Everything You Need To Know About Why Hoteliers Are Suing OYO Founder

Bengaluru-based Roxel Inn owner Betz Fernandez has sued OYO founder Ritesh Agarwal and six others alleging that the company has not paid rent for the last five months

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By Shreya Ganguly

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Trouble for hospitality unicorn OYO refuses to cool down anytime soon. Hotel association and hoteliers have been raising their voices against the company and its founder Ritesh Agarwal since September alleging that the company has been cheating and has been using unfair business practices.

Latest media reports revealed that Bengaluru-based Roxel Inn owner Betz Fernandez has sued Agarwal and six others alleging that, OYO Hotels & Homes, didn't pay rent for the rooms for the last five months. According to the hotel owner, OYO booked rooms at the inn and had mutually agreed to pay a rent of INR 5 Lakh every month for the rooms. However, Fernandez complained that OYO has not given the rent since May.

Apart from OYO founder, the case has been booked against Rohit Srivastava, head of OYO South; Madhvendra Kumar and Gourab De, heads of business development; Prateek Agarwal, Manjeet Singh and Mrimony Chakraborty, OYO Finance Officers.

Related Story: Oyo's 8-year-old Journey is a Quintessential Indian Legend in the Book of Business World Stories

OYO's Reaction To The Charges

Following this move, an Economic Times report stated that the hospitality unicorn plans to file a counter complained against Fernandez. OYO has refuted the claims and said that the case has been filed on based on wrong allegations and is an exaggeration of a regular civil dispute". OYO has said that the lawyers are currently looking into the issue and will take "strong legal action".

"Our lawyers are looking into the matter and will be taking strong legal action as these claims are incorrect and defamatory in nature.OYO Hotels & Homes will initiate appropriate criminal proceedings against the Bengaluru owner who is sensationalising a civil dispute to attract attention. On studying a similar matter where an FIR was wrongfully filed in September, the honourable Karnataka High Court while observing that issue was civil in nature, granted an injunction in Bengaluru in that matter. We, therefore, have strong reasons to repose our faith in the justice system. We respect the law of the land and believe it will do the right justice," OYO said in a statement.

According to the media reports, Agarwal and the other OYO senior executives have been asked to appear before the investigation officer on November 7.

OYO's Ongoing Troubles With Hoteliers

This case comes after reports from September revealed that Bengaluru-based Bruhat Bangalore Hotels Association had reached out to police commissioner seeking an against the hospitality unicorn, accusing it of unfair business practises.

According to the restaurant association, OYO misused its dominant position and its technology to falsify booking data. The association accused OYO of allegedly cheating the hoteliers by altering data and withholding money.

Before this, Agarwal and other OYO executives Anand Reddy and Prathik Singh were sued by Natarajan V R S, an ex-serviceman, who accused them of cheating and criminal breach of trust. According to reports, Natarajan, who runs the Rajguru Shelter Hotels in Bengaluru accused the trio of cheating him of more than INR 1 crore.

Not only Bengaluru-based hoteliers but owners from other states have also raised their concerns about OYO's business practises. In August, reports showed that several independent protests were being carried out by small hotel owners from several cities such as Nashik, Pune, Kota, Manali, Jaipur, Ahmedabad and Delhi. According to media reports, hoteliers claimed that OYO cheated them of the agreed returns and minimum guarantees. They also claimed that OYO also levies slew of charges on them often without informing.

Shreya Ganguly

Features Writer

Covering startups and investments for Entrepreneur India. Previously a startup correspondent at Inc42. Reach out to me with interesting story ideas at sganguly@entrepreneurindia.com. 

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