Connaught Plaza Restaurants Pvt. Ltd’s (CPRL) managing director Vikram Bakshi on Tuesday (September 26) agreed to the Delhi High Court’s statutory directive of not transferring, encumbering or altering his shareholding in the venture until proceedings at the London Court of International Arbitration (LCIA) are over.
These proceedings have been invoked by McDonald’s Corp. USA, who had cancelled its franchise joint venture agreement with CPRL (forming McDonald’s India Pvt. Ltd.) and asked for the closure of all outlets in northern and eastern India (those controlled by this joint venture) in a dispute over non-payment of royalty.
The directive was issued by the single-judge bench of Justice Sanjeev Sachdeva.
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.
The NCLT on July 13 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 August 21, citing non-payment of royalties as the primary reason.
On Tuesday, the bench gave Bakshi statutory directives so that the asset value of the company and its shareholding pattern are not tampered with.
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.
—India Legal Bureau