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An international arbitration panel has directed appointment of experts to determine a fair value of the joint venture between McDonald's India and Vikram Bakshi so that the US fast food chain can buy out its estranged partner.
The partners had resorted to arbitration after McDonald's in November 2013 issued a notice to terminate partnership with Bakshi for setting up and operating its popular fast food outlets in northern and eastern India.
A three-member arbitration tribunal on September 12 directed determination of a fair market value and purchase price of share of Vikram Bakshi and Bakshi Holding Pvt Ltd in Connaught Plaza Restaurants Ltd (CPRL) for transfer to joint venture partner McDonald's India Pvt Lt (MIPL), persons familiar with the order said.
The value so determined will be placed before the tribunal, which asked Bakshi to provide necessary cooperation and assistance in such determination, they said.
McDonald's appointed London-based judge Ian Hunter on the panel while Bakshi had appointed Justice Vikramajit Sen. Albert Jan Van Den Berg was the chairman of the tribunal.
Sen did not sign the award, the persons said, adding that the 2:1 majority award asked Bakshi and the holding firm not to exercise any voting rights in the 1,45,600 shares held by them in CPRL.
The international arbitration tribunal in London has also rejected Bakshi's claim that McDonald's India did not validly terminate the JV.
CPRL, a JV between Bakshi and MIPL, the Indian subsidiary of McDonald's Corporation, operates 169 McDonald's restaurants in north and east India. Of these, 43 outlets operating in Delhi are shut due to non-renewal of eating house licences.
As part of the licence termination, CPRL was asked to stop using McDonald's name, system, trademark, designs and its associated intellectual property, among others, with effect from September 6.
The LCIA (London Court of International Arbitration) also noted that all shares held by Bakshi are liable to be transferred and registered in McDonald's India upon payment of price determined in accordance with the methodology set out by the JV agreement, according to the persons in the know.
The arbitrator appointed by McDonald's and the chairman, who was selected jointly by both the parties, have ruled in favour of McDonald's India while Bakshi's nominee had a dissenting opinion, they added.
The LCIA has also rejected Bakshi's relief seeking a declaration that the JV agreement remains in force and effect, they said.
It has also asked Bakshi to cooperate with McDonald's in obtaining all approvals under the applicable law.
A McDonald's spokesperson had yesterday said: "We are pleased with the decision by the tribunal 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."
However, comments from Bakshi could not be ascertained at the time of filing of this story.
Bakshi has been at loggerheads with McDonald's since 2013. He had approached the NCLT -- previously Company Law Board -- after McDonald's removed him from the post of MD of CPRL in 2013. In July this year, the tribunal restored him to his position.
It was challenged by McDonald's 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 any interim relief. Both the appeals filed by the parties are listed for hearing on September 21.
Except the 43 outlets in the national capital that were shut in June due to non-renewal of eating house licences, the remaining ones continue to operate.
Earlier, Bakshi had on August 30 requested the National Company Law Appellate Tribunal (NCLAT) to direct the buy-out of shares of either of his side or MIPL in CPRL at fair market value.