The National Company Law Tribunal (NCLT) on Friday issued notices to the Delhi Gymkhana Club and its general committee managing its affairs, over a government petition seeking management control of the facility.
The NCLT asks the Delhi Gymkhana Club, a sprawling facility in the Lutyens' zone of the national capital, to file its reply on the Centre's plea.
The government, through an urgent petition filed through the Ministry of Corporate affairs (MCA), has 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.
Meanwhile, during the hearing, conducted through video conferencing,the Delhi Gymkhana Club through its counsel Senior Advocate Vikas Singh submitted that it would not take any new application for membership.
A two-member NCLT bench headed by Acting President B S V Prakash Kumar has asked the Club to file its reply by May 8 and directed to list the matter on May 13 for next hearing.
The Gymkhana Club's counsel said the government has acted in a hurry and this is a misconceived petition by a disgruntled official seeking a membership of the Club.
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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.
Sections 241 and 242 of the Companies Act deal with oppression and mismanagement, and give wide powers to the tribunal, which include removal of the managing director, manager or any of the directors of the company and recovery of undue gains.
Citing the reason, theMCA said fraudulent and rampant mismanagement of the affairs of Respondent No 1 company(Delhi Gymkhana Club Ltd) by the general committee of the company is a great detriment of significant public interest.
The MCA said it has requested the NCLT to pass an interim order to suspend the general committee of the Delhi Gymkhana Club and to nominate an administrator to run its affairs.
It has also asked for immediate ban on any new membership application and fee till the time matter is pending before it.
Delhi Gymkhana Club Ltd was registered as a non-profit company and falls under section 26 of the Companies Act and is managed by a general committee having around 17 members.
Interestingly, one of the members in the general committee is the Ministry of Urban Development, which granted land measuring 27.3 acre at the posh Safdarjung Road of the city in 1928 on a perpetual lease.
During the inspection conducted by the Regional Directors (North Region) of MCA between January to July 2019 over the complaints received by several members of the club -- earlier known as 'Imperial Delhi Gymkhana Club, it was found that several violations of the Company Law took place, the petition said.
After inspection, the MCA had issued an order on September 13, 2019 asking to initiate penal action for violation of several sections of the Companies Act, including revocation of licence of Delhi Gymkhana Club and to take over the management.
In a supplementary inspection report, the MCA had also looked into issues related to allotment of membership, only received from the new applications as registration fee form membership and accounting treatment of the money received.
It has also questioned the hereditary succession mode of membership terming it as "parivaar-vaad" (nepotism) and minimal adherence to the democratic ethical practise and misuse of huge land property having enormous potential.
The violations are of extremely serious and grave nature, which indicate that the GC members have been automatically to the benefit of a few chosen members of Delhi Gymkhana Club in a hereditary manner, at the expense of the general public, it said.