OYO faces lawsuit for non-payment of dues

India: OYO Rooms has been served a lawsuit for a potential non-payment.

Hyderabad based hospitality firm Conclave Infratech has filed an insolvency application against OYO parent company Oravel Stays. The group claims a lack of payment for services rendered with regard to The Conclave Hotel.

The original agreement between the two claims that Oravel would pay Conclave an assured benchmark an assured benchmark revenue of Rs 12,96,000 every month irrespective of bookings. Conclave claims that it only received this amount for two months over the duration of the report, and that it was far beneath for the rest of the contracted period.

Because the reduction to Rs 9,96,000 each month was unilateral, the group has accused OYO of fraudulent behaviour.

OYO has claimed that talks for a dispute resolution are currently underway. In a statement, the company said: “OYO has disputed the liability and this being a corporate commercial dispute, the petition itself before the NCLT is not maintainable.”

The lawsuit has at this point been moved to the National Company Law Tribunal’s Hyderabad chambers, and was listed on 24 February. OYO has been served a notice but has claimed that the motion is without justification moving forward.

An OYO spokesperson added: “Unfortunately, in this situation, the partner chose to disengage and pursue the matter in the said forum.”

This follows a 2020 of difficult news for Oyo as the group announced an increase in losses over the past year. With layoffs in mid-January, the group’s business strategy of ambitious acquisition and rapid expansion has drawn criticism in certain quarters, with experts comparing it to fellow Vision Fund project WeWork.

The group’s gulf segment of business was also offered a buy-out by Gallery Suites earlier this year.