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NCLAT to hear McDonald's case on Sep 21: Vikram Bakshi says 169 outlets will continue to operate

Mcdonald's India had terminated its franchise agreement with Connaught Plaza Restaurant Limited (CPRL), after which Bakshi appealed to the NCLAT to stay the termination notice.

BT Online | September 8, 2017 | Updated 09:30 IST
McDonald's outlets in North, East may remain shut after NCLAT refuses interim relief to Bakshi

The National Company Law Appellate Tribunal (NCLAT) refused to issue any interim order on the plea by Vikram Bakshi, asking for relief against termination of franchise agreement by US-based fast food restaurant chain McDonald's. This implies that if Bakshi's CPRL decides to open the McDonald's stores it will be in violation of the NCLAT order.

Today, most McDonald's shops were shut, but some were open as Bakshi hoped to buy time. After the hearing today, McDonald's India has said that CPRL must stop using the brand's intellectual property.

"Following the NCLAT hearing today, the termination notice remains effective as of September 6, which requires CPRL to cease the use of the McDonald's system and its associated intellectual property. We will continue to take steps to exercise our legal and contractual rights and enforce the termination," McDonald's India said in a statement.

Mcdonald's India had terminated its franchise agreement with CPRL, or Connaught Plaza Restaurant Limited, after which Bakshi appealed to the Tribunal to stay the termination notice. CPRL is a 50:50 joint venture between McDonald's and Bakshi, formed 23-years ago to manage McDonald's restaurants in North and East India.

Bakshi issued a statement on Thursday saying the 169 outlets will continue to operate under the US brand. Bakshi said he asked Justice G S Singhvi, who has been appointed as administrator on the board of CPRL, to call for a board meeting to discuss the situation after today's hearing. "Till a decision is taken by the board of CPRL, it is business as usual." However, McDonald's said it would enforce its legal right to restrain Bakshi from using its name, system, trademark, designs and its associated intellectual property, among others.

McDonald's had terminated all franchise agreements with CPRL covering 169 restaurants, following which they would have to stop using McDonald's brand name, trademark, design, operating and marketing practices and policies, food recipes and specifications after September 5.

An NCLAT bench chaired by Justice SJ Mukhopadhyaya stated that it will hear the interim plea by Bakshi alongside the main plea filed by McDonald's India. The bench will hear the main plea on September 21.

McDonald's India had filed a petition against the National Company Law Tribunal (NCLT) order of reinstating Bakshi as Managing Director of CPRL back in July. The interim plea heard today was filed by Bakshi, seeking a fair valuation of McDonald's outlets in North and East India.

This means that the fate of thousands of employees and 169 restaurants in this part of the country remains suspended in uncertainty. Meanwhile, McDonald's India's franchisee in South and West India, Amit Jatia's Westlife Development, is being named as the most probable replacement of Bakshi, if NCLAT does not rule in his favour.

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