Delhi Gymkhana takeover: How the govt came to ‘clean up’ but left a bigger mess

On August 13, 2022, during Covid, a Tiranga rally for Independence Day was taken out from the Delhi Gymkhana Club situated across the road from the Prime Minister’s house – perhaps the most heavily guarded square kilometre in India.

Four months earlier on April 1, 2022, the Ministry of Corporate Affairs (MCA) had appointed a six-member team of director-administrators in compliance with a National Company Law Tribunal (NCLT) order. (See Timeline below).

The Tiranga rally was led by two of the six – BJP member Kuljit Chahal and former IRS officer Ashish Verma. Inexplicably, the rally was not authorised, and they also decided to film it with a drone – two acts that were oddly provocative in this highest security zone. 

The rally ended with the police registering an FIR suo moto. The ACP who came to investigate the drone was not allowed to enter the Club. The two Directors and the Club F&B manager, Bhatnagar, were named in the FIR, which did not mention a drone despite video footage of it and staff witnesses corroborating its presence.  

As things spiralled, Club staff members lodged an FIR and went to court alleging serious intimidation and harassment after the episode. An FIR was separately lodged about the drone by Col Ashish Khanna, the Club’s former CEO and Secretary (who had taken the Club to court in 2020, alleging wrongful termination), with video evidence. The drone was never found. 

If it sounds bizarre that the Prime Minister’s own party members and appointees created a security issue near his residence, the entire period of government administration from 2021 onwards offers a list of such paradoxical episodes that raise serious questions of intent. 

Before examining what went wrong, a brief timeline establishes the arc of events till 2024.

The MCA was approached by members and applicants in good faith, from 2016 to 2018, to address Club mismanagement. Its mandate was clear: clean up the affairs of the Club,  eliminate fraud and corruption and restore a legacy institution to financial propriety . 

Yet there is a long trail of incriminating and self-sabotaging acts of commission and omission since. Apart from hiking charges considerably to improve profitability, holding certain sporting events, commissioning forensic accounting reports that were never officially finalised or utilised for change, and endless rounds of membership data collection that were never concluded over five long years, it is difficult to discern any serious attempts at transforming the mess MCA had purportedly come in for. 

Instead, the MCA-appointed administrators presided over an incredible run of puzzling events, all of which somehow managed to take the Club's affairs to a new nadir and make its accounts, finances, image, and management worse than they were before. The most serious are the financial issues that have compounded rather than cleared up.

2021: Director Om Pathak’s questionable run at the helm 

The issue began in 2021, when the NCLT first deputed administrators to oversee the Club’s management. The first two had brief stints, and the third, BJP member Om Pathak was appointed in May 2021. He lasted less than a year but left behind a trail of well-documented irregularities and bizarre actions.

A former IAS officer with a truncated service, Pathak is known for a case involving the Delhi Public School brand, with whom he entered into talks while he was DM Ghaziabad, to set up a school there. Though the joint ‘efforts’ ended in Court, Pathak now runs eight franchise schools under the same brand name and is currently the chairperson of the Delhi Public School Ghaziabad (DPSG) Society – not affiliated with the original DPS Society that runs 200 franchise schools. He was also a former member of the Congress party who joined the BJP only in 2014.  

At the AGM held later that year on December 23, 2021, 711 of 738 members present refused to pass the financial statement for FY 2020-21, which showed a loss of Rs 14 crores. In a letter addressed to Pathak and signed by more than 200 members dated the following day, they alleged that he presided over sudden changes to long-standing accounting principles to create “controversial, erroneous and misleading” audited accounts and asked auditors why they had included these in their report. 

The rising sense of alarm and unease was reflected in the misgivings about the administrator’s intent. 

Members accused Pathak of making statements in his report, like “governments neither lease premium lands nor grant a license under Section 8 to private outfits”, that were “prejudicial to the interests of the Club”. They protested specifically against financial accounting changes that could reduce the Club’s general reserves, potentially affecting its “status of remaining a going concern” and a “ripe case for dissolution/takeover.” 

An Economic Times report quoting the letter said: “The net effect of this will be that the Club’s profit and loss account will show a loss and the Club could then be presented as a loss making entity fit for takeover by the Government. Further it would result in wrongly indicting all past Presidents and GCs for alleged fraud and grave financial irregularities whereas the Club has never committed any irregularity by adoption of this accounting procedure over the last many decades.”

In the same vein of inexplicable, barely veiled actions that created a sense of unease was the organic garden episode. Pathak created a security issue by ordering the destruction of the Club’s organic garden with JCB bulldozers, which had been laid out at a cost of Rs 40 lakh, according to a story in The Financial Times, to create a party venue. The garden’s wall abuts the high-security PM residence and changes are strictly forbidden within 100 metres. Pathak was given a warning by the PM’s Special Protection Group (SPG), that flagged “security-related complications”.   

Pathak also spearheaded a Davis Cup event at the Club on March 3, 2022, purportedly in partnership with the All India Tennis Association (AITA), and took credit for bringing the tournament back to the grass courts it is famous for.

About Rs 3.47 crores were spent from the Club account, for which it claimed reimbursement. AITA inexplicably repaid only Rs 26 lakh out of this, while the Club was left with a Rs 3.21 crore loss despite holding all the bills and expenses in its records, including a salary and security bill of Rs 1.36 crore.  

In a communication dated August 20, 2022, to AITA president Dr Anil Jain, accessed by journalist Subhodh Jain of Bharat Express through an RTI application, the expenses are clearly stated by Malay Sinha, then and now MCA-nominated President of the Club, along with the mention of Pathak’s statement that AITA was to pay only 26 lakhs out of 3.47 crores. Further, the notings on the communication raise several questions.

This issue was raised by auditors as a “qualification,” in the 2023 financial statement, (also rejected by members). The MCA nominated management responded that the non-reimbursed amount by AITA was “in common nature and not directly attributable to the Davis Cup” and that the matter was under discussion with the AITA. It has shared no further clarity since, as no financial statements have been presented since 2023. 

2022: Unethical conduct, violations of due process 

Pathak’s successors did not inspire confidence in this regard either.

Of the six appointed, one (Kumar Rajesh Chandra) resigned almost immediately. This meant there was no quorum under the Club’s Articles of Association (AoA) rules until September 2022 (when a sixth member joined), and the administrators were not authorised to take any decision, spend any money, or represent the members in any way during that period. Yet they did.

This is confirmed in a government file noting 1/97, accessed through an RTI application filed by Col Ashish Khanna, relating to Gymkhana mismanagement, which states that all actions of the GC are “void ab initio” (void from the beginning) during the period that minimum quorum had not been achieved. Minister of Finance and Corporate Affairs Nirmala Sitharaman’s noting is also on the file.

On July 20, 2022, the MCA-appointed directors also filed an application with the NCLT seeking immunity from civil and criminal liability. 

One of the five, Club Secretary Ashish Varma, accused in the Tiranga rally episode, was pulled out 4 months after the episode and inexplicably made a technical member of the NCLT itself. The F&B Manager, Bhatnagar who was also implicated in the drone episode (and earlier, as liquor manager, in the complaints against the Club) was promoted to Secretary of the Club, a position he holds to date. 

2023: Blocking an EGM is a ‘complete mockery of company law’

On April 24, 2023, members delivered a signed letter to the administrators, requisitioning an Extraordinary General Meeting (EGM) under Section 100 of the Companies Act 2013. The letter, carrying 570 signatures, sought to correct the balance sheets with proper accountability, discuss the massive legal costs or “money siphoned away by fraud/embezzlement”, and enquire about the corrective Action Taken reports ordered to be filed every three months in NCLT and NCLAT at the start of the government takeover.

An EGM can be requisitioned by 10 percent of the stakeholders and, once done, cannot be cancelled by the courts or declared invalid. The MCA-appointed administrators sought a legal opinion from CA firm Rosy Jaiswal & Associates, that advised them to convene the EGM within 21 days and no later than 45 days, citing the Supreme Court's upholding of shareholders’ rights in the interests of corporate democracy. 

Yet on June 1, 2023, the NCLT deferred the EGM indefinitely, “in view of the contents of the application”. Nalin Kohli, BJP spokesperson, advocate, and the Club’s government-appointed Director (Legal), argued in person as the applicant. The order was passed without any notice or hearing from the 570 Club members, who alleged that the “Union of India is making a complete mockery of its own laws”. 

“You can’t do it under any aspect of Company Law,” said one member. “There is no explanation…. Company Law is being butchered.” Members also accused the NCLT of ignoring the destruction of records and evidence by the administrators. An Economic Times story quoted “shocked” members who felt “the government is playing Judge, Jury and Executioner in the matter”. They further alleged, “Though NCLT is a quasi-judicial body, it seems to be under the complete sway of the Ministry.” 

Kohli told The Economic Times the MCA nominated GC’s petition against the members’ EGM outlined how it “wouldn’t be in sync with the tribunal’s original judgement” and claimed that the members’ signatures on the EGM may include those whose memberships were being “investigated by the MCA appointed GC” under complaints of irregularities. Until the final report of those investigations was tabled, the EGM requisition by members would be “contrary to the mandate of the NCLT,” according to the application. 

A Report On Way Forward authored by MCA-nominated GC Director Legal Nalin Kohli states: “this call of meeting (the EGM) was to disrupt the functioning of the Club and the requisition was non-est” (invalid/void, having no legal existence). 

AGM rejections of financial statements: No accounts passed after 2020

Yet perhaps the greatest indication of the MCA's dismal record is this: no accounts have been passed since 2020, and no AGMs have been held since 2023. In several communications to the administrators over five years, members have called it a story of deliberate “incompetence” – one that systematically “set up” the Club for its current crisis.

In 2022, after the new GC took over, an independent audit firm, Baker Tilly Advisory Services, was hired to conduct a forensic audit. This was completed on November 11, 2022. However, its contents were not officially released by the GC, though it is openly referred to and quoted in media reports. Nalin Kohli, Director (Legal), said it was a “draft.” 

The AGMs of 2022 and 2023 fared no better than 2021. At the 2022 AGM, members rejected the financial statements presented, which showed an unexplained Rs 26 crore loss that they were being asked to approve.  

At the 2023 AGM, long-time Club auditors Khanna & Anandham presented an audit report with 30 qualifications and subsequently resigned. 

Qualification No 7 was regarding the infamous Davis Cup financial loss, of which the firm said, “No agreement stating sharing of expenses and revenues with other terms and conditions was made available to us”. 

The Management response posted in the next column stated that the report was for “internal discussion” only and “not based on any audit standards”. It added, “It was not a mandatory requirement by any law to do the verification of financial records.” 

Qualification No 8 on the holding of the AGM states that it is a “mandatory requirement to file audited financial statements even if unadopted financial statements are filed, and non-filing of the same would be non-compliance under relevant provisions of the Companies Act, 2013.”  

The Management response states, “As a good corporate practice, unadopted accounts were filed.”

Qualification No 27 refers to the staggering legal bills totalling Rs 2.08 crores accrued in the previous financial year 2022-23 and noted that audit evidence supported by documents for some bills was “not available”, nor were “files relating to all legal cases made available for review”; therefore, “costs could not be verified with payments made to law firms.” 

The Management response was that the files were with the lawyers and that the Club could “arrange a meeting” to examine the records.

Company Law requires that qualifications in audit reports be addressed and presented again to members within three months, but neither the audit nor the AGM has taken place since 2023. The last elected President and his elected GC were suspended on February 15, 2021. The last accounts passed were in 2020, after which the government effectively took over. 

As a registered company, the Club’s five-year gap in filing audited reports could be a violation grave enough to invite imprisonment.

This may explain why the auditors expressed their “desire to resign” after the AGM – documents ranging from internal audit reports and the Baker Tilly forensic audit to several other audit records, too many to enumerate, were simply “not made available” to them. 

Kohli’s Way Forward report does not mention the 30 qualifications. It states that the reason for the continuous non-approval of financial records for three years was due to “members holding it to ransom.” It also claims the 2023 auditors reportedly resigned on “health grounds”.  

2024: Persistent inaction despite Supreme Court and NCLAT orders to hold polls 

The administrators’ stonewalling wasn't limited to auditors. Court orders directing them to act went unheeded as well.

On October 21, 2024, the National Company Law Appellate Tribunal – the appellate Court for NCLAT – delivered its judgment on the appeal filed by former General Committee member Maj Atul Dev, Mandeep Kapur and five others against the government takeover and findings of corruption of the earlier GC in the original NCLT order of April 1, 2022.

The 108-page judgement upheld the findings of corruption within the Club and dismissed the appeal. It also indirectly indicted the MCA-nominated GC by acknowledging that sufficient time (2.5 years) had passed since the original order for remedial action, and that the MCA appointees could not supersede the management of the Club indefinitely . It ordered the completion of any remedial steps to “end the matter” by March 31, 2025, and to hold elections by June 30, 2025, thereby handing the Club back to the members. 

Despite appeals and cross-appeals, this October ’24 judgment stands. Yet no elections were held, and no timetable was adhered to. Instead, the shock eviction order was delivered on May 23 this year – 19 months after the judgment that ordered elections and handover to an elected Board of members.  

The eviction raised an uncomfortable question that members had been asking for years: had any of this ever really been about cleaning up the Club? What emerged in the days that followed – in documents, court records, and a report that had been quietly circulating for months – suggested the answer had been there from the beginning.

In Part 2, Newslaundry follows the trail of breadcrumbs to its end.

Newslaundry reached out to Nalin Kohli and Om Pathak via email seeking their response to the allegations detailed in this report. This story will be updated if and when responses are received.

Complaining about the media is easy. Why not do something to make it better? Support independent media and subscribe to Newslaundry today.