Budget hotel unicorn Oyo, in a recent letter, has requested the National Company Law Tribunal (NCLT) to expedite the ministry of corporate affairs’ (MCA) investigation into the operations of Federation of Hotel & Restaurant Associations of India (FHRAI).Recently the NCLT’s New Delhi bench passed an order directing MCA to look into the affairs of FHRAI and examine if it conducts itself in a manner compliant with the provisions of the Companies Act. The NCLT order also stated that this was necessary due to allegations of “personal interest” which have come to loom over the functioning of FHRAI.
The letter by OYO points out that the present governing body members of the FHRAI, are running a “deleterious and malicious agenda” aimed towards ruining the interest of the hotel industry at large”.“(FHRAI) is creating hurdles and bottlenecks for new players in the market, who are posing a stiff challenge to the self-serving agenda of certain members of the FHRAI with vested interest,” the letter stated.
Oyo, in its letter to NCLT, also talked about how FHRAI’s actions are allegedly a “worrisome development” for the hotel business in the country.“ It does not augur well for the business environment of our country when prominent start-ups…are the subject of such concerted and intimidatory tactics launched by the present committee of FHRAI, across multiple forums with the sole malicious intent to harm the hotel industry of the country”, Oyo added in its representation to NCLT. FHRAI was formed with the intent to promote the travel and tourism industry, however, there have been allegations of unfair elections and mismanagement by two regional chapters of FHRAI. Oyo, in its letter, to NCLT has questioned the functioning of FHRAI and has also urged to take appropriate action against the erring committee members.
It’s important to note that the tussle between Oyo and the FHRAI has been a long-drawn one with the hotel lobby body having publicly accused Oyo of unfair trade practices to monopolies the hotel industry. The FHRAI had also earlier represented a group of more than 30 ex-Oyo partners in the NCLAT in 2021 in an insolvency case against Oyo Rooms. In April 2021, Oyo’s subsidiary unit Oyo Hotels and Homes Private Limited (OHHPL) was dragged to the NCLT under the bankruptcy and insolvency code, by Yellow White Residency Hotel demanding clearance of dues worth Rs 16 lakh.
The hotel owned and managed by Rakesh Yadav however reportedly settled his disputed amount of Rs 16 lakh with Oyo later in June 2021 and the case was withdrawn from the tribunal. Post this, FHRAI also wrote to market regulator SEBI asking it to halt Oyo from launching its IPO after the Competition Commission of India slapped a Rs 169 crore penalty on the hospitality unicorn for breaking competition norms. Oyo, however, challenged the CCI ruling in November last year after which the tribunal reportedly stayed the CCI penalty. The tribunal is set to hear Oyo’s appeal on April 11 2023.