Image Ctsy; Official Website
Suspense, not laughter and free conversations, fills the air at the Gymkhana Club, Delhi’s unique watering hole that runs primarily on hereditary legitimacy and is frequented by important people in the affairs of the nation.
The club is in the midst of a peculiar crisis, the entire management suspended by a court order after the Ministry of Corporate Affairs (MCA) levelled a host of charges ranging from financial irregularities to mismanagement of services to irregular memberships, even failing to win sports laurels.
Sports? Why not, Gymkhana Club is registered as a sports club, right? So where are the medals, the MCA has asked? Expenses on sports was less than 2 percent of the club’s revenue whereas 30 percent of expenses was for top class wines, beverages and tobacco. Government officials joining the club paid Rs 150,000 as utility charges, it was Rs 5,000 two decades ago. Non-government candidates paid Rs 750,000 for utility charges, it was Rs 5,000 in the year 2000.
A Little Background
What the MCA found most disturbing was that the club was charging Rs 100,000 for membership application fee and did not pay interest. Worse, there was no guarantee of membership even after two to three decades. At the same time, those who get membership being government officials, also bypassed the long waiting list of the less privileged. And there are times when such automatic membership rights go to their descendants.
Delhi Gymkhana said it was a private club and need not follow any government diktat. One question from the government led to a counter question. The club members asked should a ministry (read the government) get into the affairs of a club only because land was once offered cheap and rent is low? Yes, claimed the MCA, the government would interfere if the club ignored public interest and instead, followed a bizarre rule where sons and daughters of members kept retaining memberships on hereditary basis and rest made to wait for years. There have been charges that club memberships were traded for cash by some outgoing members for high costs.
“Look at the government petition in the court against the club, it says the management was running some kind of parivar vad (that translates into fiefdom laced nepotism). So this is completely prejudicial to public interest,” remarked Mohan Guruswamy, former advisor to the Finance Ministry and head of an independent think tank.
Guruswamy, fondly called by his friends as India’s Benjamin Button for his astute analytical expertise, told MoneyControl that the club never bothered to follow rules and there was constant bickering over memberships.
“The management has itself to blame, it never cared about anyone. It had to happen. You need to follow rules. And this will not stop here, next in line would be the India International Centre (IIC) which also displays a certain air of finality in offering or rejecting candidates for memberships,” adds Guruswamy.
Hyderabad-based Guruswamy, who has been a member of some of these elite clubs, knows how these bodies function. There have been routine dustups over rejection of memberships. Oldtimers in Delhi recount how the IIC once rejected the candidature of Ranjan Bhattacharya, the powerful son-in-law of PM Atal Behari Vajpayee but accepted that of Jayant Advani, son of LK Advani. The move, claimed by those in the know, almost triggered a rift between the two households.
This was not all. Once the IIC rejected a candidature for Ram Madhav, causing much discomfort to the powerful BJP general secretary. And then, IIC President Dr Karan Singh submitted his resignation after he failed to get the then Bihar CM Lalu Prasad Yadav— the then Railway minister—a membership of the elite club.
In The News For Wrong Reasons
Clubs such as the IIC, Delhi Gymkhana and the Delhi Golf Club have always been in the news for one reason or the other. Arvind Kejriwal, during the heydays of the Aam Aadmi Party’s campaign in Delhi, had called the Delhi Golf Club home to corruption and cronyism which allowed a selected group to take possession of the public property.
But now the government is streamlining some of the processes at these clubs. Guruswamy said it was interesting that the government had used the same provisions of the Companies Act to get the National Company Law Appellate Tribunal (NCLAT) to supersede the board of the bankrupt IL&FS in October 2018.
The NCLAT heard the plea moved by the Centre challenging the June 2020 order by the National Company Law Tribunal (NCLT). In its order, the NCLT had refused to suspend the entire general committee of the Delhi Gymkhana and asked the Centre to appoint two members to the managing committee instead.
The MCA filed a petition in the NCLAT seeking action under Sections 241 and 242 of the Companies Act, which allows a member of a company or the government to seek relief if the affairs of the entity are being run in a manner “prejudicial to the public interest” or is “oppressive”, among other things.
In the court, Gymkhana lawyer, SN Mookherjee argued there was no public interest involved in the club affairs just because 27 acres of land was leased by the government. But that did not hold water, the NCLAT said that the perpetual lease granted to the club was a State Largesse. “Under the garb of the distinctive character of the club which is a relic of the Imperial past, the doors for membership are virtually limited to people having blue blood in their veins thereby perpetuating apartheid and shattering the most cherished Constitutional goal of securing social justice and equality of status and opportunity,” said the order.
The NCLAT further said the suspension of the board was necessary because two government nominees on the board of the club to give suggestions would be of no consequence as their voice, on account of their inferior numerical strength, would be lost in the din.
In short, the government played by the rulebook, there was nothing illegal. It was a game, set and match for the government against the club and its management.
But true to the culture of any club, the new entrant, MM Juneja, director-general of the Ministry of Corporate Affairs, took charge of the club without much support from the rest. Former members of the club’s disbanded governing council, it is reliably learnt, avoided meeting Juneja the moment he asked for files pertaining to a host of operations at the club. Some members even argued in private how a government official could run a club, it was almost like a swimming coach taking over a soccer club. In short, suspended board members felt their blue blood had been infiltrated.
President of the disbanded Delhi Gymkhana governing council, Air Marshal (retd.) PS Ahluwalia, told MoneyControl he does not have any comments to offer, he has told his friends the members will file an appeal in the Supreme Court against the order. “We will talk when the time comes,” he said.
The Delhi Gymkhana has been at the loggerheads with the government for a long. The discrepancies at the club were first highlighted by Injeti Srinivas. During his tenure as the Commerce Secretary, Srinivas had noticed discrimination by the club while offering memberships. Srinivas, currently the chairman of the International Financial Services Centre, had flagged the discrepancies, not just at the Gymkhana Club but also at institutions like the India International Centre.
In short, it was Srinivas who highlighted to the government why the club must follow rules. His move - expectedly - was not liked by the Gymkhana board. After all, the club is a better-known relic of the Raj, meant as a private place for the elite to socialise and fraternise.
It needs to be mentioned here that various complaints against the club have been pending with the MCA since 2014. Last year, the club - in the middle of a pandemic - alleged it was being harassed by the MCA over membership for Navrang Saini, then a top MCA bureaucrat.
In a notice, the club said the following: “Insofar as the complaint of Navrang Saini is concerned, it arises out of the Club having resisted pressure to give him membership. The Club verily believes that since (Mr) Saini was a high-ranking member in the MCA, the harassment that the club has been facing from the Department of Corporate Affairs harps back to that episode,” the club said.
The club, in its affidavit, did not name anyone but said the regional director of the northern wing of MCA, approved action “without application of mind”.
It is reliably learnt that Saini, currently a whole-time member of the Insolvency and Bankruptcy Board of India, pushed for changes in the club’s management, filing a plea before the NCLT in April, 2020 that a management committee appointed by it should immediately take over Delhi Gymkhana as there was “fraudulent and rampant mismanagement of affairs” prevalent at the century-old club.
Image consultant Dilip Cherian said the current dustup could have been easily avoided if the members had cared to listen to each other. “It is a club of powerful women and men. And every now and then, one set rebelled against the other. It is a strange power struggle. Members want to call the club their exclusive domain, a domain of the elite but the tug of war never ends,” Cherian told MoneyControl
The stillness inside the club is in stark contrast to those lovely conversations that happened around the bar, even in the lounges and card rooms. Live bands filled the air with music even as ministers (both current and former), judges, defence personnel, bureaucrats and corporate honchos talked about issues they could not discuss at the workplace. The bands still play music but a proverbial Sword of Damocles hangs in the air. Members wonder what will happen next, it is something akin to survivor’s guilt. Everyone wants to talk, not on record.
This is one side of the coin.
The other is the government action that could soon impact other institutions like the IIC and Delhi Golf Club., considered for long as the preserve of the ruling elite. But now, the government wants to have its stamp on the vast tracts of public land once offered for a pittance for private enjoyment. The MCA and other ministries want to reset the guidelines, arguing clubs cannot run on hereditary rules, cannot be homes only for the well-born.
“Membership cannot be dependent on birth, there needs to be an end to this business of power elite thriving on dynastic succession,” said a former top-ranking director of the Directorate of Revenue Intelligence (DRI), speaking on conditions of anonymity. “How will a non-dependant become a member if the dependents get priority?” asked the official.
Consider this one. The Delhi Gymkhana is located on 27 acres of land, and the Delhi Golf Club is spread over 220 acres of common land. The Delhi Golf Club has 3,000 members, nearly one-third hereditary.
The dustup at the Delhi Gymkhana seems to signal the end, too, of a fading social fabric that defined life in the Indian Capital for over five decades. But now, the very social dynamics are changing. The legal tussle between the MCA and Delhi Gymkhana will continue once the latter goes for an appeal in the Supreme Court.
The battle has just begun.