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Vikram Bakshi, estranged partner of McDonald’s in India, got a stay order from the high court (HC) here on Monday on the arbitration in the dispute that was scheduled to take place in London.
Bakshi had earlier nominated a former Delhi HC judge, J K Mehra, to represent his side in the arbitral panel. The arbitration had been sought by the US food major, which had petitioned the Company Law Board (CLB) in the matter.
The case has been on at the CLB since McDonald’s said in a public notice on August 30, 2013, that Bakshi had “ceased to be the managing director of Connaught Plaza Restaurants”, their joint venture.
Bakshi had moved the HC earlier this month, against a CLB order transferring the litigation between the two over the ownership of Connaught Plaza to its Chennai bench. The Delhi HC had, on December 3, given a stay on this as well. Judge Sanjay Sachdeva will hear the case again on January 15.
Earlier on November 7, Bakshi had offered to sell his stake in the joint venture Connaught Plaza Restaurants, which operates fast-food restaurants in the north and east of India, for Rs 1,800 crore. McDonald's had rejected the offer but failed to present a counter offer in the next hearing. Bakshi had earlier rejected McDonald's offer of Rs 48-50 crore to buy his stake, based on a complicated formula. Bakshi had asked for an independent valuer to determine the right valuation.
According to sources, Bakshi had valued his stake at Rs 2,500 crore, and later brought down to Rs 1,800 crore.
Bakshi had informed the CLB in the previous hearing that McDonald's offer went against the Foreign Exchange Management Act because it only provided for return on equity. His counsel argued the valuation did not capture Bakshi's work over 18 years in building McDonald's as a leading brand in India.
Prior to this, Bakshi had offered to buy McDonald's stake in Connaught Plaza Restaurants at net asset value, around Rs 150 crore at the time. He had said he was not keen on retaining the brand and would prefer to start his own food and beverage venture. In 2008, McDonald's had proposed Bakshi sell his stake for $5 million. It later raised the offer to $7 million. Bakshi refused to sell at such a valuation. Grant Thornton had valued the business at $331 million.
CLARIFICATION
An earlier version of this report said the Monday order was an ex parte one. The company has clarified that this was not. We stand corrected.
