The London Court of International Arbitration (LCIA) has asked Vikram Bakshi, the estranged joint venture partner of McDonald’s India Pvt. Ltd, to sell his entire 50% stake in the JV firm Connaught Plaza Restaurants Ltd to the fast-food chain.
The court has asked the Indian partner to transfer his 145,600 shares in the JV to McDonald’s India at a fair value in accordance with the 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.
“We are pleased with the decision in what has been a protracted legal dispute with a former partner,” said a McDonald’s India spokesperson. “We intend to take the appropriate steps to enforce the award which we believe is the right one 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.
“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, Connaught Plaza Restaurants was asked to stop using McDonalds’s name, system, trademark, designs and its associated intellectual property, among others, with effect from September 6.
Connaught Plaza Restaurants till recently operated 169 McDonald’s restaurants in north and east India. Of these, 43 outlets have been shut.
On 13 July, the Delhi bench of National 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. However, McDonald’s challenged this order 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 an interim relief. The appeals filed by both the parties are slated for hearing on September 21.
Tejas Karia, partner, Shardul Amarchand Mangaldas & Co, who is representing Bakshi in the dispute, declined to comment since the matter is sub judice.
Like this report? Sign up for our daily newsletter to get our top reports.