Vikram Bakshi moves NCLT against McDonald's as thousands of jobs set to go

NCLT had issued a show-cause notice to fast food chain McDonald's

Managing Director of McDonald's, Vikram Bakshi on Wednesday filed a fresh application against the company. 

McDonald’s has already approached the appellate tribunal against the NCLT order that reinstated Vikram Bakshi in his position in a July order. 

The National Company Law Tribunal’s (NCLT) principal bench had issued a show-cause notice to fast food chain McDonald’s, for not following an earlier order that it should not interfere in the running of outlets, yesterday. 

The tribunal’s order came as it prima facie found McDonald’s guilty of violating a final order issued by it on long drawn matter of dispute between Vikram Bakshi and McDonald’s India, following the former’s ouster from the post of managing director (MD) of the joint venture (JV) company. The NCLT bench had asked McDonald’s not to intervene in operations of Connaught Plaza Restaurants Pvt Ltd (CPRL). However, CPRL turned defunct after McDonald’s last month terminated the franchise licensing agreement with it.

The dispute that came out in open in September 2013 following Bakshi ouster by his American partner, has recently gained steam. However, the fate of 169 restaurants is in limbo as the last date of termination period ended on Tuesday. Bakshi told Business Standard that to take a final call, the CPRL board will meet on Wednesday morning under the chairmanship of former justice G S Singhvi, whom the NCLT appointed as an administrator.

McDonalds, however, continues to withdraw its branding from the JV. The termination notice period ended september 5. CPRL is no longer authorised to use the McDonald’s system and its intellectual property. It means they need to stop using the McDonald’s names, trademarks, designs, branding, operational and marketing practice and policies, and food recipes and specifications. 

CPRL, formed in 1995 as an equal JV between McDonald’s India and Bakshi, along with Bakshi Holdings, currently oversees 169 McDonald’s outlets and employs 6,500 people directly. While Bakshi (with Bakshi Holdings) and McDonald’s India hold an equal number of equity shares in CPRL, over the years McDonald’s has pumped Rs 193 crore against non-convertible preference shares.

According to sources, to clear the mess and initiate its business with a fresh approach and a new partner, McDonald’s is considering writing off its investments in CPRL.