Companies

OYO refutes Zostel claims on arbitration award

Our Bureau Mumbai | Updated on March 08, 2021

Says Zostel has failed to get relief for monetary damages

The wrangle between OYO and Zostel refuses to die down with both sides claiming victory at the recently concluded arbitration proceedings.

While Zostel on Sunday said that the arbitration award over a three-year dispute has gone in its favour, OYO has countered it by saying that Zostel has failed to get relief for monetary damages or in terms of getting any OYO share ownership.

The Arbitration Tribunal adjudicating the dispute between Zo (Zostel) and OYO delivered its award on March 6, 2021 “In the most significant development, the Tribunal has disallowed it while granting them the right to seek specific performance of TS. No definitive agreements in place to consummate the transaction and the tribunal has categorically acknowledged it; and that the definitive agreements, important documentation for any M&A transaction, were neither finalised nor agreed,” OYO said in a statement.

Both companies have been fighting against each other over a 2015 deal under which ZO claimed OYO had acquired the company while OYO maintained the deal fell through after due diligence and that it has plenty of reasons for not acquiring the company.

Zostel and OYO had entered into talks for a merger in 2015, executing an agreement on November 26, 2015. ZO Rooms claims that it completed its obligation under the agreement and transferred the business but OYO failed to transfer 7 per cent to Zostel’s shareholder, which eventually led to the recently concluded Arbitration. Following the Supreme Court Directive in October 2018, Justice AM Ahmadi was appointed as the sole Arbitrator.

‘Breach of agreement’

On Sunday, Zostel said, “OYO acted in breach of its binding agreement after its acquisition of rival Zostel Hospitality, ruled the Arbitral Tribunal, directing OYO to sign the documents and issue the shareholding as committed in the Term Sheet.”

OYO countered this by stating that “The order notes that the non-binding term sheet is to be held as binding, however, the term sheet itself has several key elements like assets, value etc. including commercials that were not agreed within the term sheets itself. The Arbitration hasn’t given any direction for issuance of shares as the definitive agreement was neither agreed nor consummated and therefore, closing conditions were far from being achieved and the same has been acknowledged by the Arbitrator.”

“The Tribunal has ruled and categorically acknowledged that the definitive agreements, which are extremely important documents for any M&A transaction, were neither finalised nor agreed upon,” OYO said, adding that the final award purports to provide Zostel a right to initiate “appropriate proceedings” and for seeking execution of the definitive agreement while no specific remedy for the same was granted except against their prayer for a cost which OYO will vehemently oppose in all avenues available under the law of the land.

Published on March 08, 2021

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