Gymkhana Club in trouble? NCLT says its affairs ‘prima facie’ conducted in prejudiced manner

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Published: June 27, 2020 7:26 PM

NCLT has also asked the government to constitute a five-member special committee to enquire the affairs of the club, and also to look into the issues related to the utility of the land leased out by the government and membership issues, including waitlist and accelerated membership.

The tribunal has also put several restrictions on the general committee, directing it not to take any policy decision or make any changes to the Memorandum of Association or Articles of Association till its further order.

The National Company Law Tribunal has placed colonial-era Delhi Gymkhana Club under the government scanner, citing irregularity in its functioning. The NCLT in an order said the affairs of Delhi Gymkhana Club ‘prima facie’ are being conducted in a “manner prejudicial to the public interest” and has directed the government to appoint two members on its General Committee, managing its affairs. It has also asked the government to constitute a five-member special committee to enquire the affairs of the club, and also to look into the issues related to the utility of the land leased out by the government and membership issues, including waitlist and accelerated membership.

“I have found prima facie case demonstrating that the affairs of the Club are being conducted in a manner prejudicial to the public interest, therefore, I hereby direct Union of India to appoint two of its nominees of its choice as Members in the General Committee to monitor the affairs of the Club along with other GC Members and give suggestions to the GC,” said a single member NCLT bench of Acting President BSV Prakash Kumar.

The tribunal has also put several restrictions on the general committee, directing it not to take any policy decision or make any changes to the Memorandum of Association or Articles of Association till its further order. The NCLT order came over a petition moved by the government through the Ministry of Corporate Affairs (MCA), which alleged “fraudulent and rampant mismanagement” by the general committee, besides others, and sought to take over the management control under section 241 and 242 of the Companies Act, 2003.

According to the NCLT, the five-member committee will enquire into the issues related to the utility of the land leased out by the government to the club, with regard to constructions in progress without requisite approvals or with approvals, suggestions for changes in Articles and Memorandum of Association, membership issues including waitlist and about accelerated membership, adherence of the Club to the Rules governed by the Companies Act 2013.

It will also file a report of recommendations, suggesting for better use of the club premises for the larger good in a transparent manner on equity basis within two months, the order said.

“This Bench further directs the general committee that it shall not proceed with construction or further construction on the site, it shall not make any policy decisions and it shall not make any changes to the Memorandum of Association or Articles of Association and it shall not deal with the funds received for admission of Members and it shall not conduct balloting until further orders,” said the NCLT. However, it has permitted the general committee to carry day to day functions of the club by using funds of it other than fee collected from applicants for new members.

“All these directions shall remain in force until further orders,” it said. The tribunal has directed to list the matter on September 7, 2020, before it for hearing. “In the meanwhile, the respondent shall file a full-fledged reply within one month hereof and rejoinder by the petitioner, if any, within one month thereof,” the tribunal said.

Earlier, on April 24, the NCLT had issued notices to the Delhi Gymkhana Club and its general committee (GC) managing its affairs, over government plea seeking management control of the facility. Filing an urgent petition during the extended lockdown period under sections 241 and 242 of the Companies Act, 2003, the MCA has requested to supersede the general committee of the Club and allow it to nominate 15 persons as directors on it to run the affairs.

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