Delhi HC: If Zostel wins the case, It will receive 7% stake in OYO parent’s stock
- ByStartupStory | March 19, 2022
In the latest hearing of a long-running dispute between the two parties, a division bench of the Delhi High Court ruled that hospitality startup Zostel’s (Zo Rooms) claim of a 7% ownership in IPO-bound Oyo parent Oravel Stays, if eventually allowed, will also confer an option for an amount equivalent to that stake to be paid to Zostel.
The court judgment, dated March 14 and obtained by ET, further ordered Oyo to notify markets regulator Sebi (Securities and Exchange Board of India) of the recent order of the Delhi HC division bench. It was also revealed that the SoftBank-backed hotel startup has taken on the project.
The bench, which was hearing Zostel’s appeal against a single judge’s interim order allowing Oyo Hotels & Homes to proceed with its plan for a public listing in February, said it had taken cognizance of both parties’ prayers and agreed that a consensual order should be passed while disposing of Zostel’s appeal.
The decision did not specify how the value of 7% of Oyo will be determined. While Oyo has previously contested Zostel’s claim to a 7% interest in its parent business, the consensual ruling states that if Zostel prevails in its lawsuit, it will earn up to 7% of the Oyo parent, which was last valued at $9.5 billion in September 2021 after a Microsoft investment.
Last month, Zostel’s request for a temporary injunction to prevent Oyo from proceeding with its IPO was denied, prompting the company to file an appeal with the division bench, opposing the decision. Oyo’s spokeswoman declined to comment on the court case. The legal counsel for Zostel also declined to comment on the situation.
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