NCLAT asks McDonald, Bakshi to settle row, re-open 169 outlets for now

NCLAT asks McDonald's, Bakshi to settle dispute, wants 169 outlets to re-open

The National Company Law Appellate Tribunal (NCLAT) on Friday asked US fast food giant McDonald’s and its estranged Indian joint venture (JV) partner Vikram Bakshi to consider settling their dispute between  themselves.

Putting off the matter for next hearing on August 30, the tribunal asked McDonald’s to give an undertaking that its 169 outlets in north and east India will be allowed to function till the negotiations are on.

The tribunal also asked Bakshi to give an undertaking that he would not pursue the criminal cases filed in India against McDonald’s executives when they come for negotiations. The parties will have to decide by August 30 whether they will consider settling the dispute or not. 

McDonald’s on Monday terminated franchisee agreement for the 169 outlets in north and east that were operated by Connaught Plaza Restaurant Ltd (CPRL), the JV with Bakshi. McDonald’s India spokesperson said: “We are examining the matter at the moment and will get back when we have anything to share.” Bakshi said his stand for a fair settlement remains unchanged.

“A settlement as per the laws of this sovereign, democratic republic of India, prescribes a fair market value as per the RBI guidelines. My stand for a fair settlement remains unchanged,” Bakshi told PTI. When asked about giving the undertaking that he will not pursue the criminal cases against McDonald’s executives, he said: “The laws of this country need to be respected and not trivialised by anyone who is bound by them. So why fear them if one is not guilty of violating them?”

He further said the Indian directors have been subjected to criminal cases and on behalf of the company, both directors have had to appear in various police stations while the foreign directors have conveniently stayed away from the shores of the country even though they as directors were also accused in these cases.

“We shall adhere to the directions given to us by the NCLAT and we hope as foreign nationals on the Board of an Indian company, they shall abide by Indian laws,” he added. 

The NCLAT decision came on the appeal filed by the US-based food chain against the NCLT order dated July 13 that reinstated Bakshi as the managing director of CPRL and restrained McDonald’s from interfering in the functioning of CPRL.

Bakshi was ousted from the post at the McDonald’s franchisee in August 2013, following which he approached the NCLT in September the same year. He has been at loggerheads with McDonald’s over management of CPRL.

However, McDonald’s took the matter to the London Court of Arbitration citing the terms and conditions, where the matter is pending. According to the termination notice issued by McDonald’s to CPRL, the outlets have time till September 6 to function, post which they will have to stop using McDonald’s name and trademark.

While terminating the licence, the fast food chain had said priority will be given to mitigate the impact on affected parties such as employees, suppliers and landlords and it is open to working with CPRL to achieve this. The company cited breach of contract terms and payment default, including royalty for two years, as the reason for termination, to which Bakshi said the royalties were not paid because he was forced by McDonald’s to pay the debtors first.