The NCLT allowed the government to take over the management of the Delhi Gymkhana Club. read here

A bench of Justices R Sudhakar and Narendra Kumar Bhola, Principal Bench of NCLT New Delhi, on Friday further directed that “such directors appointed as above shall file a report with this Tribunal once in three months or as and when required.”

The Bench observed, “We find that there is sufficient material to hold that it is a case of mismanagement of the affairs of the company and that the members of the General Council of each financial year have been promoting the same violations year after year and some in recognition of the stand of the Government from one period to another that the club is run in the nature of ‘complainting’ which cannot be treated in light of the provisions of the Companies Act.”

Further, the bench held that the continued conduct of the governing body of the company, whose actions are prejudicial to the public interest and against the interest of the company, justifies that such company should be wound up.

However, taking into account the nature of the action proposed in the inspection report and the petition, we are inclined to invoke the power under section 242 (1) and (2) of the Companies Act, 2013, the NCLT Bench said.

The order passed in the petition filed by the Ministry of Corporate Affairs prayed that the Central Government may be allowed to nominate 15 persons to be appointed as directors in the general committee of the company to manage its affairs, ANI Reported.

Earlier in February 2021, the NCLAT allowed the central government to proceed with the appointment of an administrator to oversee the management in Delhi Gymkhana affairs.

The NCLAT had directed the Ministry of Corporate Affairs to appoint an administrator nominated by the Union of India to manage the affairs of the club. It also directed that the acceptance of new membership or fee or any increase thereof shall be put on hold till disposal of the applications of the waiting list of the company.

The Centre’s plea said that an inspection report dated July 31, 2019 and a supplementary inspection report dated March 3, 2020, are evidence of large-scale mismanagement of the company by the general committee over the years.

The plea said, “Mistakes, misuse, defiance of law, absence of procedure and non-compliance of law are too numerous, repeated and continuing in nature and fact, cannot be passed as dereliction of duty or service.” is,” the petition said.

“There has been a persistent lack of transparency, complete disregard for integrity and minimal adherence to democratic and ethical practices for which a company/club of this nature has been granted Section 8 Company status by the Government and misuse of a vast land asset. There is immense potential for the nation.”

The petition states that the matter is eligible for immediate enjoyment of the Tribunal under sections 241 (application to the Tribunal for relief in cases of atrocities) and 242 (powers of the Tribunal) of the Companies Act, 2013.

Section 241 of the Act deals with any member of the company who complains that the affairs of the company are being conducted or are being conducted in a prejudicial or oppressive manner prejudicial to the public interest.

(with inputs from agencies)