A division bench of justices Badar Durrez Ahmed and Sanjeev Sachdeva 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 the Connaught Plaza Restaurants Private Limited, which was incorporated pursuant to the joint venture between Bakshi and the US-based fast food major.
"Therefore, in any eventuality, in the facts and circumstances of the case and applying the principles, as indicated above, the single judge could not have restrained the appellant from pursuing the arbitration proceedings before the arbitral tribunal," it added.
The bench further said, "the finding of the single judge that the arbitration agreement in the present case is incapable of performance or inoperative because of the pendency of the proceedings in the CLB is clearly out of line".
It said while courts here have the power to injunct arbitration proceedings, they should use this power rarely.