An arbitral tribunal dominated in favour of Zostel Hospitality Pvt. Ltd, which owns Zostel Hostels and ZO Rooms, in a criminal conflict towards Oravel Stays Pvt. Ltd, the figure of Oyo Rooms, which may also cause shareholders of ZO Rooms to now very own 7% in Oyo.
The time period sheet carried out among the 2 events in 2015 promised ZO Rooms’ shareholders 7% of hospitality unicorn Oyo. The arbitral tribunal, in a ruling with the aid of using former Chief Justice of India A.M. Ahmadi on 6 March, ordered the report to be binding.
“However, as Definitive Agreements have not begun to be carried out, the Tribunal holds that the Claimant is entitled to take suitable lawsuits for Specific Performance and execution of the Definitive Agreements as envisaged for itself and its shareholders below the time period sheet,” stated the order.
According to Zostel Hospitality, ZO Rooms and Oyo had entered into talks for a merger in 2015, executing an settlement on 26 November that year. ZO Rooms finished its duty below the settlement and transferred the business, however Oyo didn’t switch 7% to the ZO Room’s shareholder, which sooner or later brought about the lately concluded arbitration, the organization stated.
Now, Zostel will take the judgement to Oyo to fulfil the duties below the time period sheet and switch the stocks. In case of refusal, Zostel will technique a excessive court.
Oyo is precisely refuting the element which claims that Zostel shareholders are entitled to a stake withinside the organization.
“The arbitration hasn’t given any route for issuance of stocks because the definitive settlement changed into neither agreed nor consummated and therefore, remaining situations have been a ways from being achieved,” Oyo stated in its professional blog.
“The very last award purports to offer Zostel a proper to initiate ‘suitable lawsuits’ and for in search of execution of the definitive settlement whilst no precise treatment for the equal changed into granted besides towards their prayer for a cost, which Oyo will vehemently oppose in all avenues to be had below the regulation of the land,” stated Oyo.
If the arbitration award is implemented, the seven founders of Zostel Hospitality, which includes Orios Venture Partners and a collection of angel investors, gets a 7% stake in Oyo. As in keeping with a current regulatory submitting with the ministry of company affairs, Oyo has raised $7.31 million at a proportion fee of $58,490 as a part of collection F1 round, valuing Oyo at $nine billion.
Oyo is predicted to pay the criminal charge to Zostel for mission the arbitration, the order stated.