The National Company Law Appellate Tribunal (NCLAT) Today (Oct 21) upheld the Central government’s takeover of the prestigious Delhi Gymkhana Club. A coram of NCLAT comprising Chairperson Justice (retd) Ashok Bhushan and Technical Member Arun Baroka dismissed appeals against an order of National Company Law Tribunal (NCLT) approving the takeover. In April 2022, the NCLT allowed the Centre to take over the affairs of the Delhi Gymkhana Club, appointing a 15-member committee to manage its affairs.
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NEW DELHI: The National Company Law Appellate Tribunal (NCLAT) on Monday upheld the Central government’s decision to take over the management of the renowned Delhi Gymkhana Club, a move that has stirred significant attention. The takeover was initially challenged, but the appellate tribunal’s decision marks a turning point in this long-standing legal battle.
A bench comprising NCLAT Chairperson Justice (Retd.) Ashok Bhushan and Technical Member Arun Baroka dismissed the appeals filed against the earlier order of the National Company Law Tribunal (NCLT), which had approved the government’s intervention in the club’s affairs.
Directions from NCLAT
The NCLAT directed the government-appointed 15-member committee to implement all necessary “remedial measures” as mandated by the NCLT by March 31, 2025. Following this, the committee is required to hold elections for the Club’s governance within three months after March 31, 2025.
These elections will allow for the appointment of elected representatives to run the Club, ensuring that the governance structure is compliant with democratic norms.
Additionally, the Appellate Tribunal stressed that the committee must act in line with the Club’s “Articles of Association” and “Memorandum of Association,” guiding documents that govern the operational framework of the Club.
Legal Representation and Background
The petitioners, who sought to challenge the takeover, were represented by Advocates Gaurav M. Liberhan, Praveen Alok, and Deepak Khosla. On the other hand, Advocates Raunak Dhillon and Ishan Malik appeared on behalf of the Central government.
The NCLAT’s ruling brings closure to a legal battle that has spanned two years. It dates back to April 2022, when the NCLT granted the Central government permission to take control of the Club’s affairs. At that time, the NCLT appointed a 15-member committee to oversee and manage the Club’s daily operations.
The Case for Government Intervention
The government’s involvement was initiated after it filed a petition under Sections 241 and 242 of the Companies Act, 2013. These sections allow for intervention in cases where the affairs of a company are conducted in a manner that is prejudicial to public interest.
In its petition, the government argued that the management of the Delhi Gymkhana Club was acting in ways that were detrimental to the public.
“We hold that it will be just and equitable to allow the prayer of the Union Government to nominate 15 persons to be appointed as directors on the general committee,”
-the NCLT had stated in its ruling.
The NCLT found considerable merit in the government’s claims, particularly highlighting instances of “mismanagement and financial arbitrariness” within the Club.
It was noted that various sums of money were being collected by the Club in a manner that was inconsistent with its Articles of Association, as well as in violation of the provisions of the Companies Act.
Allegations of Mismanagement and Dynastic Practices
The government’s petition pointed to a number of serious issues within the Club’s administration. Among the most significant was the allegation that the General Committee, which oversees the Club’s operations, was acting in favor of “a few chosen members” rather than for the benefit of the Club’s broader membership or the general public.
It was further alleged that the admission process was steeped in favoritism and could only be described as “parivaar-vaad” (dynastic), a term the government used to underscore the nepotistic tendencies in the Club’s membership practices.
Conclusion
The NCLAT’s recent order brings an end to the appeal process initiated by members of the former management of the Delhi Gymkhana Club.
With this ruling, the focus now shifts to the government-appointed committee, which has until March 31, 2025, to implement the necessary reforms and oversee the election process.
The outcome is expected to reshape the governance structure of one of India’s most prestigious clubs, ensuring greater transparency and alignment with public interest.
CASE TITLE:
Major Atul Dev (Retd) v. Union of India Ministry of Corporate Affairs Through Regional Director (North Region)
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