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McDonald’s Row: NCLAT Refuses to Pass Interim Order 

169 restaurants run by CPRL in North and East India are to shut down following cancellation of licence.

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The National Company Law Appellate Tribunal on Thursday refused to pass any interim order on estranged partner Vikram Bakshi's plea against termination of franchise licence agreement by US-based fast food chain McDonald's.

This means the fate of 169 McDonald's stores in north and east India hangs by a thread as CPRL's licence to operate the outlets lapsed on 5 September.

An NCLAT bench headed by Justice SJ Mukhopadhyaya has issued a direction to list on 21 September Bakshi's licence termination petition along with the original one filed by McDonald's.

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Bakshi had on Wednesday approached the National Company Law Appellate Tribunal (NCLAT) to stay the termination of franchise licence agreement by McDonald’s for 169 stores operated by their joint venture Connaught Plaza Restaurant Ltd (CPRL).

Some of the outlets of McDonald's run by CPRL, franchisee of the US fast food chain for north and east India, continued to function on Wednesday amid uncertainty over the future of 169 such restaurants following the cancellation of licence.

On 21 August, McDonald's India had terminated franchise agreement for 169 outlets run by Connaught Plaza Restaurants Ltd (CPRL) alleging breach of contract terms and payment default.

It had given a 15-days notice to CPRL – a 50:50 joint venture between the company and its estranged partner Vikram Bakshi – to stop using its brand and associated intellectual property, following termination of license. The notice expired on Tuesday.

However, the outlet in the international airport in Delhi was found to be fully functional. Similarly, the outlets of the fast food chain in parts of South Delhi and Gurugram also operated during the day.

As many as 43 outlets of the fast food chain have been closed already in the Capital since June, following the expiry of eating house licence.

Meanwhile, during the day, the board of CPRL met with NCLAT-appointed administrator Justice G S Singhvi, who presided the meeting to decide on a future course of action.

When contacted, Bakhsi said:

Our appeal in front of NCLAT is to be heard tomorrow. The administrator on the board of CPRL in the board meeting today has asked both sides to wait for NCLAT’s decision tomorrow.

The NCLAT had earlier denied any interim relief to Vikram Bakshi on his plea seeking a stay on termination of franchise agreement by McDonald's for the 169 stores operated by CPRL.

"If all papers are in order then it would be listed tomorrow," said the single-member bench of NCLAT.

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Bakshi also claimed he has been elected again as Managing Director of CPRL by Justice GS Singhvi.

"Whilst the NCLAT had restored my position as MD from 6 August 2013, in the board meeting today, I have been elected as MD again for further period," Bakshi said.

Meanwhile, a McDonald's India spokesperson said:

We are looking to take steps to exercise our legal and contractual rights to enforce the termination.

The spokesperson had stated on Tuesday that CPRL was no longer authorised to use the McDonald's system and its intellectual property after the expiry of the termination notice.

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