The Government of India will take over the reins of Delhi Gymkhana Club in the interim after it won an appeal in the National Company Appellant Tribunal (NCLAT), which allowed the government to temporarily nominate an administrator to manage the affairs of the Club.
The government had moved an appeal in the NCLAT against an interim order of the Principal bench of the National Company Law Tribunal (NCLT) on June 26, 2020. The NCLT order had directed the government to appoint a five-member committee to enquire into various issues including affairs of the Club, which were alleged to be conducted in a manner prejudicial to public interest. The NCLT order had also directed the government to appoint two nominees of its choice as members in the General Committee to monitor the affairs of the Club.
However, the government was not satisfied by the NCLT order as it felt it was not enough to 'stem the rot'.
The rot
The controversy arose after allegations of mismanagement in the affairs of the club, which led to Corporate Affairs Ministry directing an enquiry in 2016. A detailed inspection report was drafted which corroborated the several allegations of mismanagement of the affairs of the club.
Based on this report, the government filed a petition with the NCLT. The government has alleged in its petition in the NCLT that the Club, which limited its access only to government officers and limited number of non-government people, virtually barred entry of many people who applied for membership even after waiting for decades. Meanwhile, children of permanent members managed to sneak in under the garb of being dependents of permanent members, thereafter as green card holders, etc, making it difficult for people on the wait list to become members.
The government had further alleged that the money taken from the waitlisted applicants was being utilised by the club for persons coming through various channels, which the government alleged to be unfair and prejudicial to public interest.
It has also been alleged that the despite the limit on the number of permanent members being 5,600, the number of users of the club is twice that.
It is alleged that the club kept increasing the member fee for prospective members despite the members being aware of the fact that the average vacancy rate of the Club membership per annum ranged between 120 to 135 and from 1972 onwards there has been a long waiting list.
The Club had a waiting period of about 37 years for the non-government category. It is alleged that the action of culling out and giving the proportion meant for non-government category to the category of UCPs (use of club premises) in the new category of wait list, indicating unlawful way of inducting permanent members.
The club had allegedly collected Rs 44.79 crore till 2017-18 from waitlisted members as fee for seeking membership with 'disappointment staring in their faces'.
According to the allegations, 30.34 per cent of the total expenditure of the Club has been incurred towards catering consumables, wine, beverages and cigarette. The government has also submitted in its petition in both NCLT and NCLAT that barely 3 per cent of total expenditure was being incurred by the Club towards sports activities and more than 60 per cent was being spent on maintaining the recreational Club.
Delhi Gymkhana Club was incorporated on July 14, 1913 as a company (limited by guarantee) under Section 26 of the Companies Act 1913 (corresponding to Section 25 of the Companies Act, 1956/Section 8 of the Companies Act, 2013) as a non-profit company with objective to promote sports and pastimes under license from the central government to carry out its functions subject to the conditions and regulations binding on the Club. The Ministry of Housing and Urban Affairs is the lessor of 27 acres of land given on perpetual lease to the Club in 1928.