Zostel has suffered another setback in its ongoing legal dispute with PRISM, with the Delhi High Court dismissing its latest application as withdrawn after finding no merit in the plea.
The development marks the second withdrawal by Zostel in just over a month, following the withdrawal of an earlier application before the same court on July 8, 2026.
The matter was briefly heard last week when questions regarding Zostel’s legal representation emerged before the court. According to proceedings, the company’s previous counsel informed the court that professional fees remained unpaid, while Zostel had engaged a new legal team to pursue the latest application. The matter was subsequently adjourned to August 10.
When the case was taken up again, the court reportedly found no grounds to proceed with the application, following which Zostel withdrew the plea.
Continuing Legal Battle
The latest development is part of a prolonged legal battle between Zostel and PRISM, which has centred on claims arising from a proposed transaction involving the two parties.
A significant turning point in the dispute came in May 2025, when the Delhi High Court set aside the arbitral award that formed the basis of Zostel’s claims. In its judgment, the court held that there was no concluded agreement between the parties.
Zostel subsequently filed an appeal under Section 37 of the Arbitration and Conciliation Act challenging that ruling. The appeal remains pending before the Delhi High Court.
Notably, the company’s latest application acknowledged that the arbitral award had already been set aside and that the matter is currently under appellate consideration.
PRISM Responds
Commenting on the latest court proceedings, a spokesperson for PRISM said the company remained confident in its legal position.
“The Delhi High Court has today dismissed as withdrawn yet another application filed by Zostel. This comes barely a month after Zostel withdrew its previous application before the same Court. Despite its previous counsel informing the Court that legal fees remained unpaid, Zostel has continued to file fresh applications seeking overlapping protections. We have consistently maintained that these applications are frivolous and not maintainable,” the spokesperson said.
The spokesperson further noted that the arbitral award underlying Zostel’s claims had been entirely set aside by the Delhi High Court in May 2025 and reiterated the company’s confidence in the judicial process.
“We remain confident in our legal position and will continue to place complete reliance on the judicial process,” the statement added.
Industry Watch
The dispute has been closely watched by India’s hospitality and travel industry due to its connection with the early growth of the budget accommodation segment and the evolution of platform-based hospitality businesses.
While the latest ruling does not resolve the underlying dispute, it strengthens PRISM’s position ahead of the pending appeal proceedings. The final outcome will likely depend on the Delhi High Court’s decision in the Section 37 appeal, which remains the key legal avenue through which Zostel is seeking to challenge the May 2025 judgment.
Until then, the case continues to be a significant legal and commercial development for stakeholders tracking consolidation, partnerships and contractual disputes within India’s hospitality startup ecosystem.
