New Delhi: The Delhi high court on Tuesday asked Vikram Bakshi, the estranged joint venture partner of McDonald’s India Pvt. Ltd, not to transfer, encumber or alter his shareholding in the venture until proceedings at the London Court of International Arbitration (LCIA) are over.
Bakshi is the managing director of Connaught Plaza Restaurants Ltd (CPRL), the north and east India licensee of the US-based burger chain, which operates 169 restaurants.
During the hearing, Bakshi assured the court that he and his wife (Madhurima Bakshi, director of CPRL), would maintain status quo and not dilute their shareholding in CPRL until the arbitration proceedings are completed.
The court was referring to the partial award passed by the LCIA which had asked him to sell his stake in CPRL, Press Trust of India reported on 13 September. The LCIA also called for the appointment of independent experts to determine a fair value for CPRL so that the US-based fast food chain could buy out Bakshi’s 50% stake.
“This is a partial award which is not final. In this respect, the earlier stay order will continue till arbitration proceedings are complete,” said Tejas Karia, counsel for Bakshi.
Justice Sanjeev Sachdeva relied on an earlier order of 2 December 2013 under which Bakshi had made a statement undertaking to not transfer shares or alter the shareholding pattern in CPRL.
The court has also issued a notice to Bakshi on the issue of enforcement of the partial arbitral award and sought his reply within six weeks.
McDonald’s has been pursuing arbitration against Bakshi in the LCIA since 2013. In 2013, the company had voted against the re-election of Bakshi as the managing director of CPRL, following which Bakshi challenged his removal in the Company Law Board (now National Company Law Tribunal, or NCLT). Later the same year, McDonald’s revoked the joint venture agreement and invoked arbitration.
NCLT on 13 July reinstated Bakshi as managing director and also asked McDonald’s Corp. to refrain from interfering in the functioning of CPRL. McDonald’s challenge to the NCLT order is pending in the National Company Law Appellate Tribunal (NCLAT).
This comes in the backdrop of McDonald’s India terminating its franchise agreement with CPRL for all 169 McDonald’s outlets in northern and eastern India on 21 August, citing non-payment of royalties as the primary reason. Bakshi, managing director of CPRL, was supposed to shut the restaurants from 6 September.
Up until now, all McDonald’s outlets have not only continued to operate, but Bakshi, earlier this week, also reopened 19 out of 43 outlets in the national capital that were shut in June due to the company’s failure to renew eating house licences.
The matter will be heard next on 7 December.