Court quashes Zo Rooms’ plea against Oyo

Now-defunct budget hotel room aggregator Zo Rooms has suffered a setback in its legal battle against Oyo Rooms with a Gurugram court dismissing its petition against the SoftBank Group Corp-backed company.

The Gurugram district court rejected the arbitration petition saying it lacked jurisdiction to decide on the matter, Oyo said in a statement on Friday.

The petition, filed earlier this month, accused Oyo of stealing data about employees, assets and hotel properties under the guise of speeding up Zo’s acquisition. It also claimed that Oyo, operated by Oravel Stays Pvt. Ltd, was refusing to pay dues for the business it had allegedly acquired.

Oyo and Zo, operated by Zostel Hospitality Pvt. Ltd, had first engaged in merger talks in 2015. In October 2017, however, Oyo said it had ended the negotiations. Zo later claimed Oyo had acquired its business in March 2016 and then abandoned its contractual obligations.

Zo hasn’t outlined its next legal move but, on Sunday, it acknowledged the challenges it faces in taking on Oyo. In a message portraying itself as an underdog, Zo said: “We don’t have much money left in the company to incur prolonged legal costs, PR (public relations) machinery and advisors -- something Oyo can splurge on -- or counter (them) with frivolous cases through which Oyo wants to pressure us and muzzle our voice. Our only asset is the wealth of strong supporting evidence of OYO taking up our entire business without giving us a penny.”

Oyo sounded triumphant in its statement: "We are delighted with the outcome which reinforces the faith entrepreneurs have in the judiciary. Zostel Hospitality Pvt. Ltd (owner of Zo) is taking an emotional route now after the dismissal of their petition. These are factual misrepresentations and theatrical antics by Zostel in a futile attempt at gaining emotional mileage on the case.”

The two companies are also locked in other legal cases. On 16 January, Oyo sued Zo and filed a criminal complaint against its founders alleging cheating, breach of criminal trust and misrepresentation of data. 

In its complaint, Oyo said Zo’s behaviour over the past few months amounted to harassment. It alleged that Zo had been intimidating, blackmailing and threatening the company, apart from causing constant inconvenience.  

In its statement on Sunday, Zo reiterated that both companies had started integrating their businesses, going way ahead of the term-sheet stage, when Oyo called off the merger.

“OYO acquired our partner-hotels across all cities, employees, the entire customer data, future bookings, analytics, access, and passwords… It was not an exercise done at a founder or core team level, but rather almost each one of our employees has played his/her part in efficiently transferring our business spread across the length and breadth of the country to Oyo by February 2016,” Zo said.