SC appoints former CJI AM Ahmadi as sole arbitrator in OYO-ZO Rooms dispute

Indian hotel chain unicorn OYO has been engaged in a litigation battle with budget hotel aggregator ZO Rooms, ever since the former called off the deal in October last year.

In a recent development, a three-judge bench of the Supreme Court, comprising of Chief Justice of India Dipak Misra, Justice DY Chandrachud and Justice AM Khanwilkar, has appointed former Chief Justice of India Justice AM Ahmadi, as the sole arbitrator for the OYO-ZO Rooms case. The decision by Justice AM Ahmadi shall be final and binding.

It was two years back when OYO’s largest stakeholder Softbank had announced that OYO had acquired ZO Rooms. OYO had signed a term sheet to acquire the assets of ZO Rooms. However, since OYO called off the deal in October last year, there has been a string of litigation cases between the two Indian hotel aggregators.

Earlier in February this year, a Gurugram-based district court had rejected an arbitration petition filed by ZO Rooms against the Indian hospitality unicorn on the grounds that it lacked jurisdiction.

Zostel Hospitality, the parent company of ZO Room, had filed the petition, alleging that OYO had acquired its data of employees, assets, hotel properties under the pretext of accelerating the process of acquisition and was refusing to pay the dues for the business acquired.

Following this Zostel approached the High Court and later the Supreme Court.

OYO claimed that the term sheet for the deal was non-binding and stands terminated. While ZO Rooms sought arbitration on the grounds that the arbitration clause in the term sheet was binding.

“On a scan of the arbitration clause, there can be no doubt that a clause of arbitration exists between the parties in the term sheet. Whether the claims are arbitrable or not, is within the domain of the arbitration,” the Supreme Court stated in its order dated September 19. The arbitrator has 12 months to reach a conclusion.

In response to the Supreme Court’s decision, OYO spokesperson, said, “We welcome, respect and value the Hon’ble Supreme Court’s decision to appoint an arbitrator while giving OYO the opportunity to agitate the issue of arbitrability.”

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