NCLT declines to suspend GC of Delhi Gymkhana Club

Delhi Gymkhana Club

New Delhi, June 27 : The National Company Law Tribunal (NCLT) declined to suspend the General Committee (GC) of the Delhi Gymkhana Club and also the appointment of administrator as sought by the Centre, instead directed the central government to appoint two of its nominees in the GC to monitor the affairs of the Club along with other GC Members and give suggestions.

The Ministry of Corporate Affairs (MCA) had moved the NCLT asking for replacement of the directors of the Club with government nominees to run the affairs of the company, and in the interim relief, asked for suspension of GC and for appointment of an administrator until final order is granted.

In an 81-page order the acting president NCLT Principal Bench B.S.V. Prakash Kumar said, though the reliefs seemingly look the same, there is a sea of difference between replacement and suspension.

Replacement is permanent arrangement and suspension is temporary arrangement. Suspension and appointment of administrator is a stop gap arrangement until final relief is granted.

“In any event, since this Bench is not ordering suspension of GC and appointment of administrator, where is the question of granting interim order covering final relief? This is a misplaced apprehension,” said the bench.

The NCLT directed the Centre to appoint two of its nominees, of its choice, as Members in the GC to monitor the affairs of the Club along with other GC Members and give suggestions to the GC, and also directed the Centre to constitute a Special Committee with five Members of its choice to enquire into the affairs of the Club, utility of the land leased out by the state.

This committee will also look into constructions in progress without requisite approvals or with approvals, suggestions for changes in Articles and Memorandum of Association, membership issues including waitlist and about accelerated membership, adherence of the Club to the Rules governed by Section 8 of the Companies Act 2013 and other miscellaneous issues if any. On the membership row, the club argued that the applicants” money is refundable on demand and since the monies have been given voluntarily by the applicant, without any promise of time for grant of membership to the applicant by the club, the question of payment of interest does not arise.

Also, the committee will file a report of recommendations suggesting for better use of the club premises for the larger good in a transparent manner on equity basis within two months.

The club had submitted that the present GC is duly elected by its members and all the allegations in the MCA”s petition relate to a period prior to the present GC got elected and since there is no other prayer in the petition, the same ought to be dismissed outrightly.

The NCLT said it found prima facie case demonstrating that the affairs of the Club are being conducted in a manner prejudicial to the public interest. “The GC is given liberty to carry day to day functions of the Club by using funds of it other than fee collected from applicants. All these directions shall remain in force until further orders,” said the order.

The NCLT bench further directed that the GC shall not proceed with construction or further construction on the site, it shall not make any policy decisions and it shall not make any changes to the Memorandum of Association or Articles of Association and it shall not deal with the funds received for admission of Members and it shall not conduct balloting until further orders.

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