Delhi Gymkhana Club’s erstwhile management members have challenged the National Company Law Tribunal’s order allowing the central government to take over the control of the prestigious club. A plea challenging the order has been filed before the National Company Law Appellate Tribunal (NCLAT) by Major Atul Dev and six other petitioners. In its order passed on April 1 this year, the New Delhi-based Principal Bench of NCLT had allowed the central government to take over the management of the Delhi Gymkhana Club.
- Membership: It has been noticed that the mechanism adopted in ensuring that the membership stays tied up and confined to a close group with an ordinary aspirant waiting for decades in queue with disappointment staring in his/ her face and the membership fee garnering interest for the benefit of existing members is in blatant violation of AOA and MOA.
- Lost objective: The Company having been virtually converted into recreational Club relegating the prime object of sports activity to the back burner has the effect of destroying its distinguished character as envisaged at the inception. The company, initially registered as Section 8 Company with specific objects related to sports and pastimes, obtained land on lease from the Government but over a period of time slightly started drifting away and deviated from the permitted objects which may also impact subsistence of lease depending on the degree of violation and deviation.
- Construction Activities: The Inspection Report dated 31st July, 2019, directions of Ministry of Corporate Affairs dated 13th September, 2019 and the Supplementary Inspection Report dated 3rd March, 2020 placed on the record of the Tribunal, besides innumerable irregularities, reveal that various construction activities have been undertaken in the Club premises either without obtaining the necessary approval or in deviation of the approved plan thereby converting the land use and frustrating the prime object of the Club.
- Court’s order dated 15.02.2021: Having regard to the issues raised in this appeal, finding in regard to existence of a prima facie case demonstrating that the affairs of the Club are being conducted in a manner prejudicial to public interest, does not suffer from any legal infirmity. We accordingly uphold the same.
- Nominees of Central Government: Now coming to the last limb of the issue raised in Company Appeal in regard to the interim relief granted in terms of impugned order being inadequate, be it seen that induction of two nominees by Central Government as members in the GC to monitor the affairs of Club and give suggestions to the GC is of no consequence as the voice of such nominees, on account of their inferior numerical strength in GC is bound to be lost in the din and the interim relief as granted would become meaningless. The interim relief, to which the Union of India is found entitled to on the strength of a prima facie case demonstrated by it, has to be effective and adequate enough to ensure that the affairs of the Club are conducted in accordance with law and the charter of the Club. The interim relief must prove to be result oriented. We accordingly modify the interim relief by directing suspension of the GC and appointment of an Administrator to be nominated by the Union of India to manage the affairs of the Club and also direct that acceptance of new membership or fee or any enhancement thereof till disposal of wait list applications be kept on hold till disposal of the Company Petition. The interim directions are accordingly modified and be carried into effect within two weeks.
- Central Government to take over management: The National Company Law Tribunal (NCLT) has allowed the Central government to take over the management of Delhi Gymkhana Club and nominate 15 persons as directors of the general committee of the club.
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Approaching NCLT: The Ministry of Corporate Affairs,in April 2020 moved the NCLT under sections 241 and 242 of the Companies Act, 2013, seeking to supersede the club’s general committee and allow it to nominate 15 persons as directors to run the club’s affairs. The NCLT in June, 2020, had asked the government to constitute a five-member special committee to enquire into the affairs of the club, among other issues.
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Dissolution of General Committee: The NCLAT, on February 15 2021, dissolved the club’s General Committee and directed the Centre to appoint an administrator to manage its affairs, after the Ministry of Corporate Affairs moved the tribunal alleging corruption, mismanagement, and nepotism in the club. On September 30, in a major relief for the former general committee of the club, the Supreme Court, while hearing the appeals filed against the NCLAT, remanded the matter back to the NCLT and asked it to settle it within four months.
