UK court asks Vikram Bakshi to sell CPRL stake to McDonald’s
The London Court of International Arbitration (LCIA) has asked Vikram Bakshi, the estranged partner of McDonald’s India Pvt. Ltd, to sell his entire 50% stake in the JV firm Connaught Plaza Restaurants Ltd (CPRL) to the US-based fast food chain
In its 2:1 majority award, the arbitration panel has asked Bakshi to transfer his 1,45,600 shares in the 50:50 JV to McDonald’s India at a fair valuation in accordance with their JV agreement. It has also directed the parties concerned to appoint an independent valuer to ascertain the fair market value of the Indian partner’s stake in the JV, a person privy to the development told VCCircle.
The international arbitration tribunal in London has also rejected Bakshi’s claim that McDonald’s India did not validly terminate the JV.
Commenting on the development, a McDonald’s spokesperson said: “We are pleased with the decision by the Tribunal in what has been a protracted legal dispute with a former partner. Our intention now is to take the appropriate steps to enforce the award, which we believe is right for the business and our customers.”
On 21 August, McDonald’s India decided to terminate its joint venture agreement with Bakshi-owned Connaught Plaza Restaurants. Now, the company is scouting for another developmental licensee (DL) for north and east India.
The CPRL, a JV between Vikram Bakshi and McDonald’s India Pvt Ltd (MIPL), operates 169 McDonald’s restaurants in north and east India. Of these, 43 outlets have been shut.
“We have been compelled to take this step because CPRL has breached the terms of the franchise agreements related to the affected restaurants, and has failed to take remedial steps despite being provided with an opportunity to do so in accordance with the agreements,” McDonald’s India said at the time of scrapping the JV with estranged local partner.
As part of the licence termination, CPRL was asked to stop using McDonalds’s name, system, trademark, designs and its associated intellectual property, among others, with effect from September 6.
The LCIA also noted that all shares held by Bakshi are liable to be transferred and registered in McDonald’s India upon payment of price determined in accordance with the methodology set out by the JV agreement, according to sources.
On 13 July, the Delhi bench ofNational Company Law Tribunal (NCLT) termed an earlier decision by McDonald’s India to dismiss Vikram Bakshi as illegal and asked the food chain to reinstall him as managing partner of CPRL. It was challenged by McDonald’s in the National Company Law Appellate Tribunal (NCLAT) where the appeal is pending.
Simultaneously, Bakshi also challenged the termination of franchise licence by McDonald’s at the NCLAT but was refused any interim relief. Both the appeals filed by the parties are listed for hearing on September 21.