McDonald’s Gets the Edge In Franchise Dispute With Vikram Bakshi

As it stands now, Bakshi has been directed to sell his shares in the joint venture back to McDonald’s.

In my article dated 23 August, I explained the history of the dispute and proceedings between McDonald’s and Vikram Bakshi. Several developments have taken place in the last one month – with the legal battle being far from over.

Company Law Board/NCLT Proceedings Now Before NCLAT

Against the judgment dated 13 July of the National Company Law Appellate Tribunal (NCLAT), both Bakshi and McDonald’s have filed appeals. On 25 August, when the matter first came up before the NCLAT, the NCLAT granted parties time to explore the possibility of an amicable settlement. Interestingly, on the next date of hearing, 30 August, the counsel for Bakshi submitted that they had agreed for a settlement, and the counsel for McDonald’s stated that the question of settlement does not arise.

Having found ‘no chance of amicable settlement’, the NCLAT issued notice to respondents on both appeals.

Termination of Franchise Agreement Now Before NCLT

Following the termination of the franchise agreement by McDonald’s, Bakshi filed an application for contempt in the company petition before the National Company Law Tribunal (NCLT). On 5 September, the NCLT issued show cause notice to the respondent.

Arbitration Proceedings

On 13 September, the arbitral tribunal pronounced a partial award. Due to confidentiality issues, the exact content of the award is not known. It appears that, by a 2:1 majority award, the tribunal upheld the termination of the JV Agreement and directed Bakshi to sell his shares/stake in the JV back to McDonald’s. And for that purpose directed the appointment of experts/an independent body to value shares in terms of the formula provided in the agreement.

The award seems to give McDonald’s the edge. It will be interesting to see how the NCLAT and the NCLT proceed now and what, if any, legal course Bakshi will take against the award.

Also Read: Decoding McDonald’s VS Bakshi That Jeopardised 169 Outlets

(The author is a Delhi High Court advocate.)

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