Zostel, the hotel chain owned by Zostel Hospitality, was closed after the union talks between the two, which emerged in Zo Rooms getting a seven percent stake in Oyo.
The two companies fighting the case in 2015, but the heat is smoked up again. The Supreme Court in this March said that OYO is breaking the law, And another Company owns full legal rights to send red seal documents to OYO in this breach.
And so the Zostel Company did in April, They sent Oyo a notice for aspiring to assign seven percent shares of Oyo to the shareholders of Zostel.
A new battle between rivals of the same game, OYO, and Zostel both is smoked up again. Zostel Company of hospitality services alleged OYO with SEBI ( Security Exchange Board Of India) as their backbone in this case.
The proclamations made by Zostel Co. Against OYO’s Softbank backed, Initial Public Offerings ( IPO’s), the DRPH, (Draft Red Herring Prospectus). And looking forward and urge for rejection of OYO IPO’s as they are “misleading” and “unauthentic”.
Zostel Company denied the whole DRPH report and stated that unfair, because OYO’s parent company Oravel’s capital structure is not final and filed regulation act of SEBI 5(2), issue of capital disclosure requirements, 2018 (ICDR Regulations).
“Zostel’s shareholders have a right to get issued in their favour, 7% of the equity securities of Oravel. Oravel has failed to grant the same and hence is prohibited from making any public offer of its shares,” the company said in the letter.
“The DRHP is replete with material omissions and blatant misstatements, intended to mislead the public into investing into Oravel’s shares without an an an an appreciation of the risks involved,” it added.
In the defense, OYO criticized Zotel for overreaching Delhi HC existing proceeding.
“After multiple attempts in the courts and arbitration tribunal, Zostel’s communication shows unnecessary and repetitive efforts to create a wrong perception,” said an Oyo spokesperson.
“OYO reiterates that the entire process was merely at the stage of exploratory discussions, and no definitive agreements were finalized or executed between the parties,” he added.
OYO legal Council added many points in the favor of companies IPO, He stressed the fact that in the due course of time, Oyo raised multiple rounds of funding. “At no point in time during the arbitration proceedings till date, has there been any direction or order to prevent Oyo from increasing its capital base or changing its capital structure; fact that there were numerous rounds of funding to raise equity capital during the pendency of the arbitral proceedings. Likewise, the IPO is another round of funding to raise equity capital (albeit from public shareholders). Nothing in the award prevents or restrains Oyo from going ahead with the same,” said Oyo’s legal counsel.