Home >Companies >Delhi high court allows contempt petition against McDonald’s Corp

New Delhi: In a setback to McDonald’s India Pvt. Ltd, the Delhi high court on Tuesday dismissed the company’s plea against the centre, challenging the National Company Law Tribunal’s (NCLT) right to issue a contempt notice, two people aware of the development confirmed.

McDonald’s India’s plea was in reference to a showcause notice issued by NCLT to its US parent McDonald’s Corp. in September 2017, in a contempt application filed by Vikram Bakshi, managing director (MD) of the burger chain’s north and east India licencee Connaught Plaza Restaurants Pvt. Ltd (CPRL).

The Delhi high court’s order means that NCLT can now resume the contempt proceedings against McDonald’s Corp. which were stalled up until now. CPRL is a joint venture between McDonald’s India and Bakshi, and operates 169 McDonald’s restaurants across north and east India.

On 21 August, McDonald’s India had terminated its franchise agreement with CPRL, under which Bakshi was supposed to shut all 169 restaurants from 6 September.

In September, Bakshi had alleged that the termination violated an earlier NCLT order of 13 July 2017, which had asked McDonald’s Corp. to refrain from interfering in the smooth functioning of CPRL and all its 169 restaurants. Following this, NCLT had issued a showcause notice to McDonald’s Corp.

McDonald’s challenge to the NCLT order of 13 July is pending in National Company Law Appellate Tribunal (NCLAT).

In an emailed response to Mint’s query, a McDonald’s India spokesperson said the company is evaluating its options.

Separately, the Delhi high court will continue to hear McDonald’s plea to enforce a London arbitration court award that had asked Bakshi to sell his stake in CPRL. Earlier in December, Bakshi had also moved Delhi high court, challenging the arbitration order.

The McDonald’s-Bakshi feud goes back to 2013 when the former had voted against the re-election of Bakshi as the managing director of CPRL. Bakshi had challenged his removal at the Company Law Board (now NCLT), accusing McDonald’s India of mismanagement and oppression. NCLT reinstated Bakshi as managing director in July 2017.

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