Mcdonald’s says will not settle out of court with Bakshi over franchise issue
Mcdonald’s India Pvt. Ltd (MIPL), the Indian subsidiary of the American fast food chain, has told the National Company Law Appellate Tribunal (NCLAT) that it does not want an outof-court settlement with estranged franchise partner Vikram Bakshi.
MIPL’S stand was taken on record by NCLAT, which had, on 25 August, asked both parties to try and settle the disputes that had led to the estrangement and keep the 169 Mcdonald’s outlets they operate in north and east India open and running while the talks are on.
“We informed NCLAT today that we wish to proceed with the appeal,” said Barry Sum, director, corporate relations, Asia Foundational Markets, Mcdonald’s Corp.
The tribunal issued notices to both parties and asked them to file their replies within a week.
“Without going into the question as to who is in default, we understand that there is no chance of amicable settlement,” said NCLAT chairperson S. J. Mukhopadhaya during the hearing.
NCLAT is hearing two separate appeals.
One was brought by Mcdonald’s India against a National Company Law Tribunal (NCLT) order of July reinstating Bakshi as managing director of Connaught Plaza Restaurants Ltd (CPRL), the franchise arm.
Bakshi has filed an appeal requesting a fair valuation of the burger chain’s outlets in northern and eastern India.
“We filed a separate plea so that in case the two parties can’t reach a settlement, the NCLAT chairman has a right to order a fair valuation for one partner to buy the stake of another. After today, there is no option for us but to proceed with further litigation. We will figure out to where to get a stay order,” said Bakshi.
Mcdonald’s India, on 21 August, terminated its franchise agreement with CPRL for all 169 outlets, citing non-payment of royalties as the reason. CPRL is supposed to shut the outlets down within 15 days of termination (by 6 September).
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 13 July and restrained Mcdonald’s Corp. from interfering in the functioning of CPRL.
The case will be heard next on 21 September.
Priyanka Mittal contributed to this story.
Vikram Bakshi, managing director of Mcdonald’s India franchisee CRPL.