McDonald's outlets may reopen soon; NCLT reinstates ousted MD Vikram Bakshi

After dozens of hearings and nearly four years of court drama, Vikram Bakshi, ousted managing director of Connaught Plaza Restaurants Pvt Ltd (CPRL), is set to regain his position.

The principal bench of the National Company Law Tribunal (NCLT), a quasi-judicial body overseeing company affairs, has reinstated him; an order it issued on Thursday declared the steps towards his ouster in August 2013 “illegal, unlawful, unjust and malicious”. 

The NCLT bench of M M Kumar, president, and S K Mohapatra, member, also appointed an administrator, former Supreme Court judge G S Singhvi, to “break the impasse” on the board of directors. He is to get equal voting power as any other board member of CPRL. Appointment of an administrator with voting power is crucial in the matter as the current board is represented by two members each from either party, McDonald’s and Bakshi, and are at loggerheads. Reaching any conclusive decision is thus impossible under such a representation. 

To re-elect Bakshi, the bench ordered a meeting under the supervision of the administrator and the board of CPRL has been barred from taking up any agenda item without prior approval of  Singhvi. The tribunal has also restrained McDonald’s Corporation, controlling entity of McDonald’s India, from “interfering with smooth functioning” of CPRL and its McDonald’s outlets. 

Vikram Bakshi
“We respect the decision of the NCLT. We are examining the judgment and exploring our legal options,” McDonald’s India said in an e-mail.

Meanwhile, according to sources, Bakshi is now preparing to approach the London Court of International Arbitration (LCIA) with the NCLT order. A legal proceeding is underway at LCIA between McDonald’s and Bakshi on the same matter, since the US-based burger giant approached the top arbitration forum in October 2013.

While Bakshi was not available for comments, Tejas Karia, his counsel in the NCLT matter, welcomed the order.

This comes at a time when CPRL, which runs the franchise outlets for McDonald’s in North and East India, is battling with operational malfunction and indecisiveness. Recently, it had to shut down nearly 80 per cent of its outlets in the major market of Delhi, its biggest. 

The order for closure came as it failed to renew the mandatory regulatory licences. While 154 outlets are operational in the two regions, issues in maintaining quality of food and service and a high attrition rate has mired growth prospects. According to sources, the firm’s attrition rate runs as high as 25 per cent a year. 

Since Bakshi’s ouster in 2013, revenue growth plunged to six per cent in 2014-15 from 27 per cent in 2012-13 and expansion plans have been hit. 

The other entity – Hardcastle Restaurants, run by Amit Jatiya – that operates in West India and South India is expanding its number of outlets by 30 a year. According to Jatiya, it plans to invest Rs 700 crore in the next few years.  

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