- Delhi High Court disposed of Zostel's petition against PRISM on July 8.
- PRISM IPO filing disclosed the long-running dispute.
- The proposed IPO is worth about $701 million.
The Delhi High Court disposed of Zostel's fresh petition against PRISM on July 8 over a failed 2015 acquisition deal. The case centers on a nonbinding term sheet.
A two-judge bench of the Delhi High Court disposed of the petition, according to The Economic Times.
Manish Dhir founder of Chestlaw, Advocates & Solicitors, described the petition as Zostel's "ninth unfruitful judicial attempt."
"It is also significant that during the proceedings, Zostel's counsel clarified that they do not seek to obstruct the IPO process while claiming protection of their alleged rights," Dhir told The Times. "Additionally, we have reviewed reports regarding Zostel's representation before SEBI."
PRISM, the parent of OYO and G6 Hospitality, recently filed its Updated Draft Red Herring Prospectus-I with the Securities and Exchange Board of India. The proposed IPO comprises a fresh issue of shares worth about $701 million, with no offer for sale by existing shareholders.
PRISM is led by founder and Group CEO Ritesh Agarwal, who also chairs G6 Hospitality, the parent of Motel 6 and Studio 6. The company plans to use about $526 million of the net proceeds to repay or prepay borrowings. The remainder will be used for general corporate purposes.
"It is unfortunate that despite repeated judicial findings in favor of PRISM, attempts are being made to revive claims that have already been rejected after extensive adjudication," Dhir said. "The Delhi High Court previously set aside the arbitral award in its entirety, ruling that it was contrary to contract law and public policy."
Dhir said the IPO disclosure process is governed by regulatory requirements and that PRISM has made all required disclosures under applicable laws and regulations.
"A pending dispute, particularly one in which the underlying award has been set aside, cannot be portrayed as an impediment to the IPO process," he said, according to the Times. "We believe that matters pending adjudication should be resolved through the judicial process, not through parallel representations or attempts to influence regulatory proceedings. We remain confident in PRISM's legal position and will continue to rely on the judicial and regulatory framework."
Since 2018, Zostel has pursued the dispute in the Gurugram District Court, the Delhi High Court and the Supreme Court. In May 2025, the Delhi High Court set aside the arbitral award underlying Zostel's claims, ruling that the parties' term sheet was largely nonbinding and that specific performance could not be granted without definitive agreements on essential commercial terms. Zostel then appealed under Section 37 of the Arbitration and Conciliation Act, 1996, to a division bench of the Delhi High Court.
PRISM disclosed the dispute in its IPO filing. The company signed a nonbinding term sheet with Zostel Hospitality Pvt. Ltd. and other parties for the proposed acquisition.
Zostel contended that it fulfilled its obligations under the term sheet, but PRISM failed to complete the acquisition. PRISM disputed the claims, arguing that the term sheet was nonbinding and exploratory and that no definitive agreements were executed.
Separately, G6 CEO Sonal Sinha recently stepped down after 14 months in the role. The company promoted Nikhil Heda to U.S. country head and expanded Anuj Ladha's role as national head of brand performance. G6 Vice Chairman and PRISM Global COO Ankit Tandon is also spending more time in the U.S., including in Dallas and other markets, to strengthen franchisee relationships and support the company's growth plans.
