Delhi High Court restrains Vikram Bakshi from transferring shareholding in McDonald’s joint venture

Bakshi, the managing director of CPRL, assured the HC that he and his wife, who is the director of CPRL, would maintain status quo and not dilute their shareholding in the JV until the arbitration proceedings are completed. (PTI)

The Delhi High Court on Tuesday restrained Vikram Bakshi, the estranged joint venture partner in Connaught Plaza Restaurants (CPRL), from transferring, encumbering or altering his shareholding in the joint venture till the proceedings at the London Court of International Arbitration (LCIA) are over. Justice Sanjeev Sachdeva also sought response from Bakshi on a petition filed by McDonald’s India seeking enforcement of an arbitral award to transfer shares in CPRL, a joint venture between Bakshi and McDonald’s India, to it. It posted the matter for further hearing on December 7.

Bakshi, the managing director of CPRL, assured the HC that he and his wife, who is the director of CPRL, would maintain status quo and not dilute their shareholding in the JV until the arbitration proceedings are completed. CPRL operates 169 restaurants in north and east India. Senior counsel Rajiv Nayyar, appearing for McDonald’s India, while seeking enforcement of the award, also asked the HC to extend its December 2, 2013 interim order that asked Bakshi to maintain status quo with regard to his shareholding in CPRL till completion of arbitration proceedings. However, Bakshi’s lawyers, including senior counsel Neeraj Kishan Kaul, opposed any extension on the grounds that the 2013 order still continued to operate as the LCIA award was a partial one.

Without passing any formal order, Justice Sachdeva said that Bakshi and his company Bakshi Holdings would be bound by their earlier statement that his shareholding pattern in CPRL won’t be changed. By a 2-1 majority, the London Court of International Arbitration (LCIA) in its September 12, 2017 order had directed Bakshi to transfer his 1,45,600 shares in CPRL to McDonald’s India Pvt Ltd at a fair valuation in accordance with their JV agreement. The LCIA in its partial award had also directed 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. McDonald’s India had last month terminated its franchise agreement with CPRL for all 169 McDonald’s outlets in northern and eastern India, citing non-payment of royalties and had also prohibited CPRL from using the McDonald’s name, system, trademark, designs and its associated intellectual property. While Bakshi was supposed to shut the restaurants from September 6, all McDonald’s outlets so far continue to operate.

McDonald’s and Bakshi have been engaged in a bitter dispute ever since the restaurant chain dropped him as managing partner of their 50:50 JV in August 2013. While Bakshi challenged his removal in the then Company Law Board (now NCLT) citing ‘oppression and mismanagement’, the US company invoked arbitration in London. After Bakshi was reinstated by the NCLT in July, McDonald’s appealed against the order in the National Company Law Appellate Tribunal (NCLAT). Bakshi has also filed a appeal at the NCLAT seeking a fair valuation of the fast food chain’s outlets in northern and eastern India. At the NCLAT, the US fast food giant had on August 30 argued that there is no possibility of mutually settling the dispute with Bakshi.