Justice Sanjiv Khanna Recuses From Hearing Appeals In Delhi Gymkhana Club

Background

• The name of the case is Rajeev Sabharwal and Anr. v. Union of India and Anr.
• The Ministry of Corporate Activities filed a petition against the General Committee of the Delhi Gymkhana Club under Section 241(2) of the Companies Act, 2013, stating that the club's affairs are being conducted in a manner that is detrimental to the public interest.
• The petition asked for the General Committee to be suspended and for the petitioner to appoint an Administrator to administer the Club's affairs.
• The National Company Law Tribunal ordered the Central Government to appoint a Special Committee to investigate the Delhi Gymkhana Club's operations.
• The General Committee was imposed with restrictions on performing certain activities.
• The Union of India then filed an appeal against the NCLT's ruling, claiming that the temporary relief provided was insufficient and requesting that it be modified.

What Do The Appellants Contend

• The counsel for the appellant stated that the NCLAT’s order for UOI to appoint an Administrator is without merit because no requirement for such an appointment has been highlighted or shown.
• The direction goes against established legal standards relating to the appointment of an Administrator under the Companies Act because it delegated the authority of appointment to the UOI and made no judgement as to the need.
• There have been no explanations given as to why the DGC, which is a private recreational club, requires the appointment of an Administrator to manage its day-to-day operations.
• The NCLAT has ruled that the UOI is entitled to ‘final relief’ in the form of replacing the DGC Directors with government nominees to run the Club’s business.
• The MOA plainly indicates that it was intended more as a recreational private club than a sports academy or a stadium for the general public.

What Is The Current Status

• The NCLAT's ordermandated that any new membership or fee, as well as any increase in the charge for waitlist applications, be put on hold until the petition before the NCLT is resolved.
• Justice Sanjiv Khanna has recused himself from hearing appeals against the NCLAT's order.
• The appeals have been ordered to be heard by a bench.

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