The Delhi High Court has resolved a new application submitted by Zostel Hospitality concerning its legal conflict with Oravel Stays, the parent organisation of OYO, now known as PRISM. A division bench, including Justices Nitin Wasudeo Sambre and Amit Sharma, noted that Zostel chose not to press the application, as referenced in the court’s previous order dated March 14, 2022. As a result, the bench has concluded the application.
The court furthermore instructed that Zostel’s outstanding appeal (FAO(OS) (COMM) 124/2025) should be scheduled for a hearing on August 12, 2026. The order issued on July 8 does not address the merits of the case and merely documents that the new application was not pursued while allowing the principal appeal to remain pending.
A representative for Zostel stated that OYO acknowledged the binding nature of the Delhi High Court’s March 14, 2022 order. OYO confirmed it would transfer 7% equity in OYO, or its equivalent value, to Zostel if the upcoming appeal is successful. The spokesperson further mentioned that the Division Bench has arranged the appeal for hearing on August 12, 2026, describing the proceedings as a substantial reaffirmation of Zostel’s ongoing rights, which are now set to be evaluated on their merits.
This development comes shortly after Zostel reached out to the Securities and Exchange Board of India (SEBI), claiming that Oravel Stays’ revised draft red herring prospectus (UDRHP) for its upcoming IPO fails to properly reveal the prolonged legal dispute between the two firms. Zostel has urged the regulator to assess whether the disclosures are in line with the SEBI Act and ICDR Regulations.
The conflict traces back to 2015 when OYO entered a non-binding term sheet to acquire Zostel’s operations. In May 2025, the Delhi High Court annulled an arbitral award in favour of Zostel, stating that the term sheet did not establish enforceable rights. Zostel’s appeal against this ruling continues to be pending before the Delhi High Court.
Last month, Oravel Stays submitted an updated draft red herring prospectus to SEBI, aiming to raise Rs 6,650 crore through a new share issue, without any offer-for-sale component.
