Vikram Bakshi, the estranged partner of McDonald’s in India, on Wednesday, received a stay from the Delhi High Court against an order by the Company Law Board (CLB) on November 27 transferring the ongoing case between American fast-food giant McDonald’s and Bakshi over ownership of their joint venture Connaught Plaza Restaurants, to Chennai branch.
Bakshi’s lawyers moved the Delhi High Court after CLB member BSV Prakash Kumar recused himself from hearing the ongoing matter on November 27, and the CLB chairman Justice DR Deshmukh transferred the case to the Chennai bench.
On Wednesday, Justice Sanjay Sachdeva heard the appeal filed by Bakshi’s legal counsels, and has given the stay. Sachdeva will again hear the matter on January 15, 2015 to decide if the call would be transferred to Chennai branch of CLB or not.
Bakshi, earlier on November 7, offered to sell his stake in the joint venture, which operates fast-food restaurants in the north and east of India, for Rs 1,800 crore. While McDonald’s rejected the offer, it failed to to present its counter offer on the next hearing. The development came after Bakshi rejected McDonald’s previous offer of Rs 48-50 crore to buy his stake. The offer was based on a complicated formula, which Bakshi did not accept, asking for an independent valuer to determine the right valuation.
Bakshi had valued his stake at Rs 2,500 crore while offering to sell it during discussions with McDonald’s executives in April this year, later brought down to Rs 1,800 crore. At that time, there were questions about the number of outlets belonging to him under the joint venture, 163. In comparison, Hardcastle Restaurants, which runs McDonald’s operations in the west and south of the country, has 193 outlets.
Bakshi had earlier informed the CLB in the previous hearing that the 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, sources said.
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.
Bakshi approached the CLB after McDonald’s said in a public notice on August 30, 2013, that he had “ceased to be the managing director of Connaught Plaza Restaurants”. Bakshi has asked McDonald’s to return all the properties it had leased from him for running its restaurants.