McDonald's row: NCLAT refuses to pass interim order

NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) refused to pass any interim order on estranged partner Vikram Bakshi’s plea against termination of the franchise licence agreement by restaurant chain McDonald’s with their joint venture Connaught Plaza Restaurants Ltd (CPRL), leaving the fate of 169 restaurants in the north and east of the country in the balance. While the American burger chain said it would take legal steps to “enforce the termination”, possibly paving the way for the closure of these stores, Bakshi said it was “business as usual”.

“Following the NCLAT hearing today (Thursday), 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,” a McDonald’s India spokesperson said. “We will continue to take steps to exercise our legal and contractual rights and enforce the termination.”

Bakshi, on the other hand, said, “The administrator shall be requested to call for a board meeting at the earliest. Till a decision is taken by the board of CPRL, it is business as usual.”


A leading supplier to McDonald’s said the company had instructed it to stop supplies to its stores starting today (Friday). Another top supplier said it hadn’t received any such instructions.

In July this year, the National Company Law Tribunal (NCLT) restored Bakshi as managing director of CPRL and appointed former Supreme Court judge GS Singhvi to act as administrator on the company’s board with the power to vote.

The equal joint venture CPRL’s licence to operate the outlets lapsed on September 5. While a number of stores stayed open despite the termination on Wednesday and Thursday, 43 had shut in June, on account of their eating house licences not being renewed.

NCLAT said on Thursday it will hear Bakshi’s plea on the termination of the licence along with McDonald’s petition against his reinstatement on September 21. Bakshi cited the administrator’s comment on the termination.

“The administrator appointed by the NCLT on the board of CPRL has stated in the board meeting held on 6 September 2017 that the discussions with regard to termination of the franchise agreements issued by McDonald’s shall be deliberated on subsequent to the hearing of the NCLAT of 7 September 2017.”

Bakshi had filed a fresh appeal at NCLAT to stay the termination of the franchise licence agreement by McDonald’s on Wednesday. On August 21, the US fast food chain terminated its franchisee agreement for the 169 stores in the north and east operated by CPRL, an equal joint venture between McDonald’s and Bakshi. The termination prohibits CPRL from using the McDonald’s name, system, trademark, designs and its associated intellectual property, among others, starting September 5.