The National Company Law Tribunal's principal bench has issued a showcause notice to fast food chain McDonald's, for not following an earlier order that it not interfere in the running of outlets given on franchise.
In a previous order, the NCLT had said Vikram Bakshi should be reinstated as managing director of the joint venture, Connaught Plaza Restaurants Pvt Ltd (CPRL), between McDonalds and Bakshi. And, that all restaurants in the country's north and east function smoothly without hindrance. The tribunal felt McDonald's had violated this order and has asked it to respond on September 20.
NCLT, however, also dismissed a case filed by Vikram Bakshi against McDonald's, on the ground that an appeal had already been filed before it on the dispute between the partners. The appeal was against McDonald's terminating the franchise agreement with CPRL for the markets in the north and east.
Bakshi and McDonald's have been at loggerheads since 2013, when he was formally ousted as MD.
Despite the NCLT order, McDonalds continues to withdraw its branding from the joint venture. In an e-mail statement, the company said, "The termination notice period ends today (September 5). Therefore, CPRL is no longer authorised to use the McDonald's system and its intellectual property. It means they need to stop using the McDonald's names, trademarks, designs, branding, operational and marketing practice and policies, and food recipes and specifications. We are proceeding with exercising our legal and contractual rights."
CPRL, formed in 1995 as an equal joint venture between McDonald's India and Bakshi, along with Bakshi Holdings, currently oversees 169 McD outlets and employs 6,500 people directly. While Bakshi (with Bakshi Holdings) and McDonald's India hold an equal number of equity shares in CPRL, over the years McDonald's has pumped Rs 193 crore against non-convertible preference shares. In the past, the two parties remained unsuccessful in reaching an agreement when each offered the other buyout options. However, according to sources, to clear the mess and initiate its business with a fresh approach and a new partner, McDonald's is considering writing off its investments in CPRL.