Admission process to Delhi Gymkhana Club can only be described as 'parivaar-vaad': NCLT notice in Centre's plea to take over affairs of Club

The National Company Law Tribunal today issued notice in Central Government's plea to take over the affairs of the Delhi Gymkhana Club..Pursunat to the Club's concession before NCLT, no new application for membership would be entertained in the meantime. .The order was passed by the Acting President of NCLT, BSV Prakash Kumar in a petition moved by the Central Government under Section 241 and 242 of the Companies Act, 2013. .The Central Government has alleged that the affairs of Delhi Gymkhana Club are being conducted in a manner which is prejudicial to public interest. .In its Petition before the NCLT, Central Government has informed that pursuant to several complaints received by it, the affairs of M/s Delhi Gymkhana Club Ltd were inspected by it under Section 206(5) of the Companies Act, 2013. .During the course of the investigation, the Central Government has alleged, it was found that there was rampant mismanagement by the General Committee of the Club, in violation of the Articles of Association and the Companies Act, 2013..It is alleged that the members of the General Committee of the Club have been acting automatically to the benefit of a few chosen members, and at the expense of the general public. ... maximum non-adherence to rules and avoidance of procedure has been reported and 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.Central Government .It is further alleged that over the years, the successive General Committees of the Club have "perversely twisted" the objects of the company and have functioned in a manner to remain in control of the Club through an "unauthorized and complicated succession mechanism". .The admission process can only be described as 'parivaar-vaad'.Central Government has alleged. .The Central Government has thus contended that the activities of the General Committee amount to fraud in terms of Section 447 of the Companies Act. .It is also asserted that apart from discrepancies with request to the admission of members, there are many other irregularities, financial and otherwise, in the management of the Club which included violation of Sections 5, 166 and 179 of the Companies Act, 2013, mismanagement of funds received by way of the registration fee from applicants, anamolies in the number of members of the company, false statement in balance sheets, etc. .Therefore, to bring an end to the mismanagement of the affairs of the Club as well to "arrest the long-standing artificial hereditary succession mode of membership", the Central Government has sought for a direction to appoint 15 persons as directors to the General Committee of the Club/Company to manage its affairs..Senior Advocate Vikas Singh along with Advocate Saket Sikri appeared for the Club today. Singh vehemently opposed Centre's allegations of wrongdoings as well as the plea for an ad-interim order seeking immediate appointment of administrators. .It is the Club's stance that it is a frivolous petition, borne out of the undue grievance of a Government official who was denied membership..Singh argued 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. .He nonetheless stated that in the meantime, no new applications for membership would be taken by the Club..In view of the above, the hearing was adjourned with directions to the Club and its Officials to file their response. .Centre was represented by Sanjay Shorey, Director (Legal & Prosecution), Ministry of Corporate Affairs. .The matter would be heard next on 13.