Zostel Withdraws Oyo Stake Plea from Delhi High Court
By ThePip Desk
Backpacker hostel Zostel withdraws Delhi High Court plea over its claimed 7% stake in Oyo’s parent, Oravel Stays. SEBI’s examination continues.
Zostel has withdrawn its application from the Delhi High Court, which sought directions for the Securities and Exchange Board of India (SEBI) regarding its claimed nearly 7% stake in Oravel Stays, the parent company of Oyo. The court permitted the withdrawal but declined to intervene in SEBI’s ongoing examination of the complaint at this stage.
This development follows Zostel’s approach to SEBI a month prior, where it alleged that Oyo made incomplete, misleading, and selective disclosures in its updated draft red herring prospectus-I (UDRHP-I). Zostel had requested corrective disclosures before Oyo’s proposed initial public offering (IPO) could proceed.
- Zostel claims a nearly 7% stake in Oravel Stays (PRISM).
- Oyo’s proposed IPO includes a fresh issue of shares worth up to Rs 6,650 crore.
- The Delhi High Court set aside the arbitral award in May 2025.
The Core Dispute
Oravel Stays and Zostel are involved in a long-standing legal disagreement stemming from a failed acquisition attempt. Zostel maintains that Oravel did not finalize the deal, while Oravel asserts the signed term sheet was non-binding and merely exploratory.
Legal Journey and Court Rulings
Since 2018, Zostel has pursued its claims across various judicial forums, including the Gurugram district court, the Delhi High Court on multiple occasions, the Supreme Court, and appellate benches. None of these proceedings have resulted in substantive relief for Zostel.
Most recently, the Delhi High Court in May 2025 invalidated the arbitral award that formed the foundation of Zostel’s claims. The court ruled that the parties’ term sheet was largely non-binding, thus precluding specific performance due to the absence of definitive agreements on essential commercial terms.
The withdrawal of the Delhi High Court plea leaves SEBI as the primary authority examining Zostel’s complaint regarding Oyo’s IPO disclosures. SEBI is expected to proceed with its examination in accordance with established legal frameworks.