SC Dismisses Hostel Chain's Appeal Against Delhi High Court Decision Regarding OYO and Zostel Dispute
In a significant development, the Supreme Court of India has dismissed Zostel's special leave petition (SLP) against the Delhi High Court's May 2025 ruling in favour of Oyo's parent company, Oravel Stays. The Court's decision upholds the High Court's order setting aside the 2021 arbitral award that was in favour of Zostel.
The Supreme Court ruled that Zostel had taken an improper appeal route by filing an SLP directly to the Supreme Court instead of appealing through the correct legal channel under Section 37 of the Arbitration and Conciliation Act (ACA). By doing so, Zostel bypassed the prescribed statutory appellate mechanisms, which is against the norms of the arbitration appeals process.
The Court's decision emphasises the importance of following the correct legal procedure in arbitration appeals. Had Zostel filed under Section 37, they would have followed the prescribed legal procedure for challenging an arbitration-related court order, allowing the High Court to consider the appeal first.
The SLP is generally intended for cases where no other legal recourse exists, which was not the situation in this case. The Supreme Court’s refusal to entertain the SLP signals strict adherence to procedural norms in arbitration appeals and discourages bypassing statutory appellate mechanisms.
As a result, Zostel has been directed to withdraw the SLP and pursue the appeal route under Section 37 of the ACA in the Delhi High Court to continue contesting the matter. This procedural requirement enforces adherence to the arbitration appellate framework and limits direct Supreme Court intervention.
The legal saga between OYO and Zostel, which began in 2015, has been dragging on for over a decade now. OYO, a travel tech company founded by Ritesh Agarwal in 2012, operates from its headquarters in Gurugram. The company has received a total funding amount of $3.7 Bn. However, the article does not provide specific information about any financial highlights for OYO or any acquisition highlights related to the legal dispute between the two companies.
The article does not provide any additional information about the legal saga between OYO and Zostel, nor does it provide specific information about the arbitration ruling in favour of Zostel in 2021, the proposed amalgamation that fell through, or the current status of the legal dispute between the two parties.
In light of the Supreme Court's decision, it's crucial for both businesses and sports teams to understand the importance of adhering to legal procedures, as a failure to do so could result in the dismissal of appeals. For instance, in the ongoing legal saga between Zostel and Oyo, Zostel's improper filing of the SLP directly to the Supreme Court has led to the dismissal of their petition and the need to pursue the appeal under Section 37 of the Arbitration and Conciliation Act. This scenario underscores the relevance of finance, business, and sports entities maintaining a thorough understanding of applicable laws and regulations in their legal proceedings.
