The corporate affairs ministry, which is seeking to takeover the management control of the Delhi Gymkhana Club, has moved the National Company Law Appellate Tribunal (NCLAT) against a ruling in the matter.
In an order passed in June, the National Company Law Tribunal (NCLT) asked the ministry to appoint two members to the General Committee of the club as well as constitute a five-member panel to look into certain issues related to the club.
GC is managing the affairs of colonial-era private club.
While the tribunal had observed that the affairs of the club "prima facie" are being conducted in a "manner prejudicial to the public interest", it declined the ministry's plea for takeover of the club.
On Wednesday, the ministry''s petition challenging the NCLT order came up for hearing before a three-member bench of the NCLAT headed by its Acting Chairperson Justice B L Bhat. The arguments of both sides were heard through video conferencing.
The appellate tribunal has directed that the matter be listed for further hearing on August 13, a government official said on Wednesday.
The NCLT, in its order dated June 26, had asked the government to constitute a five-member Special Committee to enquire into the affairs of the club and to look into various issues, including waitlist and accelerated membership.
According to the ministry, the NCLT "erroneously" did not grant "effective safeguard and efficacious remedy" and held that the GC would not be suspended.
It has to be borne in mind that the board of a company functions on majority decisions, and hereby permitting the appointment of two nominees only, the tribunal has provided relief but "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", as per the ministry's petition.
Further, the petition filed before the appellate tribunal said the NCLT erroneously allowed the GC to function and did not appoint an administrator, who would have the authority similar to a receiver and also conduct an impartial and authentic enquiry as may be warranted to deal with deep-seated malaise.
"The General Committee members have in fact become a select coterie of permanent members who have converted the Section 8 company into a family fiefdom," the petition said.
The ministry also said the club has failed to carry activities of various sports, which was the objective of the company.
"While allowing the membership of the club, the company has been treated as riyaasat (fiefdom) of the persons especially the GC members by missing the MOA (Memorandum of Association) and AOA (Articles of Association) of the company.
"Over the years the activities of the club have been turned over from vyayamshala (gymnasium) to madhushala (bar) and the functioning of the general committee is like siyasat (politics)," the ministry said in the petition.
In April, the ministry moved the NCLT seeking superseding of the GC of the club and allow it to nominate 15 persons as directors on the committee to run the affairs.
The ministry had filed the plea under Sections 241 and 242 of the Companies Act, 2013.
Sections 241 and 242 deal with oppression and mismanagement and give wide powers to the tribunal, which include removal of the managing director, manager or any of the directors of the company and recovery of undue gains.
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