From losses of Rs 1 crore per month to turning around a profit, and achieving a record revenue of over Rs 62 crore, the national capital’s most sought after club — Delhi Gymkhana Club (DGC) — is on a road to recovery.
In a recent communiqué to its members, the general committee (GC), which comprises government-nominated directors, said ‘various steps’ taken to streamline functioning of the club had managed to cut its losses.
“The club, when the present committee took over, was making a loss of about Rs 1 crore per month…We today stand at an operational profit (projected) without having granted new memberships,” reads the letter signed by GC chairman Malay Kumar Sinha, a retired IPS officer.
In the past four years, the 110-year-old club has been entangled in a legal battle following allegations of mismanagement of funds, violations of norms and granting membership illegally. In April last year, the National Company Law Tribunal (NCLT) allowed the Central government to take over the management of the club, nearly two years after a plea was submitted by the Centre citing ‘violations’ of companies law by the club. In a 149-page order on the petition filed by the ministry of corporate affairs (MoCA), a two-member bench of the tribunal had said there was ‘sufficient material’ for holding that it is a case of mismanagement of affairs. Subsequently, the committee took charge of the club on April 3, 2022. The committee has submitted four reports in compliance with the NCLT order so far.
“The best the club had achieved in terms of revenue (without membership) in any of the previous years was in 2019-20, which was approximately Rs 56.35 crore. As per the current projection, the GC expects to close FY22-23 with revenue of over Rs 62 crore… A fixed minimum usage charge applicable on members and card holders was introduced to help the club tide over the immediate cash flow crisis. This was done in line with similar systems in place at many prestigious clubs in India,” Sinha explained in his letter, a copy of which is in FE’s possession.
Among other measures, the GC also undertook ‘price correction’ for food and beverage (F&B) services, which is likely to earn a profit this year.
Supreme Court lawyer and national spokesperson of Bharatiya Janata Party (BJP) Nalin Kohli, who is one of the members of the GC, told FE that membership is the most stressing issue of the club. “The club, as per its Articles of Association (AoA), can have 5,600 members, but when we took over last year, there were over 16,000 people using the club, some under categories that were not as per the AoA. The NCLT orders are specific — to run the club as per the AoA — and the committee has to take corrective steps. While the judgment permitted a total of 15 members to be appointed on the committee, initially six members were appointed, which have now increased to eight,” he said.
Kohli added that there is no fixed tenure prescribed by the NCLT with respect to the committee. “A lot of work has been done by the committee. The NCLT had directed government-nominated members to file a report every three months on issues identified in the order. The next report will be filed in July and is expected to detail several important steps with respect to various audits that had been commissioned,” he said.
The GC has also appointed international accounting and consulting firm Baker Tilly to scrutinise the financial transactions. It has submitted its report, which is being studied by the GC.
With controversy plaguing the club, MoCA had found that the club had been adopting illegal ways of giving out permanent memberships, citing it as one of the issues and reasons behind its move to take over the club. Since the membership records were either incomplete or unavailable, the GC also initiated steps to digitise and update documents. In its submission before the NCLT, the ministry had contended that the club promoted ‘parivaar-vaad’ (nepotism) by reserving spots for families of the members, taking over slots under the open category, or introducing new categories of membership. As per the AoA, the club should have only certain categories of members — permanent, garrison, temporary, casual and special. It has now added “green card, UCP, eminent members, NRO and diplomats” as well.
Members who FE spoke with, said on the condition of anonymity that there is a waiting time of over 30 years for permanent membership at the club. “With more than half of the membership reserved for serving government officials, the waiting period for membership in the non-government (NG) category is several decades,” they say.
Some members who had approached the Delhi High Court claimed that children of existing members were given priority in accord of permanent membership over pending applications in the NG category.
“In 2017 a district court, in an interim order, barred the club from giving permanent memberships to children of existing members. The MoCA has also told the club that no new members can be taken, and now vacancies can only be created if someone dies,” said a member, who wished to remain anonymous.
Others also questioned the discrepancy between membership fees for children of permanent members and others. “Children of permanent members who possess a dependent card are being charged Rs 5 lakh, whereas those with no dependent card are charged Rs 22 lakh,” alleged a member.
For comprehensive examination of membership issues, the GC roped in accounting firm Deloitte for an audit. The agency has already submitted its report, which is being studied by the committee for necessary action.
Questions were also raised on the alleged misuse of the club land, which had been allotted as a public largesse. In its order of February 2021, NCLT noted that the government land was given on perpetual lease primarily for sports related activity but converted into “recreational club for a chosen few with doors virtually shut for an aspirant belonging to the common stock”. It was also claimed that 54 unauthorised constructions have taken place on the heritage site.
Responding to Sinha’s letter, members, however, said the developments mentioned in the letter are a routine update and do not offer any solution to the prevailing issues. “They have asked members to fill up forms, give details of membership, spouse name, date of birth, etc. It’s a routine exercise. As far as the profit is concerned, it is bound to happen because prices of F&B have increased by 25-30%. Everything costs more, so the profit will obviously increase,” said a member.
