Delhi Gymkhana moves SC against NCLAT order appointing administrator (Ld)

The Delhi Gymkhana Club (DGC) has moved the Supreme Court challenging the National Company Law Appellate Tribunal’s (NCLAT) decision to appoint an administrator to run the day-to-day affairs of the club.

On February 15, the NCLAT had ordered the suspension of the club’s General Committee (GC) and directed the Centre to appoint an administrator to manage its affairs.

In an appeal before the Supreme Court, the club and GC members said: “There are no reasons accorded as to why the appointment of an Administrator for running the day-to-day affairs of the DGC, which is a private recreational club, would be required.”

The plea contended that there was no need to replace club’s GC, which was duly elected at the AGM held on December 31, 2020.

The plea said DGC is a private club and NCLAT exceeded its jurisdiction by directing the government to appoint an administrator to take over all affairs without assigning any reasons whatsoever for the requirement of appointing an administrator.

“The NCLAT erred in referring to the perpetual lease granted to the DGC as ‘State largesse’. It is submitted that ‘largesse’ means generosity in the grant of gifts and the grant of perpetual lease to the DGC herein can under no circumstances be termed as ‘largesse’ as the lease was granted for a specific purpose, which the DGC continues to maintain,” said the plea filed through advocate Vikalp Mudgal, from Sikri Law Chambers.

The plea argued that a perusal of the impugned order shows that the NCLAT, as well as the NCLT, has seriously misconstrued concept of public interest while adjudicating upon the dispute at hand.

The appeals before the NCLAT were against an interim order of the NCLT which directed Centre to appoint two nominees of its choice as members in the GC of the club to monitor its affairs along with its other members and give suggestions to the GC.

Criticizing the appointment of an administrator, the plea said this direction has been given despite there being no evidence put on record by Centre as to why the interim directions given by the NCLT were ineffective in tackling the purported mismanagement.

“Such a direction not only seeks to usurp the authority granted to legitimately elected members of the GC, who as per the AoA (Articles of Association) are bound to manage the affairs of the DGC but vests the same in a single individual which is onerous and detrimental to the interests of the club,” the plea added.

The NCLAT had held that the Centre is entitled to “final relief” of replacement of directors of the DGC with nominees of the government to conduct the affairs of the club.

The plea said this conclusion of the NCLAT at the interim stage is akin to grant of final relief and contrary to settled proposition of law.

“Further, the same is contrary to the finding of the NCLT at para 14 which clearly indicates that no violations under the Companies Act stood established. Such categorical conclusion arrived at by the NCLAT, though baseless, is instrumental in completely replacing the management of the club by a single Administrator,” added the plea, urging the top court to set aside the NCLAT order.

The NCLAT had said the club’s policy under which membership of a person attains hereditary character and general public seeking membership being made to wait for decades, is certainly prejudicial to the public interest.

The club’s plea said the AoA, clearly provide for user rights to the children of the members in their independent/individual capacity from the age of 13 years leading to their permanent membership after 21 years of age. According to sources in the club, the administrator has hired services of senior advocate Harish Salve.