McDonald’s vs CPRL: NCLT dismisses Bakshi’s petition
The National Company Law Tribunal (NCLT) on Tuesday dismissed a plea by Vikram Bakshi, the estranged joint venture partner of McDonald’s India Pvt. Ltd, against the termination of the franchise pact by the latter on 21 August.
The tribunal, however, asked Bakshi to approach the appellate forum — National Company Law Appellate Tribunal (NCLAT) — on the issue.
“NCLT has advised us to seek relief from the appellate tribunal, which we will do at the earliest possible and that can be tomorrow itself,” said Bakshi.
Separately, NCLT issued a show cause notice to McDonald’s Corp in Bakshi’s contempt application, asking why contempt proceedings may not be initiated against the company. The company has to respond by September 20.
“Both the appeals are pending consideration before the National Company Law Appellate Tribunal and propriety demands that any such application for interim relief be preferred before the National Company Law Appellate Tribunal,” NCLT said, in the order.
The NCLT’s reference is to two appeals in NCLAT. One was brought by McDonald’s India against the NCLT order of July reinstating Bakshi as managing director of Connaught Plaza Restaurants Pvt Ltd (CPRL), the joint venture between him and McDo- nald’s India. The other was filed by Bakshi requesting a fair valuation of the fast food chain’s outlets in northern and eastern India.
On Tuesday, NCLT was hearing two different pleas brought by Bakshi. First being a contempt application, alleging that the termination of franchise agreement was in conflict with the NCLT order of July 2017, which asked American fast food chain McDonald’s Corp. to refrain from interfering in the smooth functioning of CRPL and all its 169 restaurants; the other appeal was filed to challenge the termination.
On August 21, McDonald’s India had terminated its franchise agreement with CPRL for all 169 McDonald’s outlets in north and east India, citing nonpayment of royalties as the primary reason.
As a result, Bakshi, who is the managing director of CPRL, is supposed to cease using McDonald’s names, trademarks, designs, branding, operational and marketing practice and policies and food recipes and specifications by September 6.
“The termination notice period ends today (September 5). Therefore, CPRL is no longer authorised to use the McDonald’s system and its intellectual property. We are proceeding with exercising our legal and contractual rights,” said Barry Sum, director, corporate relations, Asia Foundational Markets, McDonald’s Corp.
Bakshi, however, said this action will have a direct and adverse impact on the “very core of the business that CPRL runs. This will cause widespread damage to the lives of over 10,000 Indians (directly and indirectly)--- the company, the suppliers and all business associates,” he added.