McDonald’s row: NCLAT to study LCIA award before further action

McDonald's India last month terminated the franchise licence of 169 outlets run by Bakshi-led Connaught Plaza Restaurants Ltd (CPRL) in north and east India alleging breach of contract of terms and payment default.

By: PTI | New Delhi | Published:September 21, 2017 6:51 pm
McDonalds, Vikram Bakshi, McDonalds 169 stores, McDonalds case, McDonalds India, McDonalds north and east India, McDonalds employees, McDonalds Delhi, NCLAT, CPRL  Monday’s action coincides with strikes in the United States and Belgium. Small demonstrations in support of the striking McDonald’s workers were taking place in 14 locations in Britain

The National Company Law Appellate Tribunal (NCLAT) on Thursday said it will study the award of the London Court of International Arbitration (LCIA) that asked McDonald’s estranged partner Vikram Bakshi to sell his stake in the JV firm CPRL to the US-based fast food chain last week.

While listing the matter on October 25, the appellate tribunal after hearing both the parties said it will go through the arbitration award by LCIA before proceeding on the matter. “We have to see whether it’s an operational mismanagement or arbitral dispute and the jurisdiction would depend on that,” the NCLAT bench headed by Justice S J Mukhopadhaya said.

McDonald’s India last month terminated the franchise licence of 169 outlets run by Bakshi-led Connaught Plaza Restaurants Ltd (CPRL) in north and east India alleging breach of contract of terms and payment default, following which Bakshi moved the NCLAT. The NCLAT had denied interim relief and listed the matter for Thursday.

The tussle between McDonald’s and Bakshi started in 2013, when he was ousted as the MD of CPRL over alleged management lapses, post which he approached the National Company Law Tribunal (NCLT). In July this year, the tribunal restored him to his position, which was challenged by McDonald’s in the NCLAT where the appeal was listed for today. There has been uncertainty over the fate of McDonald’s outlets operated by CPRL after McDonald’s India Pvt Ltd (MIPL) sent the termination notice to CPRL last month.

McDonald’s India had given time till September 5 to CPRL to operate, post which it said the franchisee was barred from using McDonald’s brand, trademark, and its associated intellectual property, among others. However, Bakshi continues to operate the outlets, barring a few in the national capital, saying the stores would run till the time the entire CPRL board meets and decides the future course of action or buys out his stake at a fair market value.

CPRL is a 50:50 joint venture between MIPL and Bakshi. The company’s board has equal representation of two directors each from the two parties.

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