Zostel withdraws Delhi HC plea on OYO IPO disclosures

Zostel has withdrawn its application before the Delhi High Court that sought directions to SEBI to examine OYO’s IPO disclosures. The application concerned disclosures relating to Zostel’s claimed 7% stake in OYO parent PRISM, and had also sought that 7% of OYO’s equity shares be placed in escrow.

The High Court observed that Zostel’s concerns about the IPO disclosures would be considered by SEBI in any case, since the draft papers have not yet received regulatory approval and SEBI would examine the matter in accordance with law. Zostel was granted liberty to approach the court again if required. The substantive dispute between the two companies remains pending before the High Court.

PRISM filed IPO papers confidentially in December 2025 and an updated DRHP in June 2026. The issue is Rs 6,650 crore of fresh shares, with proceeds earmarked to repay borrowings and support growth. The dispute dates to a 2015 non binding term sheet under which OYO was to acquire parts of Zostel’s business, a transaction that never closed. An arbitral tribunal held in 2021 that the term sheet had become binding through the conduct of the parties. The Delhi High Court set that award aside in May 2025. In July 2025 Zostel withdrew a Supreme Court challenge and filed a fresh Delhi High Court appeal under the Arbitration Act.

In statements, Zostel said its “rights and remedies remain fully reserved and unaffected” and that it “remains confident of its case on merits”. PRISM said it has “consistently maintained that these applications are frivolous and not maintainable”. Both are corporate statements rather than remarks attributed to named individuals.

For anyone tracking the listing calendar, the read here is narrow. Withdrawing this application closes a parallel track, not the underlying claim. The court’s own observation is the operative point: disclosure scrutiny sits with SEBI at the draft stage regardless of who asks for it, so the application was pointing at something already inside the regulator’s normal path. The timeline still turns on the unresolved appeal, not on this withdrawal.