The London Court of International Arbitration (LCIA) in a hearing on Wednesday ruled in favour of McDonald’s Corporation in its dispute with estranged partner Vikram Bakshi.
The case pertains to the valuation of Bakshi’s holding in the joint venture company Connaught Plaza Restaurants (CRPL) by McDonald’s, which the former had said was lower than what it actually was. Bakshi had proposed to buy out McDonald’s stake in the 50:50 JV minus the brand, after he spurned the fast food chain’s offer to buy out his stake for $7 million (Rs 41 crore) in 2008.
Bakshi got independent audit firm Grant Thornton to value CPRL. The audit firm arrived at a valuation of $331 million (Rs 1,755 crore), which was rejected by McDonald’s.
Meanwhile, McDonald’s Corporation took the matter to the LCIA in December 2013, following a breakdown in ties between the two partners in July-August 2013. In its application, McDonald’s had said that Bakshi’s valuation was incorrect. The LCIA on Wednesday upheld what McDonald’s Corporation had maintained in its petition.
According to a PTI report quoting sources, the LCIA asked Bakshi to sell his stake to the US-based fast food chain. In its 2:1 majority award, the arbitration panel asked Bakshi to transfer his 1,45,600 shares in CPRL to McDonald’s at a fair valuation in accordance with their JV agreement, sources told PTI.
Bakshi was not reachable for comments.
It is unclear whether Bakshi will appeal against the verdict. Bakshi and McDonald’s India Pvt Ltd (MIPL), the Indian arm of McDonald’s Corporation, have pressed applications against each other in the National Company Law Appellate Tribunal, which will come up for hearing next week.
In a statement, MIPL said, “We are pleased with the decision in what has been a protracted legal dispute with a former partner. Our intention now is to take the appropriate steps to enforce the award, which we believe is right for the business and our customers.”
(With inputs from PTI)