Meenakshi Shukla
On 12th August, 2025 Zostel Hospitality Private Limited, which owns ZO Rooms, filed an appeal before the Delhi High Court challenging a single-judge order that had overturned an arbitral award granting Zostel a right to claim 7% equity in OYO’s parent company, Oravel Stays Private Limited. A Division Bench of Justice Nitin Wasudeo Sambre and Justice Anish Dayal issued notice to OYO on Zostel’s appeal.
The appeal arises from the May 2025 ruling of Justice Sachin Datta, who had set aside the arbitral award in its entirety. That award, delivered in March 2021 by former Chief Justice of India AM Ahmadi (Retd.), held that OYO breached its obligations under a 2015 term sheet to acquire Zostel’s business in exchange for a 7% equity stake. However, the tribunal stopped short of directing allotment of shares, noting that definitive agreements had not been executed.
Zostel, represented by Senior Advocate Abhishek Malhotra with Advocates Kartikay Dutta and Anukriti Trivedi, argued that the arbitral award recognized its entitlement to enforce specific performance of the term sheet. OYO, on the other hand, represented by Advocates Anuradha Dutt, Lynn Pereir, Suman Yadav, Haaris Fazeli and team, has consistently maintained that the non-binding nature of the term sheet prevented Zostel from claiming any enforceable rights.
The Division Bench recorded in its order:
“Issue notice of this application… Notice accepted by the learned counsel for respondents, who seeks time to file a reply. Let the same be filed within a period of four weeks from today. List on 09th October 2025.”
The case has a long procedural history. Zostel initially moved the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, 1996, requesting an order to prevent OYO from changing its shareholding ahead of its planned IPO. That plea was dismissed in February 2022, with the Court holding that the arbitral award did not crystallise into an enforceable right to shares.
Following Justice Datta’s May 2025 order, Zostel approached the Supreme Court, which declined to hear the matter on jurisdictional grounds and directed Zostel to seek remedies under Section 34 first. Zostel then withdrew the petition and filed the present appeal before the Division Bench.
The Bench has directed OYO to file its reply within four weeks and listed the matter for further hearing on October 9, 2025.
Case Name: Zostel Hospitality Private Ltd v. Oravel Stays Private Limited & Anr
Case Number: FAO(OS) (COMM) 124/2025 & CM APPL. 49594/2025
Bench: Justice Anish Dayal and Justice Nitin Wasudeo Sambre
Click here to access the Order
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