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Delhi Gymkhana Club questions maintainability of govt plea to takeover control

Press Trust of India  |  New Delhi 

With the government against the Delhi Gymkhana Club, the club's management has questioned the maintainability of the petition filed before the NCLT saying it "smacks of malafides".

Terming the corporate affairs ministry's petition as "completely misconceived, misplaced and not maintainable, the club in its reply affidavit also said it was a private club formed for the use of its members and there is no element of public interest that was involved.

The ministry has alleged "fraudulent and rampant mismanagement" by the club's general committee and sought to take over the management control under section 241 and 242 of the Companies Act, 2003.

The principal bench of the National Company Law Tribunal (NCLT) is presently hearing the matter. It was heard through video conferencing last week and the tribunal would continue the hearing on Monday as well.

"What is equally disturbing is the manner in which the petitioner has sought to move this petition, namely ex-parte, without service of an advance copy upon the answering respondent. This act itself smacks of malafides as indeed, does the petition itself," the club's petition said.

It also noted that present membership is "neither heritable nor transferable" as it is a company limited by guarantee.

In its petition, the government has also alleged that the practice of hereditary succession mode of membership terming it as "parivaar-vaad" (nepotism) and "minimal adherence to the democratic ethical practice".

According to the club, "existence of public interest is a condition precedent for invoking under section 241 and in the absence of public interest the question of anything prejudicial thereto does not arise" and another condition precedent for maintaining such a petition is grounds of winding up must exist, which is also not in the present petition.

"Admittedly, there being no public interest in the present matter within the meaning of Section 241 (2) the petition must be dismissed with costs; given the apparent legal malice in the petition," it said.

The club has also alleged that complaint from a former ministry official arose as it "resisted pressure to give him membership".

Noting that the club verily believes that the person was a high-ranking member in the ministry, the petition said, "harassment that the club has been facing from the Department of Corporate Affairs harps back to that episode".

"Their grievance is limited towards the revision of registration fee and not the imposition or the power to impose a registration fee. Needless to say these are facile arguments raised by disgruntled applicants," it said.

On April 24, the NCLT had issued notices to the club and its general committee managing the affairs, over the ministry's petition seeking management control of the facility. Among others, the ministry has "fraudulent and rampant mismanagement" by the general committee.

Moreover, in connection with election of membership, the club has always followed the traditional procedure as per the past practice and there is no violation of its article of association (AoA), it said in the reply affidavit.

"Accordingly, the club has never breached the provisions of its AoA in relation to election of the members, including issuing green cards from time to time," it added.

Regarding complaints received by the other members over the affairs, the club said "they are results of having lost the elections and other individual grievances and are disgruntled members".

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sun, May 17 2020. 16:19 IST