Indian Unicorn OYO Hotel and Homes are being dragged to the court for breach of contract by another hospitality firm. According to the Delhi based, Pearl Hospitality and Events, OYO has refused to pay the amount OYO owes for exiting the property and breaching their contract.
The company further explained that on September 4, 2019, it signed a ‘Management Service Agreement’ with OYO. According to the agreement, from September 12, 2020, OYO has a lock-in period of 16 months. If in any case this agreement is cancelled before the lock-in period, the company would have to pay Pearl Hospitality a particular amount. the hotel partner claimed that OYO made its payment only till November.
Reportedly, last week, Delhi High Court has issued a notice to OYO to give a response to the complaint that is filed by the Delhi based hotel partner. For the breach of the lock-in period terms in the contract, the Delhi based hotel partner is now seeking a financial compensation of INR 5 cr. The reply from OYO must be received by June 19.
The legal counsel of OYO informed the Delhi High Court that Pearl hospitality took the discussed property on lease from the original landlord, the agreement of which was terminated this year in January. The Softbank-backed company also added that as the deal between the landlord and Pearl Hospital is terminated, there is “no question of petitioner maintaining any claim.”
Despite repeated requests, Pearl Hospitality has not submitted many documents like no objection certifications, licenses, the legal counsel added. A spokesperson commented on the case that the company will not comment on the specific of the case as it is sub judice. “At OYO, safety and security of guests and employees are paramount. Hence compliance of all mandatory guidelines and license is non-negotiable and any failure to comply invokes relevant corrective actions.” they added.
Conclave Infratech, a Hyderabad based hospitality company, has moved the National Company Law Tribunal’s Ahmedabad chapter against OYO for non-payment of dues in March 2020. OYO was accused by Conclave Infratech of breaching the assured revenue clause in the contract, for which it owned approximately INR 13 lakh every month since May 2018.
OYO has been multiple times accused, for breaching its clause especially the minimum guaranteed dues clause. Hotel owner from Bangalore had filed an FIR against Ritesh Agarwal and some other top executive for non-payment of the assured threshold revenue of INR 7 per month in November 2019.
Apart from this, a constant protest against OYO is going on since August 2019. All those hotel owners who are not affiliated to any major union association also carried out their own independent protests in multiple cities which includes Nashik, Kota, Manali, Jaipur, Pune, Delhi, and Ahmedabad.