MCA Orders Probe Into BluSmart, Gensol Over Corporate Governance Violations

The corporate affairs ministry (MCA) has reportedly ordered a probe into Gensol Engineering and its related entity, EV ride-hailing startup BluSmart, to ascertain if the companies indulged in corporate governance violations. 

“Investigation ordered under Section 210 of Companies Act has been ordered last week,” Economic Times quoted a source as saying. 

The Section 210 of the Companies Act deals with investigation into the affairs of a company. As per the report, the investigation will also cover the other affiliates of Gensol. 

The probe report will be submitted to the MCA in the next three months, the report said. The government could hand over the probe to the Serious Fraud Investigation Office (SFIO) if the preliminary investigation reveals “serious allegations of fraud”, it added.

“The ministry will focus on ascertaining if there were any fund diversions for personal expenses of the promoters, such as the purchase of a luxury apartment, transfers to relatives, and investments benefiting private entities owned by the promoters,” an official reportedly said.

This comes weeks after SEBI, in an interim order last month, banned BluSmart cofounders and Gensol promoters Anmol Singh Jaggi and Puneet Singh Jaggi from holding the position of a director of the troubled engineering, procurement and construction (EPC) company.

The markets regulator alleged that the Jaggi brothers falsified documents, indulged in share price manipulation, misappropriated company funds, among others. SEBI also ordered a forensic audit of the books of Gensol and its related entities, which includes BluSmart. 

Since the crisis at Gensol unfolded, BluSmart has shut its operations across Delhi NCR, Mumbai and Bengaluru. 

Meanwhile, the Jaggi brothers are also under the scanner of the Enforcement Directorate (ED) over alleged violations of forex regulations. Last month, the agency raided multiple premises linked to Gensol and also detained Puneet Singh Jaggi from a hotel in New Delhi. However, he received anticipatory bail from the Delhi High Court earlier this month. 

Not just this, the EV ride-hailing startup has also witnessed the exodus of top executives, including CEO Anirudh Arun, CBO Tushar Garg, CTO Rishabh Sood, and VP of experience Priya Chakravarthy following the SEBI order. 

Amid the crisis, more than 800 BluSmart employees continue to work without pay since March. Besides, nearly 10,000 drivers who worked with BluSmart are also jobless.

Nearly 80 drivers of the ride-hailing startup also gathered at Delhi’s Jantar Mantar yesterday to protest job losses and urge the central government to intervene in the matter.

Meanwhile, BluSmart is actively seeking a buyer to stay afloat.