Friday, 30 August 2013

Did Delhi HC’s Khan Market Ruling Cost Vikram Bakshi His Job? Bakshi Denies Link & Says ‘MD Issue’ is in the ‘Legal Domain’

(This is an updated post that incorporates Vikram Bakshi’s response. Fairness demands that he has his say. We’ll keep you posted on the developments in this story.)

By Sourish Bhattacharyya

A TERSE public notice issued by McDonald’s India indicates that times are a-changing in the fast food chain that has grown remarkably — its 250-plus outlets now serve over 6.5 lakh customers a day — since it entered India in 1996.
The notice, which appears on Page 14 of The Economic Times, New Delhi, on Friday, August 29, informs the general public that “Mr Vikram Bakshi has ceased to be the Managing Director of Connaught Plaza Restaurants Private Limited (CPRL), having its registered office at 13, Tolstoy Marg, New Delhi-110001, and its corporate office at 13-A, Jor Bagh Market, New Delhi-110003, pursuant to the expiration of Mr Bakshi’s term as Managing Director on 17th July 2013”. It goes on to say, “The general public is hereby informed and put to notice that CPRL is now being managed by its Board of Directors.”
Responding to this post, Bakshi in a text message to Indian Restaurant Spy said, “This matter of the managing director is in the legal domain now and therefore I am not in a position to say anything at this stage. However, I continue being a Director and JV Partner with control of 50 per cent equity in the JV Company. I shall respond to all queries in due course.”
CPRL is a joint venture company that McDonald’s India set up with Bakshi, an affable self-made entrepreneur who is also a real estate developer, to run the chain’s outlets in the north and the east. Amit Jatia’s Hardcastle Restaurants Private Limited (HRPL) was the joint venture partner for the west and the south till it got upgraded to “development licencee” status in 2010, which, according to a McDonald’s  India media release issued then ” (http://www.mcdonaldsindia.com/aboutus.html), is given only to a partner whose “financial strength, viability, profitability and long-term sustainability of the business is assured”. CRPL is yet to get that status.
Has Bakshi paid the price for what is described in the trade as the Khan Market snafu, which apparently didn’t go down well with the chain’s top brass? McDonald’s India only got bad press (and an adverse Delhi High Court ruling) when it was evicted last month from the three-floor premises it was occupying in Khan Market. The premises belonged to an octogenarian widow, Niamat Kaur, who asked McDonald’s to either vacate the property as the nine-year lease had expired in 2010, or renew the lease after paying the prevailing market rent.
In the case heard by the Delhi High Court, which saw retired Chief Justice A.P. Shah acting as arbitrator and top lawyer, Harish Salve, appearing on behalf of the petitioner, McDonald’s was not only evicted by Justice Manmohan Singh, but also asked to pay the market rent at the rate of Rs 11 lakh per month from February 11, 2010, the date of expiry of the lease deed.
Justice Singh came down heavily on McDonald’s India and Bakshi when he observed: “Vikram Bakshi, managing director of the petitioner company, is aware about the actual rent in Khan Market. Even he lives in Jor Bagh. He is running 117 restaurants in prime areas of India. He has real estate business also ... it is not believable that the petitioner is not aware about the market rent of Khan Market area.”
Bakshi, however, denied any link between the ruling and his position in the company. “The Khan Market ruling has nothing whatsoever to do with the re-election of the managing director,” he said. “We had a proper extension letter from our landlady. But as we have said before, we shall abide by the decision of the Delhi High Court, where an appeal is pending.”
Ironically, just in June, opening the largest McDonald’s India outlet at the Great India Place, Noida, Bakshi had said CPRL plans to invest up to Rs 500 crore to double the total number of the fast-food chain’s outlets in the north and the east to 300 by 2015. This year, he said, the company will add 45 outlets to its present spread of 152 stores.
American corporations are particularly sensitive to adverse court rulings and in this case McDonald’s India and CRPL came across as being insensitive to an elderly woman. Was Khan Market, despite his categorical denial, the real reason for the unseating of Vikram Bakshi?