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OYO Files Case Against Zostel Alleging Data Theft, Breach of Trust

OYO has filed a criminal complaint against the founders of another budget hotel group, Zostel.

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Softbank-backed hospitality chain OYO has filed a criminal complaint against the founders of another budget hotel group – Zostel, alleging breach of trust, cheating and misinterpretation of data.

OYO was in talks to acquire Zostel Hospitality Pvt Ltd’s budget hotel business Zo Rooms in an all stock deal since 2015, but had clarified last year that it had called off the talks and said the non-binding term sheet for “this deal” stands terminated in September 2016.

“Zostel and its directors have been continuously harassing the company for more than year,” Oyo said in a statement last evening, adding that the firm has been trying to arm twist and blackmail OYO and its investors into getting the deal done.

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They’ve used every tactic, from sending letters carrying false allegations to OYO’s management to writing to our shareholders, for intimidating and pressurising us to submit to their unreasonable demands.
OYO Statement

The statement added that Zostel has filed a ‘misconceived and baseless’ arbitration petition in a Gurgaon Court on 2 February, relating to a long-expired and non-binding term sheet. OYO said it has filed a criminal complaint against the founders of Zostel under Section 405, 406, 415, 420, 425 and 426, pertaining to Criminal Breach of Trust, Cheating and Misrepresentation of data. The case was filed on 16 January.

On reasons behind calling off the deal last year, OYO alleged that Zostel did not respond to a list of issues identified during their diligence process, including significant liabilities and unpaid dues as well as undisclosed contingent liabilities.

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They shut down the app and website, giving prior notice to us, their customers or owners, thereby making it impossible for Zostel to ever affect any customer migration, leave alone a smooth business transfer which was key to the deal discussion.
OYO spokesperson said in the statement.

This is the second instance that the firm has filed a case against Zostel. OYO said it has previously filed criminal cases under section 379, 414, 420 and 120B of Indian Penal Code and other implications under IT and Copyright Acts with the Economic Offences Wing & Cybercrime department against senior employees of Zostel for stealing data and other assets including laptops.

Zostel senior officials could not be immediately contacted for a comment.

(This article was first published on BloombergQuint)

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Topics:  Cheating   OYO 

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