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NCLT grants 10-day extension to McDonald’s to respond on Bakshi plea

LiveMint logoLiveMint 26-09-2017 Harveen Ahluwalia

New Delhi: The National Company Law Tribunal (NCLT) on Tuesday granted an extension of 10 days to McDonald’s India Pvt. Ltd to file its reply on a plea brought by its estranged joint venture partner Vikram Bakshi.

Bakshi had alleged that the termination of franchise pact is in contempt of an NCLT order of 13 July, which had asked the American fast food chain McDonald’s Corp. to refrain from interfering in the smooth functioning of Connaught Plaza Restaurants Pvt. Ltd (CPRL) and its 169 restaurants.

CPRL, a joint venture between Bakshi and McDonald’s India, is the north and east India licensee of the burger chain.

On 21 August, McDonald’s India had terminated its franchise agreement with CPRL for all 169 McDonald’s outlets in north and east India, citing non-payment of royalties as the primary reason. Bakshi, managing director of CPRL, was asked to shut the restaurants from 6 September.

In his plea, Bakshi had alleged that the termination of the franchise agreement is McDonald’s attempt to circumvent the NCLT order, following which a show-cause notice was issued to McDonald’s Corp. on 5 September.

Meanwhile, the Delhi high court, earlier in the day, asked Bakshi not to transfer, encumber or alter his shareholding in the venture until proceedings at the London Court of International Arbitration (LCIA) are over. The court was referring to the partial award passed by the LCIA which had asked him to sell his stake in CPRL, Press Trust of India reported on 13 September. The LCIA also called for the appointment of independent experts to determine a fair value for CPRL so that the US-based fast food chain could buy out Bakshi’s 50% stake.

In 2013, McDonald’s India had voted against the re-election of Bakshi as managing director of CPRL, following which Bakshi challenged his removal in the Company Law Board (now NCLT). Later in the same year, McDonald’s revoked the joint venture agreement and invoked arbitration.

NCLT on 13 July had reinstated Bakshi as managing director and had also asked McDonald’s Corp. to refrain from interfering in the functioning of CPRL. McDonald’s challenge to the NCLT order is pending in the National Company Law Appellate Tribunal (NCLAT).

The matter will be heard next on 23 October.

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