New Delhi, Jul 14 (IANS): The Central government has filed an appeal challenging the National Company Law Tribunal (NCLT) order, which allowed it to appoint two members (Central government nominees) to the Board (General Committee) of the Delhi Gymkhana Club (DGC), instead of appointing an administrator to manage its affairs.

In an appeal before the National Company Law Appellate Tribunal (NCLAT), the Centre said that the NCLT has erred in not granting effective safeguards and an efficacious remedy.

"While allotting membership of the Club, the company has been treated like a 'Riyaasat' (kingdom) of the persons, especially the GC members, by misusing MoA and the AoA of the company. It is not out of place to submit here that over the years, the activities of the Club have been turned over from a 'vyayamshala' to a 'madhushala' and the functioning of the General Committee is like 'siyasat'," the Ministry of Corporate Affairs (MCA) said in the plea in the NCLAT.

The MCA argued that the violations are of extremely serious and grave nature, which indicates the GC members have been acting autocratically to the benefit of a few chosen members of the club, at the expense of the general public.

"It has to be borne in mind that the Board of companies function on majority decisions, here by permitting appointment of only two nominees, the Tribunal has provided inadequate relief and cosmetic representation on the Board will not cure mismanagement and the gravity of the rot that has set deep in the management of DGC," it contended.

The plea said that the continuing management of affairs by successive GCs, "have pervasively twisted the objects of the company, to benefit a select few, who managed to remain in control of the DGC, through an unauthorised and complicated hereditary succession mechanism".

"The admission process can only be described as 'parivaar-vaad'. The general public applicants are being made to wait for decades (in some cases since 1972) for membership of the club, all the while (the club) having unauthorisedly collecting lakhs of rupees in the form of registration fees, process fees, enhanced registration fees etc, over and above the entrance fee," it said.

The plea contended that the NCLT accepted most of MCA's submission and also agreed with its allegations, yet it refused to grant interim relief sought.

"Till quite recently the unauthorisedly collected fee was not even refunded to the unsuccessful or waitlisted applicants. These nefarious activities by the GC of DGC are being carried out on prime land of 27.03 acres in New Delhi, all the while paying a miniscule amount of rent on the perpetual lease from the Ministry of Urban Affairs," contended the plea.

In its June 27 order, the NCLT declined to suspend the club's General Committee and also the appointment of an administrator as sought by the Centre, but instead directed it 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 ministry had moved the NCLT asking for replacement of the directors of the club with government nominees to run the affairs of the company, and in the interim relief, asked for suspension of the GC and for appointment of an administrator until the final order is granted.