NCLAT allowed withdrawal of the petitions filed by US food major McDonald’s and Bakshi against each other over the control of CPRL
New Delhi: The National Company Law Appellate Tribunal (NCLAT) on Tuesday approved the settlement reached between US food major McDonald’s and its estranged Indian partner Vikram Bakshi regarding the control of Connaught Plaza Restaurants Ltd (CPRL).
The tribunal’s approval comes almost three years after the entities filed for a settlement.
On Tuesday, NCLAT allowed withdrawal of the petitions filed by US food major McDonald’s and Bakshi against each other over the control of CPRL while it also set aside the plea of state-owned Housing and Urban Development Corp Ltd (HUDCO) opposing the settlement.
HUDCO opposed the settlement claiming recovery of the loan given to Bakshi-promoted company Ascot Hotels and Resorts.
A two-member NCLAT bench headed by Chairperson Justice Ashok Bhushan said it is “satisfied that no grounds have been made” in HUDCO’s application to reject the pleas filed by McDonald’s India, others and Bakshi.
The appellate tribunal also set aside the earlier order passed by the Delhi-based Principal bench of the National Company Law Tribunal (NCLT) in July 2017.
At that time, NCLT had set aside the proceeding of the meeting of the board of CPRL held on August 2013 relating to re-election of Bakshi as Managing Director. It had also appointed Justice G S Singhvi as administrator and McDonald’s was restrained from interfering with the functioning of CPRL and its restaurants.
This order was challenged by McDonald’s before NCLAT and subsequently, Bakshi also moved the tribunal on certain issues.
Amid the tussle, in May 2019, McDonald’s and Bakshi had an out-of-court settlement, with the US fast food chain agreeing to buy Bakshi’s share in the joint venture CPRL that operated outlets of McDonald’s in North and East India for an undisclosed amount.
Subsequently, a joint application was moved by them before NCLAT informing about the settlement and seeking withdrawal of the petitions filed against each other.
However, HUDCO filed an intervention application, opposing the settlement claiming Rs 195 crore in dues from Bakshi and his related entities.
Bakshi had given a guarantee to HUDCO against a loan of Rs 62.38 crore to Ascot Hotels and Resorts for a commercial project in Noida, Uttar Pradesh in 2006. There was a default and the loan was declared as an NPA in August 2011.
Bakshi was a promoter and full-time director of Ascot Hotels.
HUDCO had moved the Debt Recovery Tribunal (DRT) for the attachment of 3,100 shares of CPRL in the name of Bakshi. In an order passed in February 2016, DRT had restrained Bakshi from alienating or transferring or creating any third party interest on the shares.
The parties submitted that HUDCO’s claim against Bakshi as guarantor and promoter of Ascot Hotels is a separate issue which can very well be pursued by the HUDCO for dues against Bakshi but that cannot be a ground to oppose the joint application filed by both the parties to the dispute.
HUDCO contended that the settlement arrived between the parties is contrary to orders passed by the DRT.
CPRL’s 50 per cent share consisted of 1.06 per cent shareholding by Vikram Bakshi (3100 shares) and 48.94 per cent shareholding of Bakshi Holdings (1,42,500 shares).
However, NCLAT observed that in so far as 3,100 shares held by Bakshi in CPRL, the amount corresponding to the share value has already been deposited before the DRT and that an amount of Rs 10 crore which has been withdrawn by HUDCO.
DRT’s order dated February 2, 2016 issue has to be confined to 3,100 shares owned by Bakshi in CPRL and “HUDCO is not right in his submission that corporate veil of other company in which Bakshi is also shareholder should also be lifted”.
“The fact that HUDCO is entitled to pursue its recovery certificate… cannot be a ground to reject” the interim applications moved by both parties, NCLAT said.
Tejas Karia, Partner and Head-Arbitration at Shardul Amarchand Mangaldas, and counsel for Vikram Bakshi, said, “NCLAT’s decision is significant as it finally endorses the settlement arrived at three years ago, which ended the long battle between Bakshi and McDonald’s, by rightly dismissing HUDCO’s intervention for an unrelated claim.” PTI KRH
