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OYO Rooms sued by Hyderabad-based hospitality firm for non-payment of dues

A Hyderabad-based hospitality firm, Conclave Infratech, has filed an application against OYO Rooms’ parent company Oravel Stays for non-payment of dues, the Economic Times reported. OYO Rooms allegedly breached a contract for monthly payments of nearly ₹13 lakh/month since May 2018 amounting to a total of ₹82.5 lakh. Conclave Infratech filed a case in the Ahmedabad chapter of National Company Law Tribunal (NCLT) and the matter was listed on February 24, 2020. An OYO spokesperson confirmed the development to MediaNama and said that “OYO has disputed the liability and this being a corporate commercial dispute, the petition itself before the NCLT, is not maintainable”.

OYO’s Statement:

“OYO continuously engages with all its vendors, towards resolving any issues and is committed to ensuring the best outcomes. Unfortunately, in this situation, the partner chose to disengage and pursue the matter in the said forum which also as per established judicial precedence isn’t maintainable given this is a disputed matter. OYO has disputed the liability and this being a corporate commercial dispute, the petition itself before the NCLT, is not maintainable. Moreover, our efforts are always towards ensuring we are able to provide an honest and transparent perspective as a young, hotel company and engage with all stakeholders and resolve differences amicably.”

A source at OYO told us that this case has been under dispute resolution for the last few months. According to the agreement between Conclave and Oyo, ET reported that Oravel would pay Conclave an assured minimum benchmark revenue (that is, a minimum business guarantee) of ₹12,96,000/month irrespective of the bookings. It is this amount Conclave claims that OYO hasn’t paid. Between May 2018 and May 2019, Conclave allegedly received this payment only for two months; for all other months, the payment was much below the minimum benchmark revenue. Conclave has also claimed that OYO “fraudulently” reduced the minimum assured sum to ₹9,96,000/month in May 2019 citing incurring losses.

The company owns the 36-roomed Conclave Hotel in Hyderabad which is managed by OYO Rooms and has an estimated revenue of ₹15 lakh/month.

***Update (March 3, 2020 2:04 pm): Updated with OYO’s complete statement.

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***Update (5:19 pm): The article erroneously said that the matter hasn’t been admitted yet. Apologies. Original article was published at 4:41 pm on March 2, 2020.

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