The Court upheld the NCLT's authority to appoint a management committee in a club mismanaging funds, emphasizing public interest due to failures in adhering to its primary objectives as outlined in the Companies Act.

JUDGMENT

ASHOK BHUSHAN, J.

These two appeals have been filed challenging the same order dated 1st April 2022 passed by the National Company Law Tribunal, Principal Bench (hereinafter referred to as the “NCLT”) in C.P.-71/241-242/PB/2020. The impugned order has been passed by the NCLT in petitions filed under Section 241 -242 of the Companies Act, 2013 (hereinafter referred to as “the 2013 Act”). By the impugned order, the NCLT has allowed the petition filed by the Union of India permitting the Union of India to nominate 15 number of persons as Directors in General Committee of Delhi Gymkhana Club Limited. The appellants in these appeals being Members of the Delhi Gymkhana Club Limited who were permitted to intervene in the proceedings, feeling aggrieved by the impugned order, have come up in these appeals.

2. Brief background facts giving rise to these two appeals are as follows;

(a) The Delhi Gymkhana Club Limited (hereinafter referred to as ‘the Company’) was incorporated as Company Limited under Section 26 of the 1913 Act on 14.07.1913 which corresponds to Section 8 of the 2013 Act. A perpetual lease admeasuring 27.03 acres situate at 2, Safdarganj Road, New Delhi was granted to the Company vide lease deed dated 20th February, 1928. The Government of India, Ministry of Corporate Affairs vide order dated 16th March, 2016 directed for conduct of an inquiry/technical scrutiny under Section 206 (4) of the 2013 Act. In pursuance of the order dated 16th March, 2016, an inspection of the Company was carried out from January, 2019 to July, 2019. A detailed report dated 31st July, 2019 was submitted with regard to the Company. In the inspection report, details regarding background of the company, the main activities of the Company, the object for which the Company was established, were noticed. The business activities, membership of the company, management of the Company, financial position etc. were also noted in the inspection report. The details of the complaints, which were received, were also noticed in the report. The Inspectors before submitting the report, have also given opportunity to the Company’s Directors and auditors. The inspection report was divided into several parts. Part-A dealt with “violation of the 2013 Act under the purview of the Central Government”; details of the membership and other details. Several instances of mismanagement were noted. A supplementary report dated 3rd March, 2020 was submitted to the Ministry of Corporate Affairs detailing numerous violations. After receipt of the report, a letter dated 4th March, 2020 was submitted recommending filing of petition under Section 241 -242 of the 2013 Act. A letter dated 18th March, 2020 was issued by the Union of India indicating sanction of the competent authority for filing a petition under Section 241 -242 of the 2013 Act.

(b) On 22nd April, 2020, a petition under Section 241 -242 of the 2013 Act was filed by the Union of India on which the NCLT issued notices. On 24th April, 2020, time was allowed to file reply. Certain interim directions were also issued by the NCLT directing that the Club will neither take any policy decision nor it will accept any new application of membership. On 10th May, 2020, a preliminary objection was raised by means of an application with regard to maintainability of the petition. A separate application was also filed praying for dismissal of the petition on the ground of not being maintainable.

(c) The Union of India of India filed its reply to