'Delhi Gymkhana Club affairs mismanaged': Centre moves NCLT to take control

The Centre has moved a petition in the National Company Law Tribunal (NCLT) seeking a change of management of the Delhi Gymkhana Club by immediate appointment of 15 government nominees in its General Committee and transfer of absolute power to run the affairs of the posh club located adjacent to the PM's residence.

Seeking to appoint its 15 nominees as administrators, the Centre, in its petition, said: "Fraudulent and rampant mismanagement of affairs of the Respondent 1 (Delhi Gymkhana Club) company (a Section 8 company under the Companies Act 2013) by the General committee of the company, to a great detriment of significant public interest."

The government has used the same provision of the Companies Act while superseding the board of IL&FS.

In this case, the Centre has argued that the funds collected as application fee were invested in securities and deposits to gain returns. Also, the club did not pay any interest on the waiting period, which could go from 15 years to up to 35 years.

The Centre took action after analyzing complaints from Arjun Sawhny, Amar Sinha, Krishna Varma and others. Amid the nationwide lockdown due to the coronavirus outbreak, it moved the tribunal citing it as an urgent matter. "The financial statements prepared by the company do not give a true and fair view of the state of affairs of the company within the meaning of provision of Section 209 and 211A of the Companies Act, 1956 and Section 129 of the Companies Act, 2013," said its petition.

The Club would have to file a reply by May 8 and the next hearing on the matter is listed on May 13. The hearing on the matter was held on Friday through video conferencing.

The Centre submitted that the Companies Act, 2013 confers powers on the NCLT to entertain application under Section 241 and 242. "Further Section 241 (2) empowers the Central government to apply to the NCLT for an order under Chapter XVI of the Companies Act, 2013, if it is opinion of the government that affairs of the company are being conducted in a manner prejudicial to the public interest," it contended in the petition.

The Delhi Gymkhana Club started as the Imperial Delhi Gymkhana Club Limited and the name was changed in 1959. The main objective of the club was to promote various sports and pastimes, and the petition contended of the total income earned from 2014-15 to 2018-19, there is no income directly from sports. "This reflects that the management or the General Committee of the company are not able to generate any income for this company for which lease of land was allotted by Ministry of Urban Affairs in 1928...thus, the members of the General Committee during the last 5 financial years have consistently failed to carry out the object of the company," said the petition.

The petition contended that the execution of perpetual lease deed was between the Secretary of State of India in Council and the company in its earlier name Imperial Gymkhana Club Ltd on February 28, 1928.-IANS