McDonald's ending JV pact in violation of law board's interim orders: Indian partner

McDonald's terminating its joint venture agreement with Vikram Bakshi was "not a good act" and "is in violation of interim orders" passed by the Company Law Board, the Indian partner argued on Tuesday.

"It is not a good act. It acted (termination notice) in bad faith. The subject matter of the present is still proceeding before the CLB. This is an attempt me to ouster me from the joint venture under-valued," said Mr Bakshi's counsel, S N Mukherjee, before the Company Law Board (CLB).

"It interfered in the pending proceedings and was violation of the interim orders passed by the board," he said adding that it happened when the JV has started performing well and started making profits after 18 years of operation."

McDonald's on November 28 terminated its joint venture agreement with Vikram Bakshi by sending a notice and had simultaneously moved to the London Court of International Arbitration to settle the ongoing legal dispute.

Mr Mukherjee submitted that grounds taken in the termination were 'identical' of August 6 this year, when McDonald's had decided not to elect him as the managing director of their JV firm - Connaught Plaza Restaurants Ltd (CPRL).

On September 16, the CLB had directed to maintain status quo with respect to shareholding and board pattern and the right of the call option until its further order.

Incorporated in June 1995, CPRL is a 50:50 joint venture between McDonald's Corporation and Vikram Bakshi and it has been running fast food outlets in North and East India.

According to Mr Mukherjee, in the termination notice McDonald's had alleged that Mr Bakshi and his holding firm had a conflict of interest with some other businesses and it was violative of section 24 which has non-competitive clauses.

"However section is void and non-enforceable and is still subject matter before the CLB," he added.

McDonald's India has alleged that Mr Bakshi had conflict of interests and was running business as the Kebab Express, The Legends of India, Savoy which has bars and coffee shop.

The CLB member B S V Prakash Kumar posted the matter for Wednesday for further hearing.

The board was hearing a petition filed by Vikram Bakshi challenging his removal as the managing director of the joint venture.

"Vikram Bakshi has ceased to be the Managing Director of Connaught Plaza Restaurants Ltd (CPRL) pursuant to expiration of Bakshi's term on July 17," McDonald's India had said in a public notice issued on August 30.