The Supreme Court of India has dismissed a petition filed by Zostel Hospitality, effectively bringing an end to its prolonged legal battle against Oyo (Oravel Stays Ltd). The apex court rejected Zostel’s special leave petition challenging a previous ruling by the Delhi High Court, which had set aside an arbitral award favoring Zostel in 2021.
The Supreme Court’s ruling upholds the Delhi High Court’s earlier decision, reinforcing that Zostel holds no rights or claims over Oyo. The High Court had determined that Zostel could not assert any entitlement to Oyo shares based on a failed acquisition deal dating back to 2015.
The dispute began in November 2015, when Oyo and Zostel signed a non-binding term sheet for a potential acquisition. The deal ultimately collapsed after due diligence revealed gaps and the two companies failed to agree on definitive terms.
Despite the breakdown, Zostel initiated arbitration proceedings in September 2018, nearly three years later. The arbitration tribunal ruled in Zostel’s favor in March 2021, leading to the contested award. Oyo swiftly challenged the verdict, arguing that the term sheet was non-binding and did not grant Zostel any enforceable rights.
In February 2022, the Delhi High Court ruled in Oyo’s favor, setting aside the arbitral award and rejecting Zostel’s plea for an injunction that could have disrupted Oyo’s shareholder actions and proposed IPO.
With the Supreme Court now dismissing Zostel’s final appeal, the legal path is clear for Oyo, reaffirming the court’s position that Zostel has no claim stemming from the failed 2015 transaction.
Oyo welcomed the decision, stating it validates the company’s long-standing stance that the negotiations with Zostel did not result in any binding agreement or obligation.
