- Download OYO’s updated IPO papers here.
PRISM, the parent company of OYO, flagged an ongoing legal dispute with Zostel as a potential risk to its business in its initial public offer (IPO) documents filed on Tuesday.
“Any adverse outcome in legal proceedings involving Zostel may materially and adversely affect our business, reputation, prospects, results of operation and financial condition, including the potential issuance or transfer of up to 7% of our shareholding,” OYO said in the updated Draft Red Herring Prospectus (DRHP).
Zostel has filed a fresh petition before the Division Bench of the Delhi High Court, challenging its May 2025 ruling that set aside the arbitral award passed in 2021 against OYO. The matter is next listed for hearing on July 8, 2026, OYO’s IPO filing shows.
If Zostel succeeds in obtaining a non-appealable order from the court, it could claim a 7% stake in OYO.
“We are involved in a dispute with Zostel wherein we have alleged misuse of confidential information and other intellectual property rights belonging to our Company by certain former employees of our Company in collusion with Zostel. Zostel has, in turn, alleged that our Company gained illegal and unauthorised access to Zostel’s confidential property in collusion with former employees of Zostel. We cannot assure you that such litigations will be decided in our favour,” OYO said.
The dispute dates back to 2015, when OYO, Zostel, and Zostel’s key shareholders, Tiger Global and Orios Venture Partners, signed a non-binding term sheet outlining OYO’s proposed acquisition of Zostel’s business. In return, Zostel’s shareholders were to receive up to a 7% equity stake in OYO. However, the deal never materialised.
Timeline of Zostel’s dispute with OYO
April 2015: The Delhi High Court issued a stay order against Zostel on a complaint filed by OYO alleging theft of its copyrighted material. OYO alleged then that Zo Rooms, Zostel’s hotel bookings platform, was based upon copied data.
November 2015: OYO signed a term sheet with Zostel to acquire its hotel business, assets, technology, intellectual property, key employees, and supply network.
September 2016: The planned deal with Zostel, also confirmed by SoftBank, fell through after OYO claimed it could not identify sufficient value in the business. At the time, OYO alleged that Zostel misled it on revenue, while Zostel claimed OYO stole confidential data while auditing it.
January, 2018: Zostel invoked the arbitration clause, seeking specific performance of the non-binding term sheet and the transfer of a 7% stake in OYO. However, OYO disputed the claim, arguing that the term sheet was non-binding.
February, 2018: OYO filed a criminal complaint against the founders of Zostel on charges of criminal breach of trust, cheating and misrepresentation of data, alleging that Zostel and its directors were harassing the company to give in to their…
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