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NCLAT keeps Bakshi deal with McDonald's on hold, bars him from going abroad

Two-member bench headed by Justice S J Mukhopadhaya says prima facie there is a case for deal to be stayed for now and the case to be heard on merits

Aashish Aryan  |  New Delhi 

Bakshi has already paid ~66 crore and is  ready to pay another ~70 crore

In fresh trouble for former McDonald's India head Vikram Bakshi, the National Company Law Appellate Tribunal (NCLAT) on Wednesday barred him from leaving the country without informing it or the Debt Recovery Tribunal (DRT) first. The appellate tribunal has also said that the deal between Bakshi’s Connaught Plaza Restaurants Limited (CPRL) and McDonalds India would not be given effect to until further orders.

Hearing the Housing and Development Corporation (Hudco)’s plea that the deal CPRL and McDonalds India has been done in contravention to the DRT’s orders, a two-member Bench headed by Chairperson Justice S J Mukhopadhaya said that prima facie there was a case for the deal to be stayed for now and the case to be heard on merits.

“We find that parties (Bakshi and McDonald’s) have reached agreement, which is prima facie against the Interim order of DRT. We are of the view that parties should not implement such agreement or leave the country without intimating DRT or this Tribunal,” the two member bench said.

The will now examine if the deal between Bakshi and McDonalds India was done according to laws. Earlier this year on May 7, Bakshi and McDonald's India had informed the 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.

However, before the deal could be given effect, Hudco sought to be heard by the NCLAT before the final approval for McDonalds India Private Limited- out of court settlement was given the go ahead. Hudco had claimed that it was owed Rs 190 crore dues by a company owned by Vikram Bakshi, the managing director of CRPL and that those dues must be cleared from the money that Bakshi got from his deal with McDonalds India.

During a hearing in May, the NCLAT also observed that it could not give its approval McDonalds-Bakshi deal until Hudco had been given its dues.

In 2013, Hudco had filed a criminal case under the Negotiable Instruments Act against Bakshi in a 2012 cheque bounce case and said its dues owed to Bakshi had crossed Rs 75 crore. Hudco had also filed cases against Bakshi under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act.

Bakshi had, in 1995, 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 such 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.

First Published: Wed, September 18 2019. 18:20 IST
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