McDonald's eyes Vikram Bakshis shares as JV deal ends

Written by Kaushal shroff | New Delhi | Updated: Dec 17 2013, 20:45pm hrs
Mcdonalds IndiaMcDonald?s India in the termination notice to Vikram Bakshi has stated it will ?in due course? inform Bakshi of the value of his shares. (AP)
After unilaterally revoking its joint venture agreement with Vikram Bakshi, McDonalds India (MIPL) is now looking to acquire shares held by the ousted managing director of Connaught Plaza Restaurant (CPRL).

McDonalds India in the termination notice to Vikram Bakshi has stated that it will initiate the process of determining the purchase price of the shares and will in due course inform Bakshi of the value of his shares as it was on the date the notice was issued by the company.

Earlier on November 28, McDonalds had terminated its joint venture agreement with Vikram Bakshi, simultaneously moving the London Court of International Arbitration to settle the ongoing legal dispute between the two. The partnership between the US fast food chain and Bakshi, a franchisee for the northern and eastern regions, was housed in CPRL, a 50:50 joint venture, formed in 1995, that runs 150 outlets in northern and eastern India.

As per the termination notice, MIPL claims that pursuant to the termination of the JV agreement, it has elected to purchase all the shares owned and controlled by Bakshi in the JV company. Additionally, MIPL claims that it is entitled to purchase the shares as per clause 37 (a) of the JV agreement and that the determination of the purchase price of shares held by Bakshi will be carried out by an accounting firm of repute.

Bakshi, on the other hand, has contested that the termination notice is an afterthought and a blatant attempt by MIPL to try and circumvent the orders of an earlier September 16 order mandating maintenance of status quo in respect of shareholding and board composition of CPRL. Alleging that the termination notice has been issued in order to render the proceedings before the Company Law Board infructuous, Bakshi has accused MIPL of starting arbitral proceedings with the intention of employing pressure tactics and forcing him to expend large sums of money in the UK on conducting litigation.

Bakshis application before the CLB states that the termination notice is an act of oppression and is also unfair, harsh and burdensome not only to him but is also detrimental to CPRL.

Calling the notice vexatious, Bakshi has claimed that the arbitration deal between him and MIPL is void, inoperative and unenforceable and it does not stand in the way of the current proceedings before the CLB, concerning allegations of oppression and mismanagement levied against the company.

In his application, Bakshi has sought a stay of the arbitral proceedings and has, additionally, sought that the termination notice should be set aside, along with an order restraining MIPL and McDonalds Corp from taking any steps against him.