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McDonald’s India and Vikram Bakshi to settle five-year dispute out of court

By Beena Parmar

  • 07 May 2019
McDonald’s India and Vikram Bakshi to settle five-year dispute out of court
Credit: Reuters

McDonald’s India Pvt. Ltd, the Indian subsidiary of the US fast food chain, and its estranged local partner Vikram Bakshi, who owns Connaught Plaza Restaurants Pvt. Ltd, have decided to settle their dispute out of the courts.

The entities informed the National Company Law Appellate Tribunal (NCLAT), headed by Chairperson S J Mukhopadhyay, potentially bringing to a close the long-drawn five-year-old legal battle, a report in the Press Trust of India stated.

The tribunal bench stated that both parties could file an affidavit including the terms of the settlement being arrived at on the next date of hearing on 13 May, the report stated.

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"We do not have any details to share at this point. We have just informed the courts that a settlement is progressing," a spokesperson from McDonald's said in response to email queries from VCCircle.

Queries sent to Bakshi on the settlement did not elicit a response at the time of publishing this report.

In 1995, McDonald's and Bakshi had formed a 50:50 joint venture—Connaught Plaza Restaurants Pvt Ltd (CPRL)—for 25 years to operate outlets of the US fast-food chain in the country's northern and eastern regions through the franchise route.

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In August 2017, McDonald's India decided to terminate its joint venture agreement with Vikram Bakshi-owned CPRL citing non-payment of royalties.

McDonald's had even started scouting for another developmental licensee (DL) partner for North and East India.

The major tussle between the partners started after Bakshi was ousted as the managing director of CPRL in 2013, following which he approached the NCLT, which reinstated him to his position.

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A long-winding legal tussle and battle for control of the business ensued with Bakshi keeping around 165 McDonald's branded outlets operational in the north and east of the country.

Initially, Bakshi took the restaurant chain to the Company Law Board. The case was then shifted to the NCLT after the tribunal replaced the board.

In the southern and western regions, McDonald's outlets are run by Amit Jatia-led Westlife Development through its subsidiary Hardcastle Restaurants Pvt. Ltd.

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During the hearing at NCLT, the US firm had alleged that Bakshi had pledged 51,300 of his CPRL shares to get a Rs 20-crore loan to develop a mall and a cluster of service apartments in Manesar by his company Ascot Estate (Manesar) Pvt. Ltd.

According to McDonald’s, he did not seek approval from the firm before pledging the shares.

However, Bakshi refuted the allegations and said CPRL’s board, which had representatives from McDonald’s too, was aware of the pledging of shares.

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McDonald's had challenged the same in the appellate tribunal NCLAT.

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