It was on March 21 when the first sign of impending trouble emerged. The mandatory health and police licenses for running 43 out of McDonald’s restaurants Delhi were set to expire in days. Vikram Bakshi , the former managing director of Connaught Plaza Restaurants Private Limited (CPRL), had made up his mind.Bakshi may no longer be MD but he and wife Madhurima are two of the four members on the board of the 50:50 joint venture with McDonald’s that runs the fast food chain in north and east India. Bakshi shot off an email to the two foreign directors on the CPRL board, informing them of his decision not to sign any documents needed for renewal. His reason: unsafe food being served by some outlets , and his inability to control the food supply.Bakshi, according to two highly-placed sources privy to the development, didn’t want to take the risk of being prosecuted ‘alone’ for any untoward incident that might have arisen either due to consumer complaints or running the outlets illegally after March 31. The foreign directors, added one of the sources, had expressed repeatedly that they were not in charge of daily operations.Come April, and the restaurants continued to run. On May 3, Bakshi wrote another email, calling for an urgent board meeting at the corporate office of CPRL on May 8 at 10 am to fix the license issue. McDonald’s foreign directors on the CPRL board Aysel Melbye and Robert Larson were expected to be present in person. The meeting didn’t happen. “The foreign directors were neither present in person nor through Skype,” informs one of the sources quoted above.Another mail on similar lines on May 9 drew a reply a few days later from Melbye who reckoned the call for a board meeting was nothing but “posturing”. She did, however, agree that the outlets could not be run without licenses. However, the impasse continued.Another board meeting, scheduled for May 22, was called off. Finally, on the morning of June 29, after running the outlets illegally for almost three months, an emergency board meeting took place via Skype. All four directors on board unanimously decide to suspend operations of 43 restaurants in the Capital. “It’s sad that things have come to such a head,” Bakshi told ET Magazine. “The closures will affect operations, people and the brand in a big way.”McDonald’s, for its part, sounds contrite. “We apologize for the inconvenience this has caused,” the burger giant said in a media release. We are committed to doing what it takes to ensure compliance, it added. Bakshi and McDonald’s — partners since 1996 — have been embroiled in a bitter legal fight since the former was ousted as managing director of CPRL in August 2013 and the American burger giant offered to buy his stake out. Bakshi challenged the decision and the offer at the Company Law Board (CLB), which is yet to pronounce a verdict.As the standoff persists, the question of course is who is in charge. Bakshi claims he is not responsible for day-to-day operations as he is no longer the managing director. McDonald’s thinks otherwise. “You may contact CPRL since your question relates to the day-to-day operations of the McDonald’s restaurants in Delhi,” Barry Sum, director of Corporate Relations, Asia Foundational Markets, for Mc-Donald’s, told ET Magazine over email when contacted.The feud has taken its toll. In 2011, according to Euromonitor data sourced from players in the quick-service restaurant (QSR) sector, McDonald’s posted sales of Rs 1,1 43 crore, making it the biggest fast food brand in India. Domino’s, a number three then, had sales of Rs 925 crore. In two years — by which time the partners at CPRL had begun their battle — the pizza major toppled the burger giant.Since then, the gap between Domino’s and McDonald’s has only widened, another sign of how the trouble in the north and east operations had hit the brand in India. In 2016, Domino’s consolidated its lead with sales of Rs 2,502 crore, with McDonald’s trailing at Rs 1,817 crore. From 250 outlets in 2011, Mc-Donald’s managed to take its count to 342 in 2016. During the same period, Domino’s jumped from 439 to 1,085. McDonald’s had 242 stores till June last year in the south and west that are operated by the Amit Jatiaowned Hardcastle Restaurants. “It’s business as usual for us,” a Hardcastle spokesperson told ET Magazine.In sharp contrast McDonald’s has hardly got a move on in the north and east, with CPRL able to add just one store in 2017, as against a record 27 in 2012. “All the initial advantages have been lost,” rues Bakshi, adding that what worries him most is the rapidly deteriorating quality of food. “When you leave something on auto pilot for four years, with nobody accountable, this is what happens,” he says. CPRL, its operations and employees stand totally compromised, he claims.Adds Madhurima Bakshi: “There is not a single day when the restaurants are not plagued with product quality and supply chain issues. From worms, roaches, earthworms, fungus to even fried lizards, the frequency with which poor quality food has been served has only increased with every passing day.” Errors, she points out, have only increased after two decades in the business instead of coming down to zero.Bakshi lobs the blame in the court of the Mumbai-based quality department that is responsible for supplying raw material to both CPRL and Hardcastle. Their callous attitude and negligence has led to a serious compromise of CPRL, its employees and its management, she alleges, adding that because of the legal dispute she doesn’t have any control over this department. McDonald’s global spokesperson had little to offer, and the Hardcastle spokesperson refused to comment. Sum maintained that “suspending the operations of the restaurants is a collective decision of the CPRL board of directors.” McDonald’s, he added, wants to focus its effort on working with CPRL to resolve the issue as soon as possible. That, however, looks difficult.In 2013, McDonald’s had approached the London Court of International Arbitration (LCIA) for resolution. Bakshi challenged the move in court, going up to the Supreme Court last year when the high court gave McDonald’s the green signal for arbitration. The apex court, too, dismissed the appeal. The LCIA verdict is expected in a few months, and may well prove the decider. Meantime, in the interim, expect more outlets whose licences come up for renewal to be shut down. Bakshi claims he has faced several criminal cases for reneging on commitments that CPRL made to real estate owners for opening new restaurants or due to suspect food quality and statutory non-compliances.It was only because of legal pressure that CPRL was forced to open an outlet at Yamuna Nagar in Haryana this year, which happens to be the only outlet opened this year, he adds. “We have stretched ourselves thus far, but no more.” The collateral damage due to infighting, reckon industry observers, doesn’t bode well for foreign investments in India. “Such disputes hurt India’s image in investors’ eyes and dampen the mood within the industry,” says Jaspal Sabharwal, a food and private equity industry veteran.While conceding that no foreign brand has understood the importance of timing and pacing in India better than McDonald’s, Sabharwal maintains that its fight with Bakshi has made many industry observers question the burger giant’s experience and wisdom. The stalemate between the two sides has brought Mc-Donald’s expansion and investment in North and East India to a near standstill and is likely to hurt the brand if the dispute goes unaddressed. The need of the hour, contends Sabharwal, is to resolve the crisis as soon as possible.While back in 1990s, when India’s food and beverage industry enjoyed extremely favourable conditions for growth, the times have changed over the past two decades. For the past four years, the industry has had in rough thanks to spiraling competition, rising rentals and increasing health-consciousness. “Survival calls for complete trust and goalalignment between business partners,” adds Sabharwal.Back at the corporate office of CPRL at Jorbagh in New Delhi, Bakshi sounds dejected. “Whatever I could do to salvage the brand, I have done over the last four years,” he says, hinting that there can’t be mutually-acceptable solution. “This is not of my making,” he insists. However, it may well be curtains for him if the LCIA verdict goes against him McDonald’s isn’t revealing its hand, but continues to make the predictable, optimistic noises — “India continues to be an important market,” and that “it is committed to working with CPRL to resolve the issue.”If McDonald’s sounds optimistic, it may well be that it has a game plan in mind post the LCIA verdict. That may also explain their relative lack of alacrity in dealing with the current crisis. For the Bakshis, though, if the JV is terminated, it may well be the end of their role in McDonald’s India saga.