New Delhi: The Delhi Gymkhana Club has moved the National Company Law Appellate Tribunal (NCLAT), challenging the 26 June order passed by the National Company Law Tribunal (NCLT), which had placed the club under the government scanner on a Narendra Modi government petition.
In its appeal, Delhi Gymkhana said, “Clubs have absolute freedom to govern themselves in accordance with their charters and the courts, including the NCLT, have very limited scope of judicial review in the matter of the functioning of such clubs”.
It also said there is “absolutely no element of public interest involved in the petition”, as it is a “private members’ club”.
The club also submitted that the element of “public interest” cannot be construed merely because government land has been leased to it. It also reiterated that the petition filed before NCLT is not maintainable, and matters relating to the membership of a club are outside the purview of courts and tribunals.
The elite club, which is adjacent to the Prime Minister’s Residence in Delhi, is frequented by top civil servants, army officers and judges, among others.
The NCLAT took note of the appeal on 15 July and issued notice. The case will be heard next on 13 August.
What the NCLT order said
The principal bench of the NCLT had on 26 June said that the affairs of the club are prima facie being conducted in a “manner prejudicial to the public interest” and had directed the government to appoint two members on its general committee.
It had also asked the government to constitute a five-member special committee to probe the affairs of the club, as well as issues related to the utility of the land leased out by the government and the club’s membership.
The NCLT had also passed several other remarks against the exclusivity of the club’s membership, saying that even though it has a right to function as it chooses under Article 19 of the Constitution, it cannot supersede the rights of the common public under Article 14, which guarantees the right to equality.
“The shadow over the club is it is so obsessive of its privilege. Maybe it is because the club is of the view that its privilege will remain intact only if people of certain stature become members. Privilege and privileged are misconceived notions and they are all nothing but a reminiscence of earlier legacy, which is a vanity in a democratic society,” the NCLT had observed.
Gymkhana’s appeal filed on 13 July called this order “unfortunate and factually and legally perverse”. It asserted that the NCLT has “passed unwarranted and scathing remarks” against it and “instead of confining itself to the issues arising in the petition, has embarked on an uncalled for socio-economic soliloquy”.
It has therefore asked the 26 June order to be set aside.
‘Cosmetic representation not a cure’: MCA
The Ministry of Corporate Affairs (MCA) had moved the NCLT in April, claiming that the club was being run in a manner which was “prejudicial to public interest”.
It sought action against the Delhi Gymkhana Club management under Section 241 and 242 of the Companies Act — which allows member of a company or the government to seek relief if the affairs of the entity are being run in a manner “prejudicial to public interest”, or are deemed “oppressive”, among other things.
MCA had therefore sought a change of management at the Delhi Gymkhana Club and the appointment of 15 nominees as administrators to run its affairs.
However, last week, MCA had also challenged the NCLT order in NCLAT, saying that the tribunal did not grant it “effective safeguard and efficacious remedy”, by not suspending the club’s general committee.
The ministry’s petition said NCLT did pass an order providing relief, but that “cosmetic representation on the board will not cure mismanagement and the gravity of the rot that has set deep in the management of Delhi Gymkhana Club”.