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Respond to McDonald's plea to enforce London arbitral award: HC to Bakshi

In a separate matter, NCLT has asked McDonald's to file its reply by 23 October

Sayan Ghosal  |  New Delhi 

McD, McDonald's

The Delhi High Court on Tuesday sought a response from Vikram Bakshi, estranged partner of McDonald's India Private Limited (MIPL) on a plea seeking the enforcement of a September 12 international arbitral award in favour of the fast food company.

The London Court of international Arbitration (LCIA) award had by a 2:1 majority decision, directed Bakshi to sell his stake in their joint venture - Connaught Plaza Restaurants Private Limited (CPRL) - to MIPL. The partial award pertains to Bakshi's 1,45,600 shares in CPRL, which are to be transferred to MIPL at a fair valuation, in accordance with their joint venture agreement. This fair valuation is to be arrived at through the appointment of independent experts, according to the award.

Apart from seeking enforcement of the award, lawyer for MIPL also sought an extension of a December 2, 2013 interim order passed by the high court, according to which status quo was to maintain on shareholding in till the conclusion of the international arbitral proceedings in line with a statement made by Bakshi.

Responding to MIPL's request, Bakshi's counsels said there was no need to extend the 2013 order, as it still continued to operate since the award was only a partial one.

In light of these submissions, Justice Sanjeev Sachdeva did not pass any further interim order and instead reiterated that Bakshi and his holding company would be bound by the earlier statement. The court has instead issued notice on the MIPL plea and asked Bakshi to file his response in the matter by December 7, the next date of hearing.

MIPL had approached the London arbitral forum after Bakshi rejected an offer to purchase his stake in CPRL, which he had reportedly refused on the ground of inadequate valuation.

In separate proceedings before the National Company Law Tribunal (NCLT), McDonald's Corp was also allowed an extension to file its reply on a contempt action initiated by Bakshi against the American chain for allegedly violating a July order of the tribunal. In the order, the NCLT had directed McDonald's Corp to refrain from interfering in the smooth functioning of and its 169 restaurants.

Bakshi has claimed that the August 21 termination of the franchise agreement, after the passage of the tribunal's earlier direction constitutes a breach of the July NCLT order. MIPL has instead claimed that the main reason for the termination of the agreement is due to non-payment of royalties. The contempt plea will now be heard again on October 23.

Apart from the actions in the Delhi High Court and NCLT, Mc Donald's India has also approached the National Company Law Appellate Tribunal (NCLAT) to challenge the NCLT order reinstating Bakshi as managing director of CPRL, while Bakshi is also agitating the termination of the franchise agreement before the appellate body.

According to a statement issued by McDonald's India, the company will continue to progress the enforcement of the partial award rendered in its favour by the "At the same time, MIPL will continue with its appeal at the NCLAT and also continue to take all other measures and steps to exercise our legal and contractual rights in related matters," the statement said.

First Published: Tue, September 26 2017. 19:14 IST
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