Housing and Development Corporation (Hudco) has approached the National Company Law Appellate Tribunal (NCLAT) with the claim that it is owed Rs 190 crore dues by a company owned by Vikram Bakshi, the managing director of Connaught Plaza Restaurants Limited (CPRL).
Hudco sought to be heard by the NCLAT before it gives its final approval to McDonalds India Private Limited- Vikram Bakshi out of court settlement. The NCLAT has agreed to hear Hudco's plea on Wednesday.
Bakshi-owned and privately held Ascot Hotels & Resorts reportedly owes around Rs 100 crore to Hudco on unpaid loans, among other penalty charges since 2013. Of this, around Rs 80 crore was borrowed by Ascot from Hudco in 2007-08 to open Savoy Club, a premium corporate club in Noida.
Bakshi and McDonald's India had, on May 7, informed the NCLAT that the two parties were working on an out-of-court- settlement to settle their six-year-old dispute. According to the terms of the settlement, McDonald’s India has bought over the 50 per cent stake held by Bakshi and his wife in CPRL for an undisclosed amount.
In 1995, Bakshi had inked a deal with McDonald’s to open outlets in India. The partnership, a 50:50 joint venture between McDonald’s India and Bakshi’s Connaught Plaza Restaurant (CPRL), was inked in a way suchy that Bakshi’s CPRL would be responsible for opening and managing McDonald's outlets in north and east India.
McDonald’s India ousted Bakshi from the post of Managing Director (MD) of CPRL in 2013. Following the ouster, McDonalds India had offered Bakshi Rs 120 crore for the 50 per cent stake held by him and his wife in CPRL.
The deal fell through as Bakshi sought Rs 1,800 crore. In July 2017, the National Company Law Tribunal restored Bakshi to the post of MD in CPRL.
In June 2017, McDonald’s India terminated the franchise deal of 169 outlets managed by CPRL citing non-payment of royalties and asked suppliers to stop dealing with the latter. CPRL suppliers included Vista Processed Foods, Schreiber Dynamix Dairies, Cremica Foods Industries and Amrit Foods. Subsequently, McDonald’s India also challenged the use of the McDonald’s trademark by CPRL.
With an out-of-court settlement being set in motion, McDonalds India said it would focus on revamping the business in India. Though the outlets of the US-based fast food company would be shut down temporarily, the company said it hopes to restart operations within a fortnight.
“We are going to conduct an all-round assessment of the outlets, including requirements for training of staff. This is just a temporary measure. Once the assessment is over, we would know what kind of improvements or changes are required to be implemented to align the business with our basic global parameters,” Barry Sum, the director of McDonalds India’s corporate relations for Asia had said in a statement on May 10.