Global travel technology company OYO, in a recent letter to the Hon’ble Ministry to Tourism, Government of India requested that the ministry intervene and investigate the running of Federation of Hotel & Restaurant Associations of India (FHRAI) and order eviction of erring executive committee members.
The representation by OYO says that FHRAI’s actions are detrimental to small hotel owners. It also points out that constant tussle and that their continued malafide friction with organized players like OYO, discourages SME’s and entrepreneurs from progressing and moving ahead with times and technology. It urged the Hon’ble MoT to take necessary action against FHRAI’s “illegally run” Executive Committee and its members who are working for self-interest rather than the interest of the small hotel owners.
The National Company Law Tribunal’s (NCLT) Principal Bench in New Delhi recently issued an order directing the Ministry of Corporate Affairs (MCA) to examine the affairs of the FHRAI and ensure that it complies with the provisions of the Companies Act. The order stated that this was necessary course of action due to a “series of litigation that is breeding due to conduct in the affairs of FHRAI”. The Hon’ble Tribunal also pointed out that “personal interest has come to loom over the functioning of FHRAI and this has to be curbed”.
FHRAI was formed with the intent to promote the travel and tourism industry, however the recent allegations of unfair elections and mismanagement by Hotel & Restaurant Association of Northern India (HRANI) and Hotels and Restaurants Association of Western India (HRAWI), two regional chapters of FHRAI has highlighted vested interests of former office bearers.
OYO’s letter recounts the findings and order passed by the NCLT’s Principal Bench which observes that, the object of the FHRAI is to promote the interest of hotels of various regions by encouraging and protecting the hospitality industry in India has been defeated due to petty squabbles time and again. Personal interest has come to loom over the functioning of FHRAI. Certain members of various regions of FHRAI are breeding litigation for personal reasons and we strongly disapprove of it. What encourages the parties to seek more terms of appointment, the position they seek to hold, and for objective is troubling this Tribunal. If there is no personal interest of members then the Federation should run smoothly. This is not happening as we see from facts as narrated earlier.
The representation by OYO also says that “aggregators like OYO have only enabled the industry in India over the last decade and new age players have democratized travel, made hotels and homes more accessible to guests from around the globe. They have a fuelled tourism economy in India’s heartland creating alternative sources of income for many. Today entrepreneur from Ziro Arunachal Pradesh has same opportunities as one in Mumbai or Delhi. But the 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.”
In a recent verdict by National Company Law Appellate Tribunal (NCLAT) on the appeal by HRAWI and HRANI against the NCLT order dated August 30, 2022, termed that it was “fair & just”. The verdict termed all administrative decisions by the current executive committee null & void and has asked FHRAI to conduct fresh elections in 30 days. “We further find that the acts of some members of the Executive Committee, who have formed a “clique” to give shape to their chosen but perverse design are clearly acts of “oppression and mismanagement”, said NCLAT in its verdict.