New Delhi: The Supreme Court on Tuesday refused to interfere with Delhi High Court’s order allowing the Indian venture of US food chain McDonald to go ahead with the arbitration proceedings against its estranged partner Vikram Bakshi before the London Court of International Arbitration.
Refusing to interfere with July 21 order of the Delhi High Court, a bench of Justice J. Chelameswar and Justice Abhay Manohar Sapre were not persuaded by senior counsel Abhishek Manu Singhvi’s contention that it would amount to multiplicity of proceedings as the issues before the Company Law Board and those raised by the McDonald’s Indian business arm in the arbitration are identical.
Singhvi appeared for Bakshi – the estranged partner of McDonald’s Indian JV Connaught Plaza Restaurants Private Limited (CPRPL). Both are fighting over the control of the management of the JV Company which runs food chain in north and east India.
The tussle between the two started when McDonald refused to re-nominate Bakshi as the managing director of the company on the expiry of his term on July 17, 2013.
The Delhi High Court had by its July 21 order had vacated December 23, 2014 order by a single judge bench that had put the arbitration on hold.
The Indian business venture of McDonald had moved for the arbitration after it had terminated the joint venture.
Addressing the court, Singhvi said that under the JV agreement, all the disputes between the two were to be decided under the substantive Indian law and before the courts in Delhi. He said that arbitration was limited to the issues which remained unresolved after being gone through by the Indian courts.
The senior counsel told the court that CLB has said that there would be no invocation of the call options – on acquiring Bakshi’s stakes in the JV, no change in the board or share-holding.
He said that the issue before the arbitration is that of call option and they want to buy Bakshi’s shares at “low price”.
At this, the bench observed that the “call option is a part of the agreement that is available to both the parties”.
Both sides have offered to buy the others’ share. Bakshi had offered to buy McDonald’s shares at 2008 valuation. He had earlier declined McDonald’s offer to buy his shares for $5 million and again refused when it increased the offer to $7 million.
Giving the history of the JV, Singhvi said that it was entered into 1995, and 15 years after that JV started earning profits but Bakshi’s first gain came only in 2008. “No dividends were paid but they collected royalty,” he said.