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The Company Law Board (CLB), on Friday, decided to hear the case based on the petition filed by Vikram Bakshi, the Indian partner of the US-based fast food chain McDonald’s, challenging his removal as the managing director of the joint venture entity Connaught Plaza Restaurants Pvt Ltd, on November 12 and November 13, 2013.
The next date has been scheduled after CLB member BSV Prakash Kumar has heard the case on October 3 and October 4.
During the immediate past two hearings, McDonald’s, however, has argued that the dispute between the American fast food company and its joint venture partner Vikram Bakshi’s Connaught Plaza Restaurants should be referred to internal arbitration as per certain clauses in the agreement between the two parties.
Meanwhile, the CLB said its interim order passed on September 16 to maintain status quo on shareholding and board pattern and right to call option, would continue till the next hearing. The company’s board will continue to meet regularly to keep its business running, it is noted.
Bakshi moved the CLB after McDonald’s, in a public notice dated August 30, said:
“Vikram Bakshi has ceased to be the Managing Director of Connaught Plaza Restaurants pursuant to expiration of Bakshi's term on July 17.”
On October 3 and 4, senior advocate Sudipto Sarkar, who appeared for McDonald’s, said that the matter of non-appointment of Bakshi as a managing director should be referred to arbitration in the London Court of International Arbitration according to the clauses of the agreement.
Meanwhile, Connaught Plaza Restaurant, in one of its affidavits, has noted that the JV agreement that the appointment of Bakshi as a managing director happened through a board meeting of the company which is governed by the Article No 35 of the Articles of Association of the company and the same is not the subject matter of any arbitration agreement. Further, it noted that paragraph 32 of the JV agreement relates to exercise call option and is not the subject matter of any arbitration agreement.
According to the affidavit of Bakshi, the JV agreement does not cover appointment of the managing director of the company by its Board of Directors, but only provides for election of a managing director as a general meeting. The affidavit also added that as all the parties to the arbitration agreement are resident in India, no application lies under Section 45 of the Act.
In the affidavits, the petitioners have raised concerns over the oppressive a malafide acts which are beyond the scope of reference of arbitration. It also noted that the conflicting business interest is misplaced, and designed to “oppressively” ousting the petitioner from the company. As JV partner in west and south is a director in 23 companies, including Fame India, Inox, Sterling Holiday Resorts, Global Trendz, Westlife Development. Amit Jatia is also the executive chairman of West Pioneer Properties which is developing hotels in Nashik and Aurangabad. Through a subsidiary, the company also owns a shopping mall at Kalyan, in Maharashtra, which has over 20 restaurants including KFC.
Even in Thailand, McDonald’s partner operates cinema theatres with food outlets, hotels in fine dining.
Bakshi has also noted that he had infused capital of Rs 6.35 crore in the company between the last quarter of 2012 and first quarter of 2013 by way of share application money, pursuant to the respondent’s forceful demands, subject to raising of remaining capital by sale of Basant Lok and Noida property. Till date the above mentioned money is lying as share application money and the issue of shares is being delayed at one pretext or the other, it added.
Bakshi also denied that the credit facilities made available by banks and institutes to him are because they are supported by letters of comfort from McDonald’s. He also denied the allegation that he had increasingly promoted his own companies. Bakshi noted that Legends of India was owned by Ascot Hotels and Resorts Private Ltd, which is owned by his daughters. In his affidavit, Bakshi also denied that it breached non-compete clause, as he did not deceive or mislead about ownership of Legends of India which serves Awadi cuisine that is the most unlikely segment to be considered by McDonald’s.
