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Oyo takes Zo to court, rekindles battle after two-year ceasefire

Sindhu Kashyaap
19th Feb 2018
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Startups and controversies seem to go hand-in-hand. This time, instead of a new fighting front, an old battle is being rehashed. Oyo Rooms, in a press statement, announced it has again taken Zo to court.

In a small recap, Oyo had earlier taken Zo Rooms to court in 2015 for the alleged theft of copyright material. Zostel, which had then launched Zo Rooms as a hotel aggregator, was said to have built its technology on copied data.

At that point, the high court had issued a stay order against Zostel, barring it from using any of Oyo Rooms' data or software. In a press statement Paavan Nanda, co-founder of Zostel had refuted all allegations. He stated Oyo was looking to just kill competition, and no illegality had ben committed by the company.

Post this, there also were talks of Oyo acquiring Zo Rooms. However the deal didn't go through due to various reasons.

Ritesh Agarwal's OYO just hired a new CTO
OYO's Ritesh Agarwal

Now the battle is back again. According to a press note by Oyo, Zostel has filed a Section 9 arbitration petition in the Gurgaon court against Oyo. The statement also said that for over a year now, OYO was being allegedly harassed by Zostel and its directors.

The note stated:

"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 has filed a criminal complaint against the founders of Zostel on January 16, 2018, under Section 405, 406, 415, 420, 425 and 426 pertaining to Criminal Breach of Trust, Cheating and Misrepresentation of data."

Oyo alleges Zostel is trying to arm twist and blackmail Oyo and its investors into getting their deal done without having a business or a binding agreement at hand, and threatening the former through legal routes.

Oyo had earlier filed other criminal cases under section 379, 414, 420 and 120B of the IPC, and other implications under IT and Copyright Acts with the Economic Offences Wing and Cybercrime department against senior employees of Zostel for stealing data and other assets, including laptops which continue to be under Zostel's access even now and are allegedly being used to its benefit.

The press note by Oyo also stated that it is false to suggest that Oyo benefited from talks of the deal, which fell through. Oyo adds that Zostel gave no response to the issues as identified by Oyo's due diligence process. "Getting into a deal with this background would have been harmful for our reputation and our business. OYO ultimately saw little value in Zostel's business and there was a significant loss of trust owing to issues mentioned in our previous statement," said the statement.

Multiple media reports have suggested that ZO was at a disadvantage in its battle with its rich rival OYO, and was losing money. This isn't the first time that two competing startups have entered into a legal tussle. Even the two cab aggregators Ola and Uber have had a legal battle. There have also been vendor and supplier battles like in the Stayzilla case.

At the time of publishing the story, we had only received a statement from Oyo. The article will be updated with Zo's response on the same.

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