Karnataka HC quashes criminal proceedings against OYO founder

Bengaluru: The High Court of Karnataka has quashed criminal proceedings against Ritesh Agarwal, founder of hospitality chain OYO Rooms, Anuj Tejpal, Director of OYO Hotels and Homes Limited, and others, initiated by one of the partners Rajesh Padachori. 

The court noted that the complaint was nothing but an echo of claims already ventilated before the arbitral forum. 

"It is a settled axiom that courts, when confronted with complaints of this genre, must pierce the veil of clever drafting and discern the true animated intent. The complaint may, on its face, appear to recite ingredients of penal provisions, yet, if its substratum is no more than a claim for money or damages arising from contractual breaches, it would fall squarely within the province of civil adjudication," Justice M Nagaprasanna said. 

The Jayanagar police in Bengaluru had registered a case of cheating, criminal breach of trust and other offences in 2023. 

The petitioners argued that the entire issue emanates from a dispute regarding three agreements and an arbitration dispute dealing with similar claims. On the other hand, the complainant contended that the petitioners had abandoned three hotels notwithstanding the agreements to maximise profits. It was further stated that OYO has been consistently engaging in unfair trade practices, particularly in its dealings with partner hotels. 

The court said that the allegations, when considered in isolation of what is projected in the complaint, would clearly reveal that the allegations relate to demands for repayment of money and redress of contractual grievances. 

"Criminal law, however, is invoked only as a cudgel to intimidate, to arm-twist, and to bring the petitioners to their knees. When criminal proceedings are launched not to punish true crime, but to settle civil scores, such proceedings are an abuse of the process of the law, a masquerade that this court is duty-bound to unravel, and to stop it from resulting in a miscarriage of justice,” the court said.