Vikram Bakshi vs McDonald’s: Indian wins a point, but loses another

By: | Published: September 6, 2017 5:08 AM

Vikram Bakshi, the estranged Indian partner of US fast-food chain McDonald’s, on Tuesday got a reprieve on one count while suffering a setback on another.

Vikram Bakshi, McDonald's, India, NCLTNCLT issued notices to McDonald’s as to why contempt proceedings should not be initiated against it. (Reuters)

Vikram Bakshi, the estranged Indian partner of US fast-food chain McDonald’s, on Tuesday got a reprieve on one count while suffering a setback on another. While the National Company Law Tribunal admitted his plea against McDonald’s Corporation for contempt of its July 13 order, which reinstated him as the managing director of the franchise firm that runs outlets in northern and eastern parts of the country, it dismissed his other plea challenging the termination of the franchise agreement by the US firm.

Accordingly, the NCLT issued notices to McDonald’s as to why contempt proceedings should not be initiated against it and the company needs to file its reply by September 20. Regarding the termination of the franchise agreement, the tribunal said since the matter is already with the National Company Law Appellate Tribunal (NCLAT), it would not be appropriate for it to pass any directions and the parties should wait for the appellate body to take a call.

Bakshi had filed a contempt petition alleging that by terminating the licence McDonald’s has violated the NCLT order dated July 13 that reinstated him as managing director of Connaught Plaza Restaurant (the 50:50 joint venture between Bakshi and McDonald’s India that runs 169 outlets in the north and east of the country) and also refrained McDonald’s Corporation from interfering in the functioning of CPRL.

McDonald’s and its Indian subsidiary contended that as they have already filed an appeal against NCLT’s order before the NCLAT, it should not be admitted at this stage. Not consenting with it, the NCLT bench headed by chairman justice MM Kumar said, “It has been argued that on account of filing an appeal before the NCLAT, notice in the present application for contempt may not be issued. However, we are unable to accept the submission.”

However, while not admitting Bakshi’s plea on the termination of the franchise agreement, the NCLT said it was “of the view that this application at this stage would not be maintainable because both…have filed their respective appeals which are pending before the NCLAT”. Moreover, the tribunal also observed that justice GS Singhvi, who has been appointed as administrator on the board of CPRL by it, has granted permission to Bakshi to approach the NCLAT to seek relief.

“Both the appeals are pending consideration before NCLAT and propriety demands that any such application for interim relief be preferred before NCLAT,” the tribunal said.

McDonald’s and Bakshi have been at loggerheads over control of CPRL since the time the latter was removed as the managing director of CPRL in August 2013. Subsequently, the NCLT on July 13, 2017, reinstated Bakshi as MD of CPRL while also appointing Singhvi as an administrator on the company’s board. However, McDonald’s went ahead and terminated its franchise agreement with CPRL before a board meeting of the company could take place.

McDonald’s had earlier also scrapped the joint venture agreement with CPRL and dragged the matter to the London Court of International Arbitration.

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