McDonald's moves Delhi HC against NCLT show cause notice

McDonald's India today moved the Delhi High Court seeking setting aside of the National Company Law Tribunal's (NCLT) show-cause notice to the fast food major and its parent company on a contempt plea filed by their estranged Indian partner Vikram Bakshi.

McDonald's has also challenged a subsequent order of September 26 of the NCLT directing it to file a reply to the contempt plea within 10 days.

Justice R K Gauba heard the arguments on behalf of McDonald's, represented by senior advocates Harish Salve and Rajiv Nayar, which has also sought the stay of the proceedings in the contempt plea.

The arguments will continue on October 16.

The company has contended that in the absence of rules for the conduct of contempt action under section 425 of the Companies Act read with the Contempt of Court Act, such proceedings would deprive it and others of their fundamental rights.

Bakshi had moved the contempt plea alleging that McDonald's decision to terminate his franchise license, with regard to 169 outlets run by their 50-50 joint venture Connaught Plaza Restaurant Ltd (CPRL), has violated the NCLT order dated July 13 reinstating him as the Managing Director of CPRL and refraining the US-based food giant from interfering in the functioning of CPRL.

In its plea in the high court, McDonald's has contended that the NCLT ought not to have entertained the contempt plea when they have already filed an appeal against its July 13 decision in the National Company Law Appellate Tribunal (NCLAT).

The food giant also contended that the notice was not served by the NCLT, but rather by the lawyers of Bakshi.

Bakshi has been at loggerheads with the fast food chain over the management of CPRL after he was ousted from the post of MD of the McDonald's franchisee in August 2013.

McDonald's India had asked CPRL not to use its brand system, trademark, designs and its associated intellectual property, among others, within 15 days of the termination notice which expired on September 6.

Bakshi had moved the NCLT following termination of the license by McDonald's India Pvt Ltd (MIPL).

In June, 43 outlets of the fast-food chain were closed in the capital following the expiry of eating house licences.