Zostel has withdrawn its application before the Delhi High Court seeking directions to the Securities and Exchange Board of India (SEBI) over its complaint concerning OYO's proposed initial public offering (IPO).
The Delhi High Court on Monday, August 10, allowed Zostel to withdraw the application while granting the company liberty to approach the court again at an appropriate stage. The court also declined to intervene in SEBI's handling of Zostel's complaint at this stage, observing that the regulator can examine the matter in accordance with law.
Zostel had sought directions to SEBI to adjudicate its complaint relating to disclosures in OYO's draft offer document. The company had alleged that material details concerning its long-running dispute with OYO and its claimed entitlement to nearly 7% of OYO's equity were not adequately disclosed.
The court noted that OYO's draft offer document has not yet been cleared by SEBI and indicated that Zostel's objections should, in the first instance, be considered by the market regulator.
The dispute between Zostel and OYO dates back to 2015, when OYO had proposed acquiring Zostel. The transaction did not ultimately proceed as originally envisaged, but Zostel has maintained that it is entitled to shares in OYO arising from the proposed transaction.
Zostel has claimed an entitlement equivalent to nearly 7% of OYO's equity and has maintained that the issue of its share entitlement remains unresolved.
With OYO now preparing for its IPO, Zostel recently approached SEBI, alleging that the company's draft IPO disclosures did not adequately reflect the ongoing dispute and its potential implications for OYO's ownership structure.
Zostel had sought regulatory scrutiny of the disclosures before OYO's public issue process progresses.
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Following Monday's court proceedings, Zostel said its withdrawal of the application was based on the court's observation that its objections should first be considered by SEBI, given that the draft offer document has not yet received regulatory clearance.
"Accordingly, Zostel withdrew its application at this stage, with liberty to approach the Court at the appropriate time. Zostel's rights and remedies remain fully reserved and unaffected," the company said in a statement.
Zostel added that the substantive dispute with OYO continues to remain pending before the Delhi High Court and said it remains confident of its position on the merits of the case.
The company also said it would continue to monitor OYO's proposed IPO and remains committed to protecting its rights as well as the interests of investors.
The latest development does not resolve the underlying ownership dispute between the two companies. Instead, it leaves SEBI to examine Zostel's objections as part of its regulatory review of OYO's proposed public issue.
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