Delhi High Court Upholds NCLT Right To Issue Contempt Notice Against McDonald’s Corp

Delhi High Court Upholds NCLT Right To Issue Contempt Notice Against McDonald’s Corp

The Delhi High Court has dismissed a plea filed by McDonald’s India Pvt. Ltd challenging the National Company Law Tribunal’s (NCLT) right to issue a contempt notice, according to sources.

The petition filed by McDonald’s India was in reference to a showcause notice that had been issued by NCLT to its US parent McDonald’s Corp. in September 2017.

The notice had been issued in regards to a contempt application filed by Vikram Bakshi, the managing director (MD) of the burger chain’s north and east India licencee Connaught Plaza Restaurants Pvt. Ltd (CPRL).

With the latest court order the NCLT can restart the contempt proceedings ongoing against McDonald’s Corp. that had been stalled.

CPRL is a joint venture between Bakshi and McDonald’s India which operates 169 McDonald’s restaurants across north and east India.

McDonald’s India Challenge Still Pending

In August 2017, McDonald’s India terminated its franchise agreement with CPRL, as a result of which Bakshi was expected to shut all 169 restaurants from September onwards.

Bakshi alleged that the termination was in violation of an earlier NCLT order dated 13 July 2017, which had directed McDonald’s Corp. from not interfering in the smooth functioning of CPRL. The NCLT had subsequently issued a showcause notice to McDonald’s Corp.

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

A McDonald’s India spokesperson stated that the company was evaluating its options.

Arbitration Case Also Pending

In a separate case, the Delhi high court will continue with McDonald’s plea that seeks to enforce a London arbitration court award asking Bakshi to sell his stake in CPRL.

Bakshi has also moved Delhi high court in December challenging the arbitration order.

The feud between McDonald’s and Bakshi has its origins in 2013 when the former voted against re-electing Bakshi as the managing director of CPRL.

Bakshi challenged his removal at the Company Law Board (now NCLT), and accused McDonald’s India of mismanagement and oppression. A NCLT order reinstated Bakshi as the CPRL managing director in July 2017.

 

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