SC tosses Bakshi plea against McDonald's arbitration

The Supreme Court on Tuesday dismissed an appeal filed by Vikram Bakshi, an estranged partner of McDonald's India Pvt Ltd, against a Delhi High Court order allowing the US-based fast-food company to pursue arbitration.

The Delhi high court, on July 21, had held that the dispute between McDonald's and Bakshi needed to be resolved in the London Court of International Arbitration.

A Bench of judges J Chelameswar and A M Sapre, while rejecting the appeal, said it was upon the arbitrator to examine whether the claims of McDonald's were defensible or not.

The high court had set aside the decision of a single-judge bench of December 22, 2014, restraining arbitration proceedings between the two as ordered by the Company Law Board (CLB).

McDonald's had terminated the contract of its franchise for north India to Connaught Plaza Restaurants Private Limited, which was incorporated in line with the joint venture between Bakshi and the US-based fast food company.

Earlier, allowing the appeal of McDonald's by examining the issue, the division bench had said, "There is now a mandate to refer the parties to arbitration unless the court finds that prima facie no valid arbitration agreement exists. This is clearly not the case here."

It had said that in any eventuality, in the facts and circumstances of the case, the single judge could not have restrained the appellant from pursuing arbitration proceedings before the arbitral tribunal.

The high court had also said the finding of the single judge that the arbitration agreement in the case was incapable of performance or inoperative because of the pendency of the proceedings in the CLB, was clearly out of line.

It said while courts here have the power to injunct arbitration proceedings, they should use this power rarely.