Policy · Professional & Local Services

Delhi High Court allows Zostel to withdraw application

By Startup Enthusiast · 10 August 2026

What they do

Zostel runs backpacker hostels, homes, trips, and community-led travel experiences

Delhi High Court allowed Zostel to withdraw its latest application with liberty to refile later

The dispute with PRISM dates to 2015; Zostel claims 7% equity from a non-binding term sheet

The Delhi High Court on 10 Aug 2026 allowed Zostel to withdraw its latest application, with liberty to refile later.
The court declined to intervene in Zostel's complaint before SEBI (Securities and Exchange Board of India, the market regulator), saying objections should first be considered by SEBI.
Zostel had withdrawn a previous application before the same court on 8 Jul 2026.
The dispute dates back to 2015 when OYO signed a non-binding term sheet to acquire Zostel's business.
In May 2025, the Delhi High Court set aside the arbitral award that formed the basis of Zostel's claims, holding there was no concluded deal.
Zostel's Section 37 appeal (an appeal against a court order under the Arbitration Act) against the May 2025 judgment is pending before the Delhi High Court.
Zostel approached SEBI seeking a review of PRISM's IPO (initial public offering, when a company first sells shares to the public) disclosures, alleging inadequate disclosure of the dispute.
Zostel claims entitlement to nearly 7% of PRISM's equity from the proposed 2015 transaction.

PRISM has received SEBI approval to proceed with its IPO, which includes a fresh issue of shares worth up to ₹6,650 crore.
PRISM's valuation target is up to $8 billion through the public listing.
PRISM's spokesperson called Zostel's applications frivolous and not maintainable.
Zostel's previous counsel informed the court that legal fees remained unpaid.

Zostel is a backpacker hostels and social travel brand offering hostels, homes, trips, and community-led travel experiences.
It describes itself as the world's largest backpacker hostels franchise.
Zostel offers franchise opportunities for Zostel and Zo Stays, partnerships for travel agencies and tour operators, and creator/artist collaborations.
It offers curated Zo Trips along with stays across destinations.

Zostel said it will continue to monitor PRISM's proposed IPO and protect its rights and investor interests.