Oyo-Zo fight goes ugly: Former files criminal case against friend-turn-foe Zo Rooms

The story of Zo Rooms has been a curious case for the entire startup ecosystem. The startup, which had raised a major chunk of  $47 million total risk capital from Tiger Global,  had fairly posed as a challenger to the then resurging leader, Oyo.

Fast forward after a year of Zo Rooms’ inception in 2015, Oyo reportedly acquired Zo Rooms in an all-stock deal. The Masayoshi Son-led SoftBank has had even showcased Zo acquisition in its earning reports presented in February 2016.

But three months later, the Zo Rooms acquisition was completely ruled out by Oyo. After two years since last light on a mysterious deal, it resurfaced again with Oyo rooms filing a criminal case against Zostel (holding company of Zo) and its directors alleging consistent harassment ranging more than over a year.

Ritesh Agarwal-led company had filed a criminal complaint against the founders of Zostel on January 16, 2018, under Section 405, 406, 415, 420, 425 and 426 pertaining to Criminal breach of trust, cheating, and misrepresentation of data.

The complaint also mentioned that Zostel and its team used every tactic, from sending letters indulging false allegations to OYO's management to writing its investors intimidating and pressurising it to submit to Zo’s demand.

Besides, it alleges that Zo Room has tried to arm twist and ‘blackmail’ the company and its investors to execute the deal without having a ‘real business’ or even a binding agreement at hand and ‘threatening’ it for legal recourse.

Rebutting fresh accusations, Zostel has also filed a ‘misconceived and baseless’ arbitration petition in the Gurugram Court on February 2, 2018.

Meanwhile, Entrackr multiple attempts to approach Paavan Nanda, one of the co-founders of Zo did not elicit any response. We'll update the post as soon as we get a response from him.

For uninitiated, the relationship between two companies was rocky right from the beginning. Oyo had earlier alleged that executives of the Zostel-owned company had stolen (using the then Oyo’s employee poached by Zo) its data and produced evidence such as emails and CCTV footage.

Oyo-Zo deal saga reminds us the most talked about Flipkart-Snapdeal acquisition thread. However, the two competitors seem to usher into ugly legal battle.

The development was first reported by Business Standard.