In a major dispute between McDonald’s and its Indian partner Vikram Bakshi, which started around five years ago, took another turn. Last week, a settlement was announced with the US-based fast food major buying out fifty percent voting equity shares of Bakshi in Connaught Plaza Restaurants Pvt Ltd (CPRL). They operated a chain of restaurants in the northern and eastern parts of the country. However now, Housing and Urban Development Corporation (HUDCO) has approached the NCLT and demanded an amount of Rs 195 crore rupees from the settlement amount payable to Vikram Bakshi. HUDCO contended that, in an order passed by the Debts Recovery Tribunal, restrained Bakshi from transferring or creating any third-party interests in the shares held by him in CPRL. It is also contended that if the amount is not paid to HUDCO it would cause grave losses to the public chequer.
The recovery of loan extended to Bakshi’s Ascot Hotels and Resorts Pvt Ltd. After the loan account was declared as a Non-Performing Asset, HUDCO moved the DRT in 2011. Later in 2013, HUDCO preferred an application to attach the shares of Bakshi in CPRL. On May 9th DRT asked Vikram Bakshi and McDonald’s India to appear before it and also at the same time deposit the proceeds of the settlement with it.
In 2013, Bakshi was removed from the Board of CPRL and subsequent to that, he alleged oppression and mismanagement. But previously in 2008 McDonald’s tried to buy out Bakshi’s stake in their 50:50 joint venture. When Bakshi, approached the NCLT, the verdict was in his favour and he was retained as Managing Director and Mcdonalds was instructed to not interfere in the functioning of CPRL.
Mcdonalds however, did not step back. They invoked the arbitration agreement and also at the same time moved an appeal before the NCLT against the order. In 2017, the London Arbitral Tribunal asked Bakshi to sell his stake in CPRL to McDonald’s India. Additionally, In 2017, McDonald’s also terminated CPRL’s franchise agreement for non-payment of royalties. This was challenged before the Delhi High Court. An approval of the NCLT is required for the out of Court settlement, between Vikram Bakshi and Mcdonalds.