Oyo IPO: Delhi HC rejects Zostel's petition for stake in firm

The root of the dispute between IPO bound Oyo and Zostel lies in a failed buyout deal 6 years ago, which Zostel claims was binding on Oyo.

Oyo IPO: In a breather to IPO-bound Oyo, the Delhi High Court rejected Zostel's plea claiming 7 per cent shareholding in Oyo.

The Softbank-backed Oyo has been in a legal tussle with Zo Rooms after the latter filed a case in the Delhi HC last year to restrain Oyo from going for a listing. The root of the dispute between the two parties lies in a failed buyout deal 6 years ago, which Zostel claims was binding on Oyo.

Other than transfering 7 per cent shareholding to an escrow account, the HC also rejected the plea seeking Oyo altering shareholding pattern by IPO or other fundraise.

The court said there was 'no fruit' to protect under section 9. The HC also asked why Zostel had not focussed on taking steps towards 'specific performance' of term sheets as mentioned in the arbitration order.

In a statement Oyo said: "While we await for the full order, we believe that Zostel's demand for issuance of 7 per cent share of Oyo under the arbitration award has been rejected. This verdict vindicates our stand that Zostel has been trying to mislead the public at large."

Meanwhile, media reports said that Zostel will evaluate other legal options including filing an appeal before the division bench.

Oravel Stays, the parent company of Oyo, has filed its Draft Red Herring Prospectus (DRHP) with Securities & Exchange Board of India (SEBI) in September last year and has been in the process of responding to the questions and clarifications sought by the regulators.

It recently received in-principle approval from BSE and NSE to list on the respective bourses, said reports.