McDonald’s vs CPRL: NCLT reserves order on Bakshi’s plea

The National Company Law Tribunal (NCLT) on Monday reserved its order on a plea brought by Vikram Bakshi, the estranged partner of McDonald’s India Pvt Ltd, against the termination of their franchise pact by the fast-food chain.

The verdict is likely to be pronounced on Tuesday.

On August 21, McDonald’s India terminated its franchise agreement with Connaught Plaza Restaurants Pvt Ltd (CPRL) for all the 169 McDonald’s outlets in north and east India, citing non-payment of royalties as the primary reason.

Bakshi, the managing director of CPRL (a joint venture between him and McDonald’s India), is supposed to shut down the restaurants within 15 days of termination (by 6 September).

The tribunal was hearing his appeal that the termination of franchise pact is in contempt of the NCLT order of July 2017, which asked American fast food chain McDonald’s Corp to refrain from interfering in the smooth functioning of Connaught Plaza and all its 169 restaurants.

“This is an attempt to circumvent the order. This is an action to further oppress the petitioner (Bakshi),” said Tejas Karia, Bakshi’s counsel, during the hearing. He added that after the termination of the franchise pact, CPRL will be reduced to a shell company.

McDonald’s India argued that the termination of agreement is the contractual right of the company and that this right has been exercised by McDonald’s India and not McDonald Corp. “There was no injunction against MIPL (in the NCLT order),” McDonald’s counsel said during the hearing.

In 2013, McDonald’s had voted against the re-election of Bakshi as managing director of CPRL, following which Bakshi challenged his removal at the Company Law Board (now NCLT), accusing McDonald’s of mismanagement and oppression. NCLT reinstated Bakshi as the managing director on July 13.