Relief for former Delhi Gymkhana Club’s former GC as SC directs NCLT to decide matter

In a major relief for the former general committee (GC) of the Delhi Gymkhana Club, the Supreme Court on Thursday, while hearing the appeals filed against the NCLAT order for its suspension, and appointment of a Centre-nominated administrator to manage the club’s affairs, remanded the matter back to the NCLT and asked it to settle it within four months.

A bench, headed by Justice A.M. Khanwilkar, said that all contentions are open before the National Company Law Tribunal (NCLT).

Passing the direction while hearing the appeals against the NCLAT order, the bench noted that appellants will have access to all documents or other information connected with the matter. It emphasised that appellants have to be heard before the NCLT and the Centre-nominated administrator will conduct elections, if the NCLT does not decide the matter within four months.

One of the appeals — Atul Dev and others against the Union of India and others — filed by the directors of the board (general committee) of the club, under Section 423 of the Companies Act, 2013, said the NCLAT, without any basis and in an arbitrary manner, suspended and substituted the GC of the club with an administrator to be nominated by the government.

As the NCLAT’s order had also directed that acceptance of new membership or fee or any enhancement in the fee of waitlist applications be kept on hold till disposal of the petition before the NCLT, the appeal argued that the NCLAT order is wholly untenable in law, and virtually spells the death knell of the club and other like institutions.

“It is submitted that this appointment, which supplants corporate democracy, is drastic, vastly excessive, has far-reaching consequences, and is usually a remedy of the last,” it said.

The appeal added that the NCLAT order, suffers from non-application of mind as the present GC was democratically elected at the AGM held on December 31, 2020, and the allegations do not pertain to this GC, but admittedly to the period from 2013-2018.

A battery of senior advocates such as Abhishek Manu Singhvi, Harish Salve, Kapil Sibal, and C. Aryama Sundaram appeared for parties in the matter.

The Corporate Affairs Ministry, in April last year, had moved the NCLT under sections 241 and 242 of the Companies Act, seeking to take over the club’s GC and also allow it to nominate 15 persons as directors to run affairs of the club.

The NCLT declined to suspend the GC and appoint administrators as sought by the Centre, but instead, directed the Centre to appoint two of its nominees in the GC to monitor the affairs of the club along with other GC members and give suggestions.

The Centre challenged this order in the NCLAT. On February 15 this year, the NCLAT had ordered the suspension of the GC and directed the Centre to appoint an administrator to manage its affairs.