NCLT Permits Centre To Take Over Delhi Gymkhana Club

The Union of India filed the petition against the Delhi Gymkhana Club alleging that the Club is acting against the public interest. The general committee of the Club was acting on behalf of the few chosen members. It was also alleged that the membership of the club is being given in completely partial and undemocratic manner and several other violations of the Companies act were also alleged by the Union of India.

The Delhi Gymkhana Club objected to the maintainability of the petition on the ground of want of opinion by the Government of India under Section 241 of the Companies Act and that there is no public interest as it is restricted to the cause of few members of the club. (Para 10 of the Judgment).

Earlier, The NCLT vide its order dated 26.06.2020 grants interim relief as prayed by Union of India and directed the Union of India to appoint two nominees on the general committee of the Delhi Gymkhana Club. The interim relief was modified by the NCLAT vide its order dated 15.02.2021 wherein it had directed the Govt. to appoint an administrator who will be solely responsible to manage the affairs of the Delhi Gymkhana Club. The matter was challenged before the Supreme Court wherein it directed the NCLT to decide the petition expeditiously within a period of four (4) months and recently extended the same by granting four (4) weeks.

The NCLT found that the club is generating no income from any sports activities which is the primary objective of the club as per its memorandum of Association. It also observed that the Gymkhana Club is taking deposit form the outsiders in violation of the provisions of the Companies Act, 2013. (Para 16A & B of Judgement).

So far as the preliminary objection of the absence of opinion on the part of the Government to file the petition against the Club, the NCLT recorded that the opinion of the central government which is contemplated under sub sections (3) (4) & (5) of Section 241 of the Companies Act is not the same as in the case of the opinion required under Section 241(2) of the Companies. The Tribunal further observed that when on the basis of sufficient material is available on record, an opinion has been formed by the Government taking various parameters into consideration which is prima facie enough for initiating the present proceedings. The NCLT further accepted the submission of the Government that the opinion in the present case cannot be equated to the opinion as contemplated in the case of Rohtas Industries Ltd. versus SD Agarwal, (1969) 1 SCC 325.

The NCLT further held that there is a public interest involved as the land on which the Gymkhana Club is situated and functioning is a public property held by the Government and the rent of the same is a meager sum of Rs. 1000/- per month for 27 acres of land in the heart of Delhi.

On the basis of the abovementioned, the NCLT allowed the petition of the Union of India and direct the central government to nominate 15 members who will be appointed as the directors of the Delhi Gymkhana Club who will take corrective measures for the management of the Delhi Gymkhana Club.

Case Title: Union of India v Delhi Gymkhana Club & Ors

Counsel For The Petitioner: Tushar Mehta Ld. SG,K.M. Natarajan, Ld. ASG, Vatsal Joshi, Vinayak Sharma

Counsel For The Respondents: Krishnendu Datta. Sr. Adv, Gaurav M. Liberhan, Swapnil Gupta, Angad Mehta, Mehak Khurana.

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