Tuesday, Aug 16, 2022

Delhi Gymkhana Club's Erstwhile Management Members Challenge Govt Taking Over Control

A plea challenging the order has been filed before the National Company Law Appellate Tribunal (NCLAT) by Major Atul Dev and six other petitioners

National Company Law Tribunal (NCLT)

Delhi Gymkhana Club's erstwhile management members have challenged the National Company Law Tribunal's order allowing the central government to take over the control of the prestigious club.

A plea challenging the order has been filed before the National Company Law Appellate Tribunal (NCLAT) by Major Atul Dev and six other petitioners.

A two-member bench of the appellate tribunal has issued notices to the government through the Ministry of Corporate Affairs and others directing them to file their replies within four weeks.

The bench comprising NCLAT Chairperson Justice Ashok Bhushan and Naresh Salecha also granted the petitioners two weeks' time to file rejoinders, if any.

Last week, NCLAT had directed the government to file the reports as directed by the NCLT regarding the status of their work at the Delhi Gymkhana Club.

"List this appeal for admission on August 1 2022. Learned counsel appearing for the Union of India may also place the reports, if any, in this appeal which has been directed to be placed before NCLT as per the directions in the impugned order," NCLAT said in its order dated June 2.

In its order passed on April 1 this year, the New Delhi-based Principal Bench of NCLT had allowed the central government to take over the management of the Delhi Gymkhana Club.

In the 149-page order, NCLT had said there was "sufficient material" for holding that it is a case of mismanagement of the affairs of the club. It had asked the administrator, who was in charge of the affairs of the club, to "hand over the charges to the newly appointed directors forthwith".

"The new directors of the general committee appointed by the government in terms of this order shall file a report before this tribunal immediately after taking over charge of the club," NCLT had said.

NCLT had also asked the government directors to file a report before it once in three months or whenever it is required.

In April 2020, the government through the Ministry of Corporate Affairs had moved NCLT under sections 241 and 242 of the Companies Act, 2013, seeking to supersede the club's general committee.

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.

Delhi Gymkhana Club was initially registered as a Section 8 company with specific objects related to sports and pastimes and obtained land on lease from the government.

The government had alleged that over a period of time, it had slightly started drifting away and deviated from the permitted objects which may also impact the subsistence of the lease.

During the proceedings before NCLAT last week, senior counsel Krishnendu Datta representing the petitioners submitted that the condition precedent for exercise of power under Section 241 (2), which is the formation of the opinion by the central government is not reflected from the materials on record.

"It is further submitted that there is no material to indicate that the affairs of the company are being conducted in a manner prejudicial to the public interest. It is submitted that there being no satisfaction of pre-condition for the exercise of the power under Section 241(2), the application could not have been allowed," NCLAT order said while recording his submissions.