Another hospitality firm has dragged Indian unicorn OYO Hotel & Homes to the Court for breach of contract.
The news agency reported that the Delhi-based Pearl Hospitality & Events has accused OYO of denying to pay the amount OYO allegedly owes for exiting the property & abandoning their contract.
The company has elaborated that it entered into a ‘Management Service Agreement’ with OYO on Sept 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 only.
Even the High Court of Delhi has reportedly issued a notice to OYO, last week, to respond to the complaint filed by the Delhi-based hotel partner, 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.
OYO’s legal counsel told the 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.”
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The legal counsel added that Pearl Hospitality has not submitted various documents like licenses, no-objection certifications, despite repeated requests.
Commenting on the case, an OYO spokesperson said that the company wont 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.
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In March 2020, Hyderabad-based hospitality company Conclave Infratech moved the National Company Law Tribunal’s Ahmedabad chapter against OYO for non-payment of dues. Conclave Infratech 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.
OYO has been accused of breaching its clause multiple times, especially the minimum guaranteed dues clause. In Nov 2019, a hotel owner from Bengaluru had also filed an FIR against Ritesh Agarwal & some other top executives over non-payment of the assured benchmark revenue of Rs. 7 Lakh per month.
The situation went out of hand in Sikkim in Oct 2019, when some hotel partners held 4 OYO employees hostage over unpaid dues. 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.
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Besides this, there has been a series of protests against OYO since Aug 2019. Hotel owners, who were not affiliated to any major union or association, had also carried out independent protests in multiple Indian cities including Nashik, Pune, Kota, Manali, Jaipur, Ahmedabad & Delhi.
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