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In a setback to McDonald's in India, the National Company Law Tribunal (NCLT) today restored its estranged partner Vikram Bakshi as the Managing Director of Connaught Plaza Restaurant Ltd (CPRL) and imposed a fine of Rs 10 lakh on the US-based fast food chain.
A two-member NCLT bench headed by Justice M M Kumar also restrained Illinois-based fast food major McDonald's Corporation, the parent company of McDonald's India Pvt Ltd (MIPL), from interfering in the functioning of CPRL.
CPRL, a 50:50 joint venture between McDonald's India Pvt Ltd (MIPL) and Bakshi, is the licensee for north and east India regions for the fast food chain.
Bakshi was at loggerheads with the US-based fast food chain over the management of CPRL after he was ousted from the post of Managing Director of the McDonald's franchisee.
"The status of Mr Vikram Bakshi as Managing Director of CPRL is restored," said NCLT in its 134-page-long order.
The tribunal has said the meeting of Connaught Plaza Restaurants Ltd (CPRL) of August 6, 2013 in which Bakshi was removed as MD of the company was illegal, unjust and malafide.
The NCLT also appointed former Supreme Court judge G S Singhvi to act as administrator in the company with power to vote in the meeting of the board.
"He (Bakshi) shall continue to act as Managing Director of CPRL subject to passing of any resolution under the Chairmanship of the administrator," the tribunal said.
"The board of directors of CPRL is divided in 50:50. In order to break the impasse we deem it just and equitable to appoint Justice G S Singhvi, former judge Supreme Court to act as an Administrator with all the powers including the power to vote in the meeting of the board of directors," it said.
It further observed: "All steps taken in pursuance of non-election of Vikram Bakshi as Managing Director are also declared illegal, unlawful, unjust and malicious."
Besides, the tribunal also restrained McDonald's Corporation from "interfering into the functioning" of its JV franchisee.
"The petitioners (Bakshi) are held entitled to costs which we quantified at Rs 10 lakh. The cost shall be paid by McDonald's India, Respondent no 2 to the petitioners".
Justice Singhvi would ensure that all resolutions in respect of CRPL are passed to advance the interest of CRPL and "none of the two group (Bakshi & McDonald's) are oppressed)," the NCLT said.
McDonald's on August 30, 2013 had announced that Bakshi's term as MD of CPRL had ended on 17 July.
Subsequently Bakshi moved the CLB (the previous body having jurisdiction over company matters) in September 2013 through his counsel Amarchand & Mangaldas & Suresh A Shroff & Co.
However, McDonald's took the matter to London Court of Arbitration citing the terms and condition, where the matter is pending.
Presently, McDonald's 43 outlets of the total 55 outlets in the Delhi are closed since last month as the CRPL could not get renewal of 'health licences' from local authorities.
Bakshi had refused to co-sign the renewal application citing the differences.
To renew it, the JV partner and an MIPL-nominated director have to co-sign licence renewal applications.