Just when it seemed curtains down on the long dispute between the world's largest burger chain McDonald's and Vikram Bakshi, one of its two partners in the country, the Housing and Urban Development Corp (HUDCO) has thrown a spanner in the works. Bakshi's Connaught Plaza Restaurants (CPRL) handled the fast-food chain's 165 outlets in the northern and eastern regions.
The state-owned NBFC approached the National Company Law Appellate Tribunal (NCLAT) on Monday seeking to recover Rs 195 crore from Bakshi for Ascot Hotels Pvt Ltd. So a two-member NCLAT bench led by justice SJ Mukhopadhaya yesterday decided to withhold approval for the out-of-court settlement between McDonald's India and Bakshi announced on May 9.
The counsels for both McDonald's and Bakshi were also seeking a vacation of previous orders by the National Company Law Tribunal, bringing their dispute to a close, The Economic Times reported. In 1995, the two partners had formed a 50:50 joint venture, CPRL, to open McDonald's outlets in India for a period of 25 years. But things started souring in 2008, when the Chicago-headquartered giant tried to buy out Bakshi's 50% stake. Then, in August 2017, McDonald's terminated CPRL's franchise agreement citing non-payment of royalties, but Bakshi continued using the brand name and operating the outlets as usual while battling it out with the chain in various legal forums, including NCLT, NCLAT and the Delhi High Court.
The estranged partners had finally reached an out-of-court settlement last week, under which US-based fast food major bought out Bakshi's stake in CPRL and he resigned from the position of managing director and CEO. The NCLAT was expected to pass its order on this agreement on May 15, before HUDCO filed its petition. "There cannot be any settlement whereby Mr. Bakshi seeks to transfer those [CPRL] shares to either McDonald's or anybody else. The matter is pending and there is a judicial order," senior counsel for Hudco, solicitor general Tushar Mehta, reportedly told the appellate tribunal.
The bench then asked Bakshi's counsel to reach a settlement with HUDCO to apply a "final touch" to the settlement with McDonald's India. "The order of Debt Recovery Tribunal remains. We have to respect the other tribunal. We cannot annul the other tribunal's order," the bench added.
In 2013, HUDCO had filed a criminal case against Bakshi under the Negotiable Instruments Act against Bakshi in a 2012 cheque bounce case related to his privately held Ascot Hotels. The NBFC had also filed cases against Bakshi under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act and had subsequently moved the debt recovery tribunal to recover its Rs 60 crore loan. The amount owed by Bakshi has since ballooned to around Rs 195 crore with accrued interest.
The intervention application filed by HUDCO pleaded that it has the first right over the amount to be received by Bakshi under the settlement agreement with McDonald's. Balance amount, if any, could be transferred to him. The next hearing on this matter is reportedly scheduled for May 27.
So McDonald's will have to wait a while longer to get its hands on the outlets controlled by CPRL, and it's surely not 'lovin' it'.
With PTI inputs
Also read: NCLAT admits HUDCO's intervention plea claiming Rs 195 cr dues from Vikram Bakshi