The London Court of International Arbitration (LCIA), in an award passed on 12 September, had asked Vikram Bakshi to sell his stake in Connaught Plaza Restaurants Ltd (“CPRL”), the McDonald’s franchise for northern and eastern India as CPRL defaulted in payment of royalties to the tune of Rs. 61 Crore for the past two years. Vikram Bakshi has now approached the High Court of Delhi, challenging this London Arbitration Court Award that had asked him to sell his stake in Connaught Plaza Restaurants Ltd (CPRL) to the US burger chain.
Mc Donalds’s US Giant has also filed a petition in Delhi High Court to stop CPRPL from using its brand name. On the other hand, Connaught Plaza Restaurants Pvt. Ltd. (CPRPL), a McDonald’s franchise, has contended before the Delhi High Court that the US fast-food giant’s petition to stop it from using the brand name was a serious abuse of the process of law. McDonald’s has sought that the franchise be restrained from using its name as the franchise agreement with the Indian entity has been terminated.
The franchise on the other hand has challenged the termination in the National Company Law Appellate Tribunal (NCLAT) where it is pending consideration, hence, the contention of CPRPL that the current plea is an abuse of the process of law.
As per the franchise, McDonald’s is in contempt of orders of non-interference from the NCLT. The Court refused to grant a restraining order against CPRPL from selling the products of the fast food giant.
McDonald’s India had communicated to CPRPL not to use its brand system, trademark, and designs and associated intellectual property among other things, within 15 days of the termination notice which expired on September 6, 2017. As per their pleadings the royalties to the tune of Rs. 61 Crore for the past two years remain unpaid. McDonald’s India had terminated its franchise agreement with CPRL on the grounds of “default in payment of royalties by CPRL”.