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NCLT Issues Notice To Delhi Gymkhana Club Over Rampant Irregularities

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The National Company Law Tribunal on Friday has issued a notice to Delhi Gymkhana Club Administration on a plea filed by Central government to take over the affairs of the club.

The case of the petitioner (Central Government) is that the working and affairs of the club are conducted in a manner which is against public interest and received various complaints against the Club administration and the same were inspected by the Central Government as provided under section 206 of the Companies Act, 2013.

The Central Government carried out investigation and found the following:-

  • The Members of General Committee are giving undue favour to few persons at the expense of General public.
  • Money has been called fraudulently by the GC (General Committee) members by inducing and alluring the new applicants (for memberships) to apply for membership at a higher membership fee (which is enhanced from time to time) when the GC itself is aware of the fact that the vacancy rate per annum is between 120 to 135 members and the company has a long waiting list from 1972 onwards. Whereas a minimal amount is being collected from permanent members and other members of the company who enjoy the benefits and privileges of the Club at a subsidized rate even without having the voting power.
  • The successive General Committees of the Club have twisted the objects of the company and remained in control of the Club by an unauthorized and complicated succession mechanism.
  • The management of the Club was carried out in violation of its articles of association and provisions of Companies Act, 2013.
  • Rampant discrepancies with respect to admission of members and financial and administrative irregularities in management of club.
  • Mismanagement of funds received by way of the registration fee from applicants, anomalies in the number of members of the company, false statement in balance sheets, etc.

The aforesaid acts of the M/s Delhi Gymkhana Club are in violation of section 5, 166 & 179 of the Companies Act, 2013. The Central Government has moved a petition before the NCLT under section 241 & 242 of the Companies Act.

Senior Advocate Vikas Singh & Advocate Saket Sikri appeared for the Club and opposed Centre’s allegations of wrong doings as well as the plea for an ad-interim order seeking immediate appointment of administrators. Mr. Singh said that it is a frivolous petition, borne out of the undue grievance of a Government official who was denied membership and questioned the urgency that given the circumstances that were prevailing owing to the COVID-19 lockdown, there was no urgency in the matter, especially when the Club was shut.

Mr. Sanjay Shorey, Director (Legal & Prosecution), Ministry of Corporate Affairs appeared for the Central Government and sought for a direction to appoint 15 persons as directors to the General Committee of the Club/Company to manage its affairs to arrest the long-standing artificial hereditary succession mode of membership. He also said that the activities of the General Committee amount to fraud in terms of Section 447 of the Companies Act.

The case was heard by the Acting President of NCLT, BSV Prakash Kumar who granted the ad- interim prayer of the Central Government and said that no new application for membership would be entertained in the meantime.

The case will be heard on 13th of May, 2020.

-India Legal Bureau

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