In a major relief to the Union government, the National Company Law Appellate Tribunal (NCLAT) on Monday allowed it to go ahead with the appointment of an administrator to oversee the management at the Delhi Gymkhana affairs.
NCLAT directed the Ministry of Corporate Affairs to appoint an administrator to be nominated by the Union of India to manage the affairs of the Club. It also directed that acceptance of new membership or fee or any enhancement thereof till disposal of waitlist applications will be kept on hold till disposal of the Company Petition.
NCLAT Bench headed by Justice Bansi Lal Bhat, (Acting Chairperson) while passing the judgment also said that 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.
"...we are of the considered opinion that the National Company Law Tribunal (NCLT) order, in so far as 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 the public interest, does not suffer from any legal infirmity," the order said.
Advocate KM Natraja, Additional Solicitor General was representing the Union of India, and Senior Advocate SN Mookherjee, Senior Advocate was representing the respondents in the matter.
NCLAT order on Monday has come after an appeal was moved by Delhi Gymkhana Club challenging NCLT order stating that clubs have absolute right to govern themselves.
NCLT in the order found the affairs of the Club are being conducted in a manner prejudicial to the public interest and directed the Union of India to appoint two of the nominees of its choice as members in the General Committee (GC) to monitor the affairs of the Club along with other GC members and give suggestions to the GC.
NCLT also directed the Union of India to "constitute a special committee with five Members of its choice to enquire into the affairs of the Club, the utility of the land leased out by the state, 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 Section 8 of the Compes Act 2013 and other miscellaneous issues if any and file 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."
Earlier, the Centre while replying to NCLT had strongly stated that Gymkhana means "Vyayamshala", but it has converted into "Madhushala". Ministry of Corporate Affairs had alleged there was mismanagement in the club for a long time.
An inspection report by the Ministry of Corporate Affairs found irregularities committed by Club from 2013 to 2018, violations related to land under lease referred to Ministry of Housing and said the Club spends just 2.77 per cent of income for sports activities. "It is known as a premier club for parties rather than sports and other discrepancies against the club," it said.
Centre in its reply also mentioned that prime land on lease worth thousands of crores can't be used for private purposes. "A total of 27.03 acres of government land on prime location has nominal lease rent of Rs 10,000 per year, Gymkhana means "Vyayamshala" but has been converted into "Madhushala". Entry restricted to the elite and powerful and restricting access for the public," it stated.
( With inputs from ANI )
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