Exclusive | Nonexistent Club in Governing Council of National Motorsports Federation as Founder Member for 49 Years
Legal experts are clear that the Coimbatore Auto Sports Club has committed a “fraud” and its participation in affairs of the FMSCI have been blatantly “illegal”.
Of the many controversies that have plagued the Federation of Motor Sports Clubs of India (FMSCI) over the past decades, this one not only takes the cake, it takes the entire bakery along with the baker. News that representatives of a nonexistent club continue to hold a seat on the Apex Council of the federation for almost 50 years — with the current nominee becoming FMSCI president for two separate terms — by virtue of being a founder member might sound like fiction. Just that it is not.
At the centre of Indian motorsports’ latest controversy is the Coimbatore Auto Sports Club (CASC) that was established in 1954 and was registered under the Registration of Societies Act, 1860. However, from 1963, the club failed to renew its registration and on June 26, 1970, the District Registrar of Coimbatore dissolved the body, and the records were destroyed due to non-performance.
When the FMSCI was formed in 1971 by five ‘founding individuals’, it included one L.G Ramamurthi of Coimbatore. Subsequently, the founding individuals — BI Chandhok (Madras Motor Sports Club), LG Ramamurthi (Coimbatore Auto Sports Club), AD Jayram (Bangalore Motor Sports Club), Ajay Pat Singhania (Indian Automotive Racing Club) and Suresh Kumar (Calcutta Motor Sports Club) — resolved to become representatives of the motorsports clubs they represented. Thus, the five clubs became the ‘founder members’ of the federation. It is evident from the documents accessed by Newsclick that the CASC ceased to exist even before the FMSCI was established in 1971.
In effect, it means that various representatives of CASC at the FMSCI as its founding member, including its current representative, J Prithviraj, who has served as the federation president over two separate terms and held a seat in the Governing Council, perpetuated a fraud for close to 50 years and continued to wield power in the top governing body for motorsports in India. Despite the lack of its legal standing, the nominee of the CASC has been party to wide-reaching decisions such as appointment of the chairman to the federation, casting of vote at annual AGMs and other governance matters. The founder member clubs have a permanent vote and seat at the Council.
Misrepresentation by CASC about its legal status came to light last year when J Balamurugan, co-founder of another Coimbatore-based club, Spitfire Automotive Performance, filed an RTI with the District Registrar’s office. The gist of the reply to the RTI is recorded in FMSCI’s Minutes of Council Meeting No. 153-4/2020, held on October 26, 2020. At the meeting, Vicky Chandhok, representing Madras Motor Sports Club, objected to the presence of Prithviraj after the quorum was established.
“[Sic] Mr.Vicky Chandhok said that no one is mooting or promoting to remove CASC as a member. He said that until CASC gets its house in order, the election of CASC to the Council is subject to the decision of the Council as per the last para of the decision of the Returning Officer. He further said that as per the recent RTI query by M/s.Spitfire the CASC has been dissolved in 1970 which means that CASC no longer exists. Hence, they cannot sit on the governing Council. While no one is for the exclusion of CASC, the CASC has to get back its house in order, renew the society and come back to the Council,” noted the minutes note under Min. No. 1.
The issue was discussed at considerable length under Min No. 17. It notes that Chandhok sent his objection to the Returning Officer for the October 12 AGM of the federation in which the new office bearers were elected. It also states that when the current president, Akbar Ebrahim, asked Prithviraj to leave the meeting since the council needed to take a decision, he refused to comply, saying that it was not a necessity as he was not entitled to vote until the CASC matter was resolved. Further, the CASC representative maintained that “the renewal of the society is the subject matter between club and the society and FMSCI has nothing to do with that.”
CASC repeatedly furnished misleading information during the KYC process at various times. As per the meeting notes, “Mr.VickyChandhok said that their KYC document states that the Society renewal process is pending as per KYC dated 4th August 2020”.
Farokh Commissariat, representative of another Founder Member club, Indian Automotive Racing Club, pointed out that earlier in 2011 and 2017, CASC asserted its legal status as Association of Persons (AOP). An AOP is a completely different legal entity that falls under the Person definition in Section 2(31) of Income Tax, Act, 1961.
Interestingly, one of the council members, Sanjay Sharma, who is the head of JK Tyre Motorsport and is the council member as representative of Delhi-based Performance Cars Racing Trust, objected to the suspension of Prithviraj from the council. His oral submission recorded in the meeting notes shows that Ebrahim had confirmed in the latest KYC CASC’s claim to be a Society.
“Queried what CASC have stated in their KYC. The president said that they have declared themselves as Society and given the number 38 of 1959,” read the meeting notes. It’s another matter that Sanjay Sharma in his capacity as the head of JK Tyre Motorsport is the sponsor of the JK Tyre-FMSCI National Racing Championship, and occupying a seat in the governing council is a serious matter of conflict of interest, if the standards applied to other national sports federations are upheld in the motorsports body.
Other council members like Sita Raina, representing the Calcutta Motor Sports Club, too weighed in with Sharma, stating that the rules regarding founder members need to be changed in the Article of Association, before any action can be taken. But Chandhok pointed out that Article 42 gives power to the council to suspend a member.
Following the deliberations, the council arrived at a 6-3 majority decision that the nominee of CASC will be suspended until Society Reg No. 38 is restored. The club might continue to hold events under FMSCI permit, its status as full founder member will be restored once the society registration has been renewed and the performance points that a club collects for hosting events will be kept in abeyance until the time it has resolved its society status. But the CASC nominee continued to object that the council had no powers to suspend the club under the Article of Association.
Interestingly, CASC was incorporated as Private Limited Company on February 13, 2017, bearing CIN U92410TZ2017NPL028502, yet it chose to represent itself through its nominee, Prithviraj, as an AOP that same year.
On December 16, Dr. B Ravi, Company Secretary, wrote a letter to Ebrahim — which has been accessed by Newsclick — expressing his opinion on the decision of the council to suspend CASC. He pointed out that though the FMSCI’s Article of Association might be silent in its definition of a ‘member’, since it’s now governed under the Companies Act, 2013, the definition under section 2 (55) will be applicable.
“[Sic] The dissolution of company results in the legal termination of the existence of the company. The general principle of law is on dissolution, the registration of the society shall stand cancelled and the society shall cease to exist as a corporate body,” opined Ravi in his letter.
“Thus it’s clear from the various information available in the documents relied upon, the Coimbatore Auto Sports Club, as [an] entity does not exist. Merely by the fact, the name of the club still finds [a] place in the list of Founder Members, does not give the right to continue so when they cease to exist in the eyes of law. Consequently, they will not be entitled to any rights that flow to the Founder Members by virtue of the Article of Association.”
A copy of the Company Secretary, B. Ravi’s, opinion can be accessed here.
Following the decision of the Council and Ravi’s opinion, CASC obtained a court injunction against its suspension until January 11. In response to a request for comments, Prithiviraj in a WhatsApp message said, “The matter is in court and it is subjudice. Once it is over, we can give our comments.”
Newslick contacted FMSCI president Ebrahim as well but he is also yet to respond.
Legal experts that Newsclick reached out to are clear that CASC has committed a “fraud” and its participation in affairs of the federation have been blatantly “illegal”.
“If the club has repeatedly and wilfully submitted incorrect information in their KYC, it’s a clear case of fraud for the purpose of wrongful gains. The FMSCI, if it wants, has clear grounds to initiate criminal proceedings against the club under various sections of the IPC (Indian Penal Code),” said Viduspath Singhania, co-founder of sports law firm, Krida Legal.
It’s noteworthy that on June 24, 2020, the Delhi High Court ruled on a 10-year-old petition filed by lawyer-activist, Rahul Mehra, for cleaning up Indian sports administration, directed the Ministry of Sports and Youth Affairs to suspend the annual recognition of 54 federations. The ministry through its letter dated June 25, cancelled the recognition of the FMSCI . But in December 2020, the Ministry submitted an affidavit in the Delhi High Court, in which it stated that “During the one (year) period, these NSFs will be required to bring their constitutions and governance structure in line with the Sports Code.” Following this, FMSCI along with six other NSFs were granted the annual recognition by the sports ministry.
When the issue of misrepresentation of facts by the CASC was brought to the notice of Mehra by Newsclick, he called it “illegal” and put the blame on the ministry for allowing the errant federation to get away with misgovernance.
“Of course, it’s illegal. But the federation, in fact all federations are expected to do these sorts of things. The point is what are the enforcing bodies doing. The ministry is instead filing affidavits in the court in favour of these federations. It’s just not the problem of the motorsport federation, it’s a far more widespread problem. It seems that the ministry is more interested in performing the final rites of the Sports Code,” said Mehra.
It’s clear for reasons best known to the FMSCI council, it has been far too lenient on the CASC and its nominee for such gross misrepresentation of facts. A detailed reading of October 26 minutes of council meeting distinctly gives the impression that a few members, with vested commercial interests in various motorsports properties, are out to protect CASC despite a grave act of omission. If this is not misgovernance of sports administration, one doesn’t know what it is then. Maybe, the entire bakery is compromised.
(The author, former managing editor of Sports Illustrated India, is an independent journalist based in New Delhi)
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