W.P.(C)--9036/2017. Case: MCDONALD’S INDIA PRIVATE LIMITED AND ANR. Vs. UNION OF INDIA AND ORS.. High Court of Delhi (India)
| Case Number | W.P.(C)--9036/2017 |
| Citation | NA |
| Judgement Date | January 09, 2018 |
| Court | High Court of Delhi (India) |
$~15 & 16
IN THE HIGH COURT OF DELHI AT NEW DELHI
Decided on : 9th January, 2018
+ W.P.(C) 9036/2017 & CM APPL.36957/2017
MCDONALD’S INDIA PRIVATE LIMITED
AND ANR. ..... PETITIONERS
Through: Mr. Rajiv Nayar, Sr. Adv. with
Mr. Rahul P. Dave, Ms. Niti Dixit, Mr. Sumit Chopra, Mr. Amit Dhingra, Mr. Rohan Jaitley, Ms. Raunaq B. Mathur, Mr. Shivam Kumar Raheja, Mr. Suryaveer Berry, Ms. Zahra Aziz, Ms. Manjira Dasgupta & Mr. Mohit Negi, Advs.
versus
UNION OF INDIA AND ORS. ..... RESPONDENTS
Through: Mr. Manik Dogra, Sr.
Government Counsel with Mr. Amit Mahajan, CGSC & Mr. Gaurang Kanth, CGSC with Ms. Eshita Baruah & Ms. Biji Rajesh, Advs. along with Mr. Sanjay Shorey. Jt. Dir. (Legal), for R-1.
Mr. Parag Tripathi, Sr. Adv. with Mr. Tejas Karia, Mr. Manu Krishnan, Mr. Gauhar Mirza, Mr. Shubhaang Sinha,
W.P.(C) Nos. 9036/2017 & 9433/2017 page 1 of 39
Mr. Shikhar Khare & Mr. Aditya Virkam & Mr. Ashvary Vikram, Advs. for R-2 & R-3.
+ W.P.(C) 9433/2017 & CM APPL. 38403-05/2017
AYSEL MELBYE AND ANR. ..... PETITIONERS
Through: Mr. Darpan Wadhwa, Sr. Adv. with Mr. Rahul P. Dave, Ms. Niti Dixit, Mr. Amit Dhingra, Mr. Rohan Jaitley, Ms. Raunaq
-
Mathur, Mr. Shivam Kumar Raheja, Mr. Suryaveer Berry Ms. Manjira Dasgupta & Ms. Zahra Aziz, Advs.
versus
UNION OF INDIA AND ORS. .... RESPONDENTS
Through: Mr. Manik Dogra, Sr.
Government Counsel with Mr. Amit Mahajan, CGSC & Mr. Gaurang Kanth, CGSC with Ms. Eshita Baruah & Ms. Biji Rajesh, Advs. along with Mr. Sanjay Shorey. Jt. Dir. (Legal), for R-1.
Mr. Parag Tripathi, Sr. Adv. with Mr. Tejas Karia, Mr. Manu Krishnan, Mr. Gauhar Mirza, Mr. Shubhaang Sinha, Mr. Shikhar Khare & Mr.
W.P.(C) Nos. 9036/2017 & 9433/2017 page 2 of 39
Aditya Virkam & Mr. Ashvary Vikram, Advs. for R-2 & R-3.
CORAM:
HON'BLE MR. JUSTICE R.K.GAUBA
JUDGMENT (ORAL)
1. The first of the above captioned writ petitions was filed on
12.10.2017 seeking the following reliefs :-
(a) Issue an appropriate writ, order or direction in the nature of certiorari or mandamus or such other appropriate writ, order or direction to declare that the notification of Section 425 of the Companies Act, 2013 by Respondent No.1 pursuant to Notification No. S.O. 1934 (E) dated June 1, 2016 published in the Gazette of India is ultra vires and unconstitutional and to strike down such modification;
(b) Issue an appropriate writ, order or direction in the nature of mandamus or such other appropriate writ, order or direction to Respondent No.1 to frame rules to regulate proceedings under Section 425 of the Companies Act, 2013 read with the Contempt of Courts Act, 1971, as amended;
(c) Issue an appropriate writ, order or direction in the nature of certiorari or such other appropriate writ, order or direction to quash or set aside the orders dated September 5, 2017 and September 26, 2017 issued by the National Company Law Tribunal, Principal Bench in Contempt Application No. 300 (PB) of 2017 in Company Petition No. 110 (ND) of 2013;
(d) Issue an appropriate order or direction to stay the proceedings in Contempt Application No. 300 (PB) of 2017 in Company Petition No. 110 (ND) of 2013 until
W.P.(C) Nos. 9036/2017 & 9433/2017 page 3 of 39
rules are framed by Respondent No.1 in relation to proceedings under Section 425 of the Companies Act, 2013 read with the Contempt of Courts Act, 1971, as amended;
(e) Issue a writ, order or direction as may be appropriate to call for the record of Contempt Application No. 300(PB) of 2017 in Company Petition No. 110 (ND) of 2013 pending in the National Company Law Tribunal, Principal Bench;
(f) Issue an appropriate writ, order or direction of or in the nature of mandamus or certiorari or such other appropriate writ, order or direction as this Hon‟ble Court may deem fit in the facts and circumstances of the present case;
(g) Pass such other and further orders or directions as this Hon‟ble Court may deem fit and proper in the facts and circumstances of the present case;
(h) For costs of the present petition.”
2. The writ petition came up before a division bench of this court led by Hon’ble the Acting Chief Justice on 13.10.2017 when the following order was passed :-
“1. Right at the outset, Mr. Harish Salve, ld. Senior Counsel appearing on behalf of the petitioners, submits that he does not press prayers (a) and (b) of the writ petition.
2. Prayers (a) and (b) of the writ petition are dismissed as withdrawn.
W.P.(C) Nos. 9036/2017 & 9433/2017 page 4 of 39
3. So far as the remaining prayers are concerned, the same would be the subject of consideration by a ld. Single Judge of this court.
4. On request of the petitioners, let this petition be placed today itself before a ld. Single Judge of this court as per Roster.”
3. The roster judge having recused, the petition came up before this court against the above backdrop on 13.10.2017 and was taken up for hearing w.e.f. 16.10.2017.
4. On 26.10.2017, the second above-captioned writ petition came to be filed, it being almost a verbatim copy of the first said writ petition, the prayers made therein also being identically worded. Upon reference being made to the fact that the first writ petition had been pending before this court after withdrawal of the prayer clauses
(a) and (b), the second petition was also listed before this court alongside the first petition on 26.10.2017. Thereafter, both the petitions have been heard together, it being also conceded by the petitioners in the second matter that they also do not press the prayer clauses (a) and (b).
5. On 26.10.2017, the court framed the following preliminary issue :-
“The question of propriety of the writ jurisdiction of this Court being invoked at the stage of show cause notice alongside the submission of the respondents that the remedy of appeal under the special statute (Companies Act, 2013) is also available, needs to be examined first”.
W.P.(C) Nos. 9036/2017 & 9433/2017 page 5 of 39
6. It was, however, noted in the proceedings recorded on
07.11.2017 that the petitioners have insisted on and advanced arguments also covering the challenge on merits to the impugned orders not restricting themselves to the preliminary issue mentioned in the proceedings of 26.10.2017.
7. The background facts need to be noted at this stage, albeit, briefly.
8. McDonald’s India Pvt. Ltd. (MIPL) was incorporated in August, 1993 under the Companies Act, 1956, it being a wholly owned indirect subsidiary of Mc Donald’s Corporation US (hereinafter referred to as McDUS), in the wake of a joint venture agreement (JV) dated 31.03.1995 entered into by MIPL on one hand and by the second respondent in these petitions. A new company styled as Connaught Plaza Restaurants Ltd. (CPRL) was incorporated under Companies Act, 1956 as joint venture on 29.06.1995 in which each side held equal equity share capital. On 18.07.1995, Mr. Vikram Bakshi, the second respondent in these writ petitions came to be appointed as the Managing Director of CPRL, initially for a period of two years. The second respondent continued to be the Managing Director of CPRL, the term having been extended from time to time till it came to an end on 17.07.2013. On 09.09.2013, the second respondent and his company, Bakshi Holdings Pvt. Ltd., the third respondent in these writ petitions, instituted proceedings [Company Petition no.110(ND)/2013] before the erstwhile Company Law Board under Section 397 and other provisions of Companies Act, 1956, against MIPL, the principal relief sought being reinstatement of the
W.P.(C) Nos. 9036/2017 & 9433/2017 page 6 of 39
second respondent as the Managing Director of CPRL. It appears that by a notice issued on 28.11.2013, MIPL proceeded to terminate the joint venture agreement. On 29.11.2013, MIPL initiated arbitration proceedings in London, U.K., in respect of the claims arising consequent to termination of the joint venture agreement. On
21.06.2017, MIPL issued notice to CPRL alleging material breaches in terms of para 18(d) of the franchise agreement and demanding payment of royalty for the period October 2015 to May 2017. The company petition [no.110(ND)/2013] which had been instituted on
09.09.2013, before the erstwhile Company Law Board by the second and third respondents herein came up before the National Company Law Tribunal (NCLT) which had taken it over, it being the appropriate authority under the Companies Act, 2013. The said company petition [no.110(ND)/2013] was allowed by NCLT on
13.07.2017, the operative part whereof (as appearing at internal page 133 of the said judgment) reads as under :-
“41. As a sequel to the above discussion this petition succeeds. We consider it just and equitable to provide as under:-
(i) The proceedings of the meeting of the Board of Directions held on 06.08.2013 relating to re-election of Mr. Vikram Bakshi as Managing Director of the Company are set aside and declared illegal, unjust and malafide. Consequently, the uploading of Form-32 with the Registrar of Companies is also nullified and is declared illegal. The status of Mr. Vikram Bakshi as Managing Director of Connaught Plaza is restored. He shall continue to act as Managing Director of Connaught Plaza
W.P.(C) Nos. 9036/2017 & 9433/2017 page 7 of 39
subject to passing of any resolution under the chairmanship of learned Administrator.
(ii) All steps taken in pursuance of non-election of Mr. Vikram Bakshi as Managing Director, are also declared illegal, unlawful, unjust and malicious.
(iii) The Board of Director of Connaught Plaza is divided in 50-50. In order to break the impasse, we deem it just and equitable to appoint Hon‟ble Mr. Justice G.S. Singhvi, Former Judge Supreme Court, 7 Padmini Enclave, Arvindoo Marg, New Delhi-110016 to act as Administrator with all the powers including the power to vote in the Meetings of Board of Directors. The Administrator shall settle his own fee.
(iv) The Administrator shall ensure that all resolutions in respect of Connaught Plaza are passed to advance the interest of the Connaught Plaza and none of...
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