There is some bad news for those who love fastfood in the Capital, especially the burger variety. The long drawn Vikram Bakshi versus McDonald’s legal battle seems to have reached a logical conclusion with the Connaught Plaza Restaurants Ltd. (CPRL) Board deciding to shut down 43 out of 55 McDonald’s outlets in Delhi from Thursday.
McDonald’s came to a liberalised India in 1995 when a 50:50 joint venture agreement (JVA) was signed by Vikram Bakshi, the estranged partner of McDonald’s Pvt. Ltd, and the global fastfood chain. However, in 2013 McDonald’s voted against the re-election of Bakshi as the Managing Director of Connaught Plaza Restaurants Ltd. (CPRL) which operates fast-food restaurants in the north and east of India. Subsequently, Bakshi challenged his removal in the Company Law Board (CLB), Delhi, alleging McDonald’s of mismanagement and oppression under Sections 397 to 402 of the Companies Act, 1956.
McDonald’s thereafter revoked the JVA on the basis of an arbitral clause mentioned in the agreement and stated the dispute be resolved through arbitration and no civil court should interfere in the proceedings. They further claimed the company petition filed by Bakshi was infructuous and invoked arbitration in the London Court of International Arbitration (LCIA).
The CLB further directed both parties to maintain status quo over the shareholding pattern and and right of call option (a derivative contract between two parties where an investor has a right to buy stock or a bond within a specified period of time).
Hence the validity of the arbitration agreement was put into question and Bakshi approached the Delhi High Court challenging the arbitration proceedings and claiming that the same case cannot be heard in two forums at the same time. After many hearings, the high court in 2016 held in favour of McDonald’s lifting the stay and stated that the dispute be resolved through arbitration in LCIA.
Dissatisfied with the high court order, Bakshi appealed to the Supreme Court too. However, the apex court dismissed the appeal.