OYO Hotels and Homes have been dragged to the court for breach of contract by another hospitality firm.
The Delhi-based Pearl Hospitality & Events has accused OYO of denying paying the amount OYO allegedly owes for exiting the property & abandoning their contract.
As per the company’s statement, it had entered into a ‘Management Service Agreement’ with OYO on Sep 4, 2019. As per the agreement, OYO had a lock-in period of 16 months from Sept 12, 2020. If the company decided to terminate the agreement before this lock-in period, it would have to pay Pearl Hospitality a certain amount. The hotel partner alleged that the OYO made its payments till November 2019 only.
A notice has been issued to OYO by the High Court of Delhi, to respond to the complaint filed by the partner of the hotel based in Delhi, who is now seeking financial compensation with Rs. 5 Cr for the breach of lock-in period terms in the contract. OYO has to reply by June 2019.
Legal Counsel of OYO told Delhi High Court that Pearl Hospitality had taken the discussed property on lease from the original landlord, the agreement for which was terminated in January this year. The Softbank-backed company added that with the termination of the deal between the landlord & Pearl Hospital, there is “no question of the petitioner maintaining any claim.”
Pearl Hospitality has not submitted various documents like licenses, no-objection certifications, despite repeated requests, added the legal counsel.
An OYO spokesperson commenting on the case, said that the company won't be able to comment on the specifics of the case as it is sub judice.
“At OYO, safety & security of guests & employees is paramount. Hence, compliance of all mandatory guidelines & license is non-negotiable & any failure to comply invokes relevant corrective actions,” they added.
Hyderabad-based hospitality company Conclave Infratech moved the NCLT’s Ahmedabad chapter against OYO for non-payment of dues in March 2020. The company had accused OYO of breaching the assured revenue clause in the contract, under which it owned nearly Rs. 13 Lakh every month since May 2018.
In Nov 2019, a hotel owner from Bengaluru had also filed a FIR against Ritesh Agarwal & some other top executives over non-payment of the assured benchmark revenue of Rs. 7 Lakh per month. Similarly, in Oct 2019, some hotel partners held four OYO employees hostage for nonpayment of dues, in Sikkim. Hotel owners claimed that dues had piled up to Rs. 1 Cr. Sikkim Hotel & Restaurant Association added that instead of paying the dues, the company had sent the said employees to get more hotels on board.