NCLAT Upholds Order To Allow Govt To Takeover Delhi Gymkhana Club’s Mgmt

The National Company Law Appellate Tribunal (NCLAT) has upheld an order permitting the central government to take control of the management of the Delhi Gymkhana Club. This decision comes after the appellate tribunal dismissed a petition from former management members challenging the earlier ruling by the Principal Bench of the National Company Law Tribunal (NCLT).

On April 1, 2024, the NCLT granted the Ministry of Corporate Affairs’ request to manage the Delhi Gymkhana Club, citing “violations” of company law and noting “sufficient material” to indicate mismanagement. The NCLT’s ruling allowed the ministry to appoint 15 individuals as directors on the club’s general committee and manage its operations.

The NCLAT’s decision, announced by a two-member bench comprising Chairperson Ashok Bhushan and Member Arun Baroka, also mandated that the government implement all necessary remedial actions as directed by the NCLT by March 31, 2025. Additionally, the committee is required to conduct elections at the club three months after this date.

The order was delivered in open court on Monday morning, with a detailed written order expected to follow. Advocate Raunak Dhillon, representing the central government, stated, “The NCLAT upheld the NCLT’s order, emphasizing that the Union of India’s intervention was necessary due to the mismanagement by the previous general committee.”

In April 2020, the Ministry of Corporate Affairs initiated action under sections 241 and 242 of the Companies Act, 2013, seeking to supersede the club’s general committee due to issues of oppression and mismanagement. These sections empower the tribunal to remove managing directors and directors and recover any undue gains.

Originally registered as a Section 8 company with specific objectives related to sports and recreation, the Delhi Gymkhana Club obtained its land on lease from the government. However, the government alleged that the club had deviated from its intended objectives over time, potentially jeopardizing the lease’s viability.

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