The directors of Delhi Gymkhana Club, one of the oldest clubs in the Capital have approached the Apex Court challenging the National Company Law Appellate Tribunal’s (NCLAT) order naming an administrator to manage the affairs of a private club.
Challenging the NCLAT’s Feb 15 order, 9 directors of the club said in their appeal that “the appointment of administrator destroys the autonomous functioning of a private club without satisfying the threshold criteria for exercise of power under Section 241(2) of the Companies Act.”
Section 241(2) of the Companies Act states, “The Central Government, if it is of the opinion that the affairs of the company are being conducted in a manner prejudicial to public interest, may itself apply to the Tribunal for an order under this Chapter.”
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The Club established in 1913 is registered under the Companies Act & holds a perpetual lease over a prime plot of 27.3 acres in the heart of Lutyens Delhi. In 2016, the Club claimed that some disgruntled members filed a complaint with the Ministry of Corporate Affairs alleging mismanagement. This led to an inquiry by the ministry & two inspection reports , the second running into around 4,000 pages. On the basis of this, the ministry approved the filing a petition before the National Company Law Tribunal (NCLT) alleging that the activities of the club were being conducted in a manner “prejudicial to public interest”.
NCLT admitted the plea filed by the Union Govt against Delhi Gymkhana Club & held that the affairs & management of the private club involved “public interest”. In an interim order on June 26, 2020 , it sought constitution of a committee to examine & recommend changes in the character of the club. Both the Club & the Centre moved appeals before NCLAT which led to the appointment of an administrator. The appeals body also dismissed the club’s appeal. NCLAT’s order was damning. It said: “Under the garb of distinctive character of the club which is a relic of the imperial past, the doors of membership are virtually limited to people having blue blood in their veins thereby perpetrating apartheid & shattering the most cherished constitutional goal of securing social justice & equality of status & opportunity.”
In the appeal, the directors , led by Major Atul Deb (Retd) claim that the order passed by NCLAT set a dangerous precedent by allowing the Govt to interfere into the affairs of a private club.
The plea said that “Governments are not & ought not to concern themselves with the affairs of private member clubs".
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