Budget hostel chain Zostel has withdrawn its plea requesting the Delhi High Court to direct the Securities and Exchange Board of India (SEBI) to review disclosures made by PRISM, OYO’s parent company, in its draft IPO papers. The plea focused on PRISM’s reported 7% stake in OYO. The withdrawal came after the court noted SEBI would examine the disclosures as part of its regulatory process, as the draft papers have not yet been approved, according to inc42.com.
Zostel stated it withdrew the application following the court’s observation but emphasized that its rights and remedies remain unaffected, with the substantive dispute between Zostel and OYO still pending before the High Court. The company expressed confidence in its case on merits. The court granted Zostel the liberty to reapproach if needed. PRISM responded by calling Zostel’s applications frivolous and overlapping, also noting that Zostel had unpaid legal fees, per inc42.com.
The dispute between OYO and Zostel dates back to 2015, originating from a non-binding term sheet signed by the two companies. Zostel’s challenge to PRISM’s IPO disclosures was part of an ongoing legal battle over ownership claims and rights related to OYO. The case highlights regulatory scrutiny around IPO disclosures in India’s hospitality sector and the complexities of startup ownership disputes, as reported by inc42.com.
The Delhi High Court’s decision to not direct SEBI but allow it to examine the IPO disclosures underlines the regulator’s role in overseeing compliance. Zostel’s withdrawal of the plea does not close the legal dispute, which remains active in court, with further proceedings expected to clarify ownership and disclosure issues around OYO’s IPO, according to inc42.com.