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Contempt notice against McD as NCLT declines to hear plea on franchise termination

Contempt notice against McD as NCLT declines to hear plea on franchise termination
Written by IANS

The National Company Law Tribunal (NCLT) on Tuesday declined to hear a plea by Vikram Bakshi of Connaught Plaza Restaurants Ltd challenging the termination notice of the franchise agreement by McDonald’s India Private Limited.

The NCLT said that since both parties had approached the appellate tribunal on appeals, the application would not be maintainable at this stage.

However, the NCLT issued a contempt notice against McDonald’s India asking them to reply by September 20. Bakshi had filed a contempt application before NCLT against McDonald’s India.

The tribunal said that dismissal of the CPRL’s application was without any opinion on the controversy and without costs. The CPRL had approached the NCLT asking it to quash the notice given by McDonald’s India on August 21, terminating its franchise agreement in respect of 145 restaurants.

In a statement on Tuesday, McDonald’s said that CPRL cannot use McDonald’s system from Wednesday. “The termination notice period ends today (September 5). Therefore CPRL is no longer authorised to use the McDonald’s system and its intellectual property,” the statement said. McDonald’s India, however, did not comment on the NCLT’s Tuesday notice or order, saying they were examining the order.

CPRL is a 50:50 joint venture between McDonald’s India and Bakshi.

Bakshi in a statement said that although NCLT had restored Bakshi as the MD of CPRL, calling his earlier removal as “illegal, unjust and mala fide,” MCDonald’s has “clearly been unable to accept this scathing verdict and hence continued its malicious and damaging acts against their equal partner and also CPRL by terminating the franchise agreements.”

Bakshi also said that the action of terminating the agreements by McDonald’s India “has a direct and adverse impact on the very core of the business that CPRL runs. This will cause widespread damage to the lives of over 10,000 Indians (directly or indirectly), the company, the suppliers and all business associates.”

McDonald India further said in its statement that CPRL needs “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.”

On Tuesday, NCLT was urged by McDonald India to keep in abeyance the contempt proceedings. The tribunal said: “We have heard learned counsel for the parties. It has been urged that on account of filing an appeal before the NCLAT (appellate tribunal), notice in the present application for contempt may not be issued. However, we are unable to accept the submission.”

Notice was issued under Section 425 of the Companies Act, 2013 (winding up order) read with Contempt of Courts Act, 1971.

On June 29, the CPRL had temporarily suspended operations of more than 40 of its restaurants in Delhi after the ‘Eating House Licences’ of a number of outlets expired.

McDonald’s India and Bakshi have for long been embroiled in a fight over CPRL’s control.

The situation deteriorated when Bakshi, who was removed as Managing Director of CPRL in August 2013, was reinstated by the NCLT in July this year.

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