Directions have been issued by the Ahmedabad bench of the National Company Law Tribunal (NCLT) to freeze and attach all bank accounts and lockers of Gensol Engineering, a troubled engineering, procurement, and construction (EPC) company, as well as its associated entities.

Following a petition from the Ministry of Corporate Affairs that sought urgent interim relief, the tribunal issued an order. This relief would allow the Reserve Bank of India and Indian Banks’ Association (IBA) to take immediate action to secure the financial assets of Gensol and 37 related parties and individuals.

The NCLT observed in its May 28 order that there was prima facie evidence of Gensol’s involvement in systemic fraud that affected substantial public interest.

“… This tribunal observes grave accusations of deceitful behavior, comprising the misappropriation of company resources by the backers of Gensol Engineering Limited… and associated entities, infringement of corporate governance standards, distortion of financial reports, failure to repay loans in spite of untrue claims, and unlawful transfer of company assets.  The NCLT order stated, “The investigation reports and regulatory findings from the Ministry of Corporate Affairs, SEBI, and Serious Fraud Investigation Office prima facie support the petitioner’s claims of systemic fraud involving substantial public interest.”

The bench, which includes member (judicial) Mohan Prasad Tiwari and member (technical) Reena Sinha Puri, also ordered that notices be sent to all respondents along with a copy of the petition. The next hearing on the matter was scheduled by the bench for June 3.

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In a different matter, electric vehicle (EV) lessor SMAS Auto Leasing India Private Ltd has allegedly brought Gensol’s subsidiary, Param Renewable Energy, before the Delhi High Court (HC).  According to Livemint, the lessor’s application requested that a court-appointed receiver be designated to take possession of the vehicles leased to Param.

The petition pointed out that, given the sensitive nature of EV battery systems, which require constant upkeep and routine use, these vehicles are rapidly depreciating assets. It contended that their risk of total asset devaluation and irreversible battery damage could grow substantially as a result of inactivity, extreme heat exposure, and insufficient monitoring.

To provide context, the two parties entered into a master lease agreement in 2022, where SMAS Auto Leasing India leased 62 electric vehicles to Param Renewable.  Despite receiving regular invoices, the Gensol subsidiary reportedly defaulted on several lease payments.

This adds to the multitude of problems encountered by Gensol.  Only last week, the Indian Renewable Energy Development Agency (IREDA), a creditor, filed a motion with the Delhi debt recovery tribunal (DRT) to recoup approximately INR 729 Cr from the distressed company.  Reports suggest that another lender, Power Finance Corporation (PFC), is also looking into recovery via the DRT route.

More than a month ago, the Securities and Exchange Board of India (SEBI) issued an interim order determining that Gensol’s promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, treated the company’s funds as their “piggybank.”

The market watchdog also pointed out that the Jaggi siblings, who are co-founders of the EV ride-hailing startup BluSmart, misled shareholders and rating agencies, forged documents, and manipulated the stock price of their company.

SEBI’s interim order also prohibited the Jaggi duo from holding any positions on boards or engaging in activities within the securities market.  Ultimately, the two siblings left their positions in the company.

In addition to this, the Enforcement Directorate (ED) carried out raids last month at multiple locations associated with Gensol and at the homes of the Jaggi brothers.  Puneet was detained during the searches but later received anticipatory bail from the Delhi HC. The court instructed the Delhi Police to provide him with a seven-day notice before any arrest.

In the midst of all this, BluSmart’s operations have been affected and the company has halted its activities, resulting in thousands of drivers and 800 full-time employees being without jobs and pay.