In the latest hearing on the Oyo Insolvency case before the National Company Law Appellate Tribunal (NCLAT), the Federation of Hotel & Restaurant Associations of India (FHRAI) has been allowed to intervene on behalf of hotels. The FHRAI has presently filed the application on behalf of its member hotels in India, who are operational creditors and are suffering hugely on account of non-payments of debt by Oyo. Sr. Counsel Kishnendu Datta appeared for FHRAI intervening on behalf of its affected members for their outstanding of approximately Rs. 72 Crores. The Tribunal has also allowed the FHRAI to make its oral submissions on June 02, 2021. The total claims registered with IRP against Oyo are to the tune of Rs 200 Crores.
The hotels have stated that Oyo entered into various kinds of agreements ranging from leave and license agreements to Management Services Agreement with minimum return assurances but Oyo eventually breached the terms of the agreements.
“The FHRAI has been receiving several complaints from member hotels with respect to the non-payment of debts by Oyo for years. The FHRAI has presently filed the application before the NCLAT on behalf of aggrieved hotels and restaurants across India who have filed their claims with the Insolvency Resolution Professional (IRP). Many are small standalone hotels that are fighting to survive in an extremely competitive market. At present hospitality business is badly affected due to the pandemic and the non-payment of the debts by Oyo is causing extreme hardships to hotels. The development in the case has given a sense of relief to several hotels across the country who felt short changed by Oyo’s sudden change in their alignment and policy. It has brought them a new ray of hope with the possibility of recovering their rightful dues,” says Gurbaxish Singh Kohli, Vice President, FHRAI.
In its application to the Tribunal, the Association has also pointed out that a number of matters by several hoteliers are pending before various Courts against Oyo. Oyo has closed a majority of its operations and offices across India to further cheat member hotels and other similarly placed companies.
“Oyo operates its business under maze of more than a dozen subsidiary entities that have agreements with hotels. FHRAI has data of hundreds of such hotels that have reported payment defaults and other unethical business practices by Oyo. The FHRAI has also filed a case in the CCI against Oyo for anticompetitive practices and cartelization, which is presently under investigation. The systemic depredation of the budget segment hotel business and its market as a means to achieve notional billion-dollar valuation for OTAs is a serious cause of concern for FHRAI,” concludes Pradeep Shetty, Jt. Hon. Secretary, FHRAI.
Commenting on FHRAI’s intervention, OYO’s spokesperson said, “This is consistent with the baseless and negative propaganda perpetuated by FHRAI to mislead the small hoteliers of this country. This is especially surprising given the grim situation driven by Covid 2.0. They are on purpose mis-representing the views and directions of the honourable courts of India. Given the matter is sub-judice, we have no further comments at this point.”
Jeevan Bhalla Panda, OYO’s Counsel for the appeal – Anuj Tejpal V. Rakesh Yadav & ANR commented, “Kindly note that the applications seeking to intervene in the appeal are yet to be heard, let alone being allowed and do not have any merit. The Hon’ble NCLAT also did not allow any written submissions to be filed by any intervener except only to make an oral submission to show why they should be allowed to intervene at all. FHRAI has no locus standi whatsoever.”
