New Delhi: The Delhi High Court today declined to pass an interim order restraining Connaught Plaza Restaurants Pvt Ltd (CPRPL), a McDonald’s franchisee, from selling products under the name of the US fast food giant.
CPRPL is a 50:50 joint venture of McDonald’s and its estranged Indian partner, Vikram Bakshi.
Justice Rajiv Sahai Endlaw said the restaurants of the franchisee were a running business and hence, cannot be stayed ex-parte without proper consideration of all aspects, including the CPRPL’s reply.
The court, however, allowed a representative of McDonald’s legal team to visit by this afternoon some of the restaurants run by CPRPL to collect samples of food and packaging as well as inventory. The restaurants were directed to provide the samples to the representative.
The direction came after McDonald’s, represented by senior advocate Rajiv Nayar, contended that the franchisee restaurants were using products and packaging which did not measure up to its quality standards as different suppliers were being used.
Nayar said if CPRPL was not going to follow the global standards maintained by McDonald’s then it cannot use the brand name.
The court also issued notice to CPRPL and Vikram Bakshi seeking their response on McDonald’s plea seeking to restrain them from advertising themselves as franchisees of McDonald’s.
The fast food company has sought orders restraining CPRPL and Bakshi from “duplicating the McDonald’s system” which pertains to its food and packaging quality standards.
It has also alleged in its plea that CPRPL and Bakshi are “illegally and unauthorisedly” operating restaurants in a manner that is causing injury to the reputation and goodwill of McDonald’s brand.
Senior advocate Akhil Sibal, appearing for CPRPL and Bakshi, contended that they were a 50% partner in the franchise and hence, entitled to use the brand name.
He also said that McDonald’s has written to its suppliers not to supply food or packaging to restaurants run by CPRPL, forcing it to find another supplier.
To this, Nayar told the court that the franchise agreement was terminated last year and has not been stayed.
McDonald’s India had asked CPRPL not to use its brand system, trademark, designs and associated intellectual property among other things, within 15 days of the termination notice which expired on 6 September 2017, the plea said.
The petition has alleged that CPRPL has not paid royalties, amounting to over Rs 61 crore, for the last two years and has sought a direction to it for payment of the amount with interest.
The court will further hear the matter on 24 January.
The high court had recently dismissed McDonald’s plea challenging a show cause notice issued to it by the National Company Law Tribunal (NCLT) on a contempt plea filed by Bakshi.
Bakshi had moved the contempt plea alleging that the fast-food major’s decision to terminate his franchise license with regard to 169 outlets run in north and east India by CPRPL violated the NCLT order of 13 July 2017.
NCLT by its 13 July 2017 order had reinstated him as the Managing Director of CPRPL and refrained the US-based food giant from interfering in its functioning.
Bakshi has been at loggerheads with the fast-food chain over the management of CPRPL after he was ousted from the post of MD of the McDonald’s franchisee in August 2013. He had moved the NCLT following termination of the license by McDonald’s.
In June 2017, 43 outlets of the fast food chain were closed in the capital following expiry of its eating house licences.