in Oyo much ahead of Oyo’s IPO which has given absolute relief to the SoftBank supporting economical hotel chain.

Justice C. Hari Shankar passed the resolution today and he represented the single-judge bench of the Delhi High Court.


For a year now Zo Rooms has been involved in a legal battle with Oyo, it had filed an appeal in the HC looking to protect its rights against Oyo.

The clashes between these 2 companies started way back to 2015 when Zo Rooms, the pocket-friendly hotel chain owned by Zostel Hospitality shut down due to failed agreement between the 2 companies.

Oyo and Zo Rooms have begun talks for a takeover by Oyo in 2015 preparing an agreement on November 26th. Zo Rooms says it completed its responsibility under the agreement and shifted the business; However, Oyo failed to transfer seven percent to its shareholders which led to the adjudication.

In March 2021, the deal had reached a dead end after 3 years, a Supreme Court arbitrator finally said that Oyo had trespassed its agreement for the merger of Zo Rooms signaling Zo Rooms to proceed to carry out the definitive agreement.

At this point, Zo Rooms claims that it holds the right to own 7 % stakes in Oyo, to which Oyo denied that the tribunal had given no specific relief to Zostel Hospitality to own any percentage in Oyo.

Apparently, the deal between the 2 companies was to be a lucrative asset sale with Zo Rooms founders and prime investor Tiger Global amounting to a 7 % stake in Oyo. As the agreement never met its end sparking a war between Zo Rooms and Oyo.

Oyo left the merger talks midway when it found out Zo Rooms liabilities. Oyo claims it has unearthed several issues in the scrutinization process, where outstanding liabilities, debts and confidential contingent liabilities resurfaced.

Oyo is waiting for SEBIs green signal to march ahead with its proposed $ 1.2 billion IPO. Sources suggest that the company may re-evaluate its $9 valuation looking at the volatile market at the moment.