The National Company Law Appellate Tribunal (NCLAT) on Wednesday said it will review the settlement between fast food giant McDonald’s and its estranged partner Vikram Bakshi after the latter failed to clear his `195-crore dues to the Housing and Urban Development Corporation (Hudco).
An NCLAT bench headed by Justice SJ Mukhopadhaya said the out-of-court settlement is prima facie violative of the order of Debt Recovery Tribunal, Delhi, and will not be given effect to. It also restrained Bakshi from leaving the country without the tribunal’s permission.
“Don’t play with fire,” Justice Mukhopadhaya told Bakshi. “We find that the parties (Bakshi and McDonald’s) have reached an agreement which is prima facie against the DRT order. The parties will not give effect to the settlement and cannot leave the country without intimating DRT Delhi or this tribunal,” the NCLAT said.
Hudco had objected to Bakshi’s deal with the American burger giant on the ground that it violated the orders of the DRT, which directed him not to transfer his shares in Connaught Plaza Restaurants (CPRL). CPRL, a 50:50 joint venture between Bakshi and McDonald’s India, operated 169 stores in north and eastern India.
Both parties had on May 7 informed the NCLAT that they were working for an out-of-court resolution. The tribunal had then allowed them to go ahead with settlement talks. According to the terms of the settlement, McDonald’s India has bought over the 50% stake held by Bakshi and his wife in CPRL for an undisclosed amount.
On August 22, the NCLAT had given Bakshi four weeks time to settle the claims by Hudco. The unpaid dues to the state-owned corporation had delayed the settlement to the six-year-old dispute between CPRL and McDonald’s India.
The DRT, in February 2016, had restrained Bakshi from transferring or alienating or creating any third party interest in respect of his shares in CPRL. Bakshi had given guarantee to Hudco against a loan of `62.38 crore to Bakshi’s Ascot Hotels and Resorts for a commercial project in Noida, UP, in 2006, which was defaulted and declared as NPA in August 2011. To recover it, Hudco had moved the DRT in 2013 and requested to attach Bakshi’s shares in CPRL.
Source: Financial Express, September 19, 2019