OYO urges NCLT to take action against FHRAI for using Intimidatory Tactics

OYO urges NCLT to take action against FHRAI for using Intimidatory Tactics

The major hospitality start-up chain - OYO has written a scathing letter to the National Company Law Tribunal (NCLT) seeking to expediate the tribunal the Ministry of Corporate Affairs (MCA) to investigate the affairs of Federation of Hotel and Restaurant Associations of India (FHRAI) and its executive committee.

In August, 2022, the NCLT's principal bench, New Delhi had passed an order directing the MCA to investigate the FHRAI activities and scrutinize whether the conduct of the same is compliant with the provisions laid down in the Companies Act, 2013. The order also specified that it was essential to carry out such course of action as series of litigation have been initiated against the affairs of the FHRAI. The Tribunal had also stated in its order that personal interest has come to appear over the working of FHRAI and that this must be limited.

The start-up accused that certain members of the FHRAI executive committee have a 'vested interest' against the modern-day tech players in the hospitability industry. In its letter it also alleged that present committee of FHRAI has been indulging in 'concerted and intimidatory tactics' which is contrary to the government's efforts in improving the ease of doing business.

OYO additionally stated, "present governing body members of the FHRAI, are running a deleterious and malicious agenda aimed towards ruining the interest of hotel industry at large, and 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."

Furthermore, OYO pointed out the recent allegations of unfair elections and mismanagement made by the Hotel & Restaurant Association of Northern India (HRANI) and the Hotels and Restaurants Association of Western India (HRAWI), two regional divisions of FHRAI.

It is interesting to note that the tribunal's principal bench also noted that the objective of the FHRAI has been defeated by 'petty squabbles' on multiple occasions.

In November, 2022 the OYO filed an appeal to the National Company Law Appellate Tribunal (NCLAT) against the Competition Commission of India (CCI) order that imposed a Rs 169 crore penalty against the hospitality company. The CCI order was passed in a case filed by FHRAI against MMT-Go and Oravel Stays (OYO). CCI had imposed a penalty of Rs 169 crore on OYO and Rs 223.48 crore on MMT-Go besides directing MMT-Go to amend its market behaviour for indulging in anti-competitive conduct.

OYO's letter comes after the startup saw FHRAI writing letters to Securities Exchange Board of India (SEBI) to stop OYO from launching IPO in the wake of penalty imposed and delaying it multiple times, with a further three months' delay added earlier this week. Recently SEBI asked the startup to share updated draft documents because it did not provide updated financial disclosures for the September quarter of Financial Year-2023.