NEED FOR CHANGE
The central government moved a petition seeking a change of management of the Delhi Gymkhana Club and appoint its 15 nominees as administrators to run the affairs of the Club, situated bang in the middle of the country’s most expensive and prestigious real estate.
The petition was filed by the Ministry of Corporate Affairs (MCA) in the National Company Law Tribunal (NCLT), seeking action under Sections 241 and 242 of the Companies Act, 2013 which allows a member of a company or the government to seek relief if the affairs of the entity are being run in a manner `prejudicial to public interest’ or are `oppressive’, among other things. The government had used the same provisions of the Companies Act to get the NCLT approval to supersede the board of IL&FS in October 2018.
The central government has cited `parivarvad’ or nepotism, financial irregularities, misuse of allocated land and issues related to membership, as the primary reasons for it to acquire the Club.
ISSUE OF MEMBERSHIP
The Delhi Gymkhana has followed a thumb rule: 40% of the membership went to civil servants, 40% to the defence services and 20% to `others’. The presidentship changed hands every two years between the civilian and army members.
Now, suddenly in the last few years, membership in the `others’ category, which also includes businessmen, has gone up. Old-timers say values, once cherished, have given way to money power.
The Delhi Gymkhana started doling out memberships to children of members, thus snuffing out the chances of outsiders – also presumably influential – who wished to apply for membership.
The government petition on April 24, 2020. The land was allocated to Delhi Gymkhana for sporting activities. Instead, only 2% of their accounts show earnings from sporting activities, the rest is from alcohol, cigarettes and eatables. The club is being used for all purposes other than sporting activities. It has not produced a single international medal-winning athlete. This is a misuse of land for purposes other than what it was allocated for.”
Other than the 5,600 permanent members and the categories mentioned in Delhi Gymkhana’s Articles of Association (AoA), the Club has also been granting non-permanent memberships to eminent people, holders of green cards, Non-Resident Indians and women.
Following complaints from members, an investigation was ordered by the MCA.
ISSUE OF DEPOSIT
Apart from accusations of alleged mismanagement, there are charges of the 107-year-old club accepting `deposits’ in the form of application fee that was over Rs 1 lakh. The club does not pay any interest on the money during the waiting period, which can stretch from 15 years to 30-35 years.
The preliminary findings had referred to an increase in the application fee for government category from Rs 5,000 in 2000 to Rs 1.5 lakh now. For non-government applicants, the fee has gone up from Rs 5,000 to Rs 7.5 lakh during the same period. The funds collected as application fee was invested in securities and deposits that would fetch returns.
According to the government petition, Delhi Gymkhana was registered under sections 25 and 26 of Companies Act in 1913, making it a `limited company’ that is formed to promote art, commerce, science, religion, charity or any other useful theme.
It has further alleged a miss-classification of features, saying that money collected was not used for the purposes it was meant for. Hence, the Club was violating the terms of the land allotment.
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