2022 (12) TMI 619 - AT - Companies Law

Seeking lifting of corporate veil - Recovery of dues - dispute related to Joint Venture Agreement between the parties - Learned counsel for the HUDCO at this juncture has submitted that corporate veil of the Bakshi Holdings Pvt. Ltd. need to be lifted and shares held by Bakshi Holdings Pvt. Ltd. also held to be covered by the direction issued by Recovery Officer. HELD THAT - We have noticed that on the application which was filed by the HUDCO on which order was passed on 02.02.2016 was only with regard to 3100 shares held by Vikram Bakshi in M/s Connaught Plaza Restaurants Pvt. Ltd. Learned counsel for the HUDCO has emphasized on the expression or any other quantity in the name of CD#3 till further orders as occurring in the order dated 02.02.2016. The expression or any other quantity in the name of CD#3 , CD#3 being Vikram Bakshi obviously referred to the shares in the name of Vikram Bakshi in M/s Connaught Plaza Restaurants Pvt. Ltd apart from aforesaid 3100 shares. It is not the case of either of the parties that any more shares apart from 3100 shares are owned by Vikram Bakshi in M/s Connaught Plaza Restaurants Pvt. Ltd. Hence, the order dated 02.02.2016 issued by the Recovery Officer has to be held to be confined to 3100 shares. On the strength of said order, the Counsel for the HUDCO is not right in his submission that corporate veil of other company in which Vikram Bakshi is also shareholder should also be lifted i.e. Bakshi Holdings Pvt. Ltd. Present is not a case where there is any occasion for lifting corporate veil of other companies which has nothing to do with recovery of Ascot Hotels and Resorts Pvt. Ltd.. HUDCO is fully entitled to recover its dues which are owed by Ascot Hotels and Resorts Pvt. Ltd. On the strength of Recovery Certificate granted by Debts Recovery Tribunal being Recovery Certificate No. 330/2015, Recovery Officer in fact is proceedings to effect recovery and certain amount has already been deposited before the Recovery Officer including the value of 3100 shares of Vikram Bakshi, which were under restraint in the Recovery Officer s order.

Issues Involved:

1. Validity of the Joint Venture Agreement and the reappointment of the Managing Director.
2. Enforcement of the Joint Venture Agreement and reinstatement of the Managing Director.
3. Settlement between McDonald's India Pvt. Ltd. and Vikram Bakshi.
4. HUDCO's intervention and claim against Vikram Bakshi and Ascot Hotels and Resorts Pvt. Ltd.
5. Lifting of the corporate veil for Bakshi Holdings Pvt. Ltd.
6. Compliance with the orders of the Debts Recovery Tribunal (DRT).

Issue-wise Detailed Analysis:

1. Validity of the Joint Venture Agreement and the reappointment of the Managing Director:
The Joint Venture Agreement (JVA) was executed on 31.03.1995 between Connaught Plaza Restaurants Pvt. Ltd. (CPRL) and Vikram Bakshi for setting up McDonald's Restaurants in Northern India. The dispute arose when Vikram Bakshi's term as Managing Director ended on 17.07.2013, and he was not reappointed in the Board meeting on 06.08.2013. McDonald's exercised its rights under the JVA on 16.08.2013 to purchase all shares held by Vikram Bakshi and Bakshi Holdings Pvt. Ltd.

2. Enforcement of the Joint Venture Agreement and reinstatement of the Managing Director:
Vikram Bakshi and Bakshi Holdings Pvt. Ltd. filed a Company Petition No. 110(ND) of 2013 before the Company Law Board, seeking enforcement of the JVA and reinstatement of Vikram Bakshi as Managing Director. The National Company Law Tribunal (NCLT) set aside the Board meeting proceedings of 06.08.2013 and appointed Hon'ble Mr. Justice G.S. Singhvi as Administrator with all powers, restraining McDonald's Corporation from interfering with CPRL's functioning.

3. Settlement between McDonald's India Pvt. Ltd. and Vikram Bakshi:
During the appeal proceedings, both parties negotiated a settlement to end their dispute. A joint application (I.A. No. 1540 of 2019) was filed, stating that upon fulfillment of certain conditions, Vikram Bakshi would resign as Managing Director, and his shares would be transferred to McDonald's India Pvt. Ltd. The Tribunal allowed the settlement and set aside the impugned order dated 13.07.2017.

4. HUDCO's intervention and claim against Vikram Bakshi and Ascot Hotels and Resorts Pvt. Ltd.:
HUDCO intervened, claiming that Vikram Bakshi, as Promoter and Director of Ascot Hotels and Resorts Pvt. Ltd., defaulted on a loan, resulting in a Recovery Certificate from the DRT. HUDCO sought to attach 3100 shares of CPRL held by Vikram Bakshi. HUDCO opposed the settlement, arguing it violated DRT orders.

5. Lifting of the corporate veil for Bakshi Holdings Pvt. Ltd.:
HUDCO contended that the corporate veil should be lifted to include shares held by Bakshi Holdings Pvt. Ltd. The Tribunal rejected this, stating that the Recovery Officer's order was confined to 3100 shares held by Vikram Bakshi, and there was no ground to lift the corporate veil of Bakshi Holdings Pvt. Ltd.

6. Compliance with the orders of the Debts Recovery Tribunal (DRT):
The Tribunal noted that Vikram Bakshi had already deposited Rs.10 Crores towards the share consideration, which HUDCO had withdrawn. The Tribunal found no violation of DRT orders and allowed the settlement between McDonald's India Pvt. Ltd. and Vikram Bakshi, dismissing HUDCO's objections.

Conclusion:
The Tribunal allowed the joint application for settlement, set aside the NCLT's impugned order, and disposed of the appeals. HUDCO's intervention application was rejected, and the Tribunal emphasized that HUDCO could continue its recovery proceedings independently.

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