Delhi Gymkhana has become a bar, ‘hereditary club’, Modi govt tells company law tribunal

In its submissions before the NCLAT seeking control of management of Delhi Gymkhana club, the government states that the club is ‘an ugly example of nepotism in a democratic country’.

The Delhi Gymkhana Club | Photo: delhigymkhana.org.in

New Delhi: The Narendra Modi government has described the Delhi Gymkhana Club as a “madhu-shala (a bar)” in its written submissions before the National Company Law Appellate Tribunal (NCLAT) Tuesday. 

The government had filed a petition in the NCLAT last month to take control of the prestigious club’s management.

“Gymkhana means vyayam-shala or physical exercise in the memorandum of association (of the company managing the club), but over the years, it has become a madhu-shala (bar),” read the Ministry of Corporate Affairs’ (MCA) latest submissions. 

The tribunal reserved its orders on the government petition, filed through MCA. The Gymkhana has fought back, saying some disgruntled members and individuals, who were denied membership, have come together to destabilise the club. 

Through the submission, the MCA has tried to justify its decision to take over the club, alleging the current governance has promoted “parivaar-vaad (nepotism)” by reserving membership for their own kith and kin, thereby usurping the slots under the open-category membership.

“The entry is restricted to the elite class of the society and the powers-that-be have hijacked the club memberships for their kith and kin, thereby making it a hereditary club for the members rather than keeping its nature and character as public,” read the submissions. 

‘Ugly example of nepotism in a democratic country’

According to club documents, the club has provided 25 per cent reservation for those who use the membership pending their registration application. Such a category is called UCP (User of Club Premises Pending Election) and includes children of permanent members, who are allowed to apply once they turn 21. However, these members do not have voting rights but can use the club facility until they are cleared for permanent membership. 

The MCA has attacked this provision in its submission.

“It is clearly against the intent and purpose of the incorporation document to convert the company into a hereditary club,” the MCA submission reads. “The intention to promote “parivar-vaad (nepotism)” is evident from the statement of the secretary of the company that the club has provided 25 per cent reservation for UCPs, usurping the open category membership,” the MCA stated. 

The ministry has called this practice an “ugly example of nepotism in a democratic country”. It has also objected to the club introducing several categories of membership over a period of time. According to the Articles of Association, the club was to have only certain categories of members — permanent, garrison, temporary, casual and special. It has now added “green card, UCP, eminent members, NRO and diplomats”.

The Modi government, however, has been particularly critical of the UCP category, which it said has not only destroyed the character of the company but has secured membership of its members’ future generations, who, otherwise, may be ineligible for membership.

This, it said, is a distortion of practices and violation of articles of association — which does not envisage a backdoor entry for children of members — to the detriment of persons waiting in the queue for over 40 years. In effect, the children of club members continue to enjoy the facility uninterruptedly, irrespective of their position, if any, in the waiting list, the MCA has said. 

On its part, the Delhi Gymkhana has defended its UCP provision, saying the category does not usurp the rights of anybody. If a new applicant applies for membership then it is “merely a request to be considered for an invitation to be a member”. 

‘Injury to public interest when prime area for sports is taken over’

To the Delhi Gymkhana’s contention that the club has the right to admit or not admit, allow or not allow members, and the same is not justiciable, the MCA has said that the hereditary enjoyment of state largesse, connected to public interest, is against Article 14 (right to equality). 

“It is an injury to public interest when the prime area of sports facility is taken over by the mighty for recreational purposes and enjoyment of state largesse is infested with nepotism or favouritism,” it said. 

The club is spending just 2.77 per cent of its income in sports activities, is known more for its premier parties and has made recreational activity its main activity, the MCA has said.  It has also claimed that 54 unauthorised constructions have taken place on the heritage site built on 27.03 acres of government property. 

This land, worth thousands of crores, is being enjoyed by the company at a nominal lease rent of Rs 1,000 per annum, the MCA said, adding that the gymkhana cannot be a private club. 

The gymkhana has in its response questioned the government argument on the land’s value and its utilisation. It said there can be no relationship between the land cost and management of the club. The club said it paid Rs 5,000 in 1918 for the land and has over the years spent money to develop it, adding that it has the right to decide who it wants to associate with or grant membership to.