SC rules out Zostel's appeal against Oyo

The Supreme Court has dismissed Zostel’s petition challenging the Delhi High Court’s previous ruling in its ongoing dispute with Oyo (Oravel Stays Ltd).

The bench dismissed Zostel’s special leave petition against the High Court order. The Delhi High Court’s ruling, which set aside the Arbitration award of 2021, continues to operate effectively and bars any rights or claim of Zostel against Oyo.

The Supreme Court’s decision confirms Oyo’s position that Zostel is not entitled to any claim or rights whatsoever owing to the unsuccessful negotiation relating to the nonbinding term sheet signed in 2015.

The dispute started in November 2015, when Oyo signed a nonbinding exploratory term sheet with Zostel to potentially acquire its business. The deal, however, fell through after due diligence failed and both sides could not agree on final terms.

A tribunal issued an arbitral award in the Zostel dispute in 2021; however, the Delhi High Court subsequently set aside this award, ruling that Zostel had no enforceable right or claim over Oyo shares. The court also issued multiple orders declining to restrain any of Oyo’s shareholder actions, including its proposed IPO.

Zostel initiated arbitration in September 2018, nearly three years after the talks, which resulted in the arbitral award in March 2021 that Oyo promptly challenged. In February 2022, the Delhi High Court denied Zostel’s plea for an injunction.