NCLT Orders Freezing Of Gensol’s Bank Accounts & Lockers

The Ahmedabad bench of National Company Law Tribunal (NCLT) has issued directions to freeze and attach all the bank accounts and lockers of troubled engineering, procurement and construction (EPC) company Gensol Engineering and its associated entities. 

The tribunal’s order came after the Ministry of Corporate Affairs filed a petition seeking urgent interim relief to enable the Reserve Bank of India and Indian Banks’ Association (IBA) to take immediate steps to secure the financial assets of Gensol and 37 related parties and individuals. 

In its order dated May 28, the NCLT noted that there was prima facie evidence that Gensol indulged in systemic fraud, involving substantial public interest. 

“… This tribunal notes serious allegations of fraudulent conduct, including diversion of company funds by the promoters of Gensol Engineering Limited… and related entities, violation of corporate governance norms, manipulation of financial statements, default in loan repayments despite false declarations, and illegal alienation of company assets. 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,” read the NCLT order. 

The bench, comprising member (judicial) Mohan Prasad Tiwari and member (technical) Reena Sinha Puri also directed that notices be served to all respondents along with a copy of the petition. The bench listed the matter for next hearing on June 3. 

Meanwhile, in a separate case, electric vehicle (EV) lessor SMAS Auto Leasing India Private Ltd has reportedly dragged Gensol’s subsidiary, Param Renewable Energy, to Delhi High Court (HC). As per Livemint, the lessor’s plea sought the appointment of a court-appointed receiver to take custody of the vehicles leased to Param. 

While noting that EVs are fast-depreciating assets due to their sensitive battery systems that need continuous maintenance and regular use, the petition argued that prolonged inactivity, exposure to extreme heat, and a lack of monitoring could significantly increase the risk of permanent battery damage and complete asset devaluation.

For context, the two parties signed a master lease agreement in 2022, under which SMAS Auto Leasing India leased 62 EVs to Param Renewable. However, the Gensol subsidiary reportedly defaulted on several lease payments despite receiving regular invoices.

Gensol’s Many Troubles

This piles on the slew of troubles faced by Gensol. Just last week, creditor Indian Renewable Energy Development Agency (IREDA) moved the Delhi debt recovery tribunal (DRT) to recover about INR 729 Cr from the troubled company. Another lender Power Finance Corporation (PFC) is also reportedly exploring recovery through the DRT route.

This comes more than a month after the Securities and Exchange Board of India (SEBI), in an interim order, found that Gensol’s promoters Anmol Singh Jaggi and Puneet Singh Jaggi used the company’s funds as their “piggybank”.

The markets watchdog also noted that the Jaggi siblings, also the cofounders of EV ride hailing startup BluSmart, misled shareholders and rating agencies, forged documents, and manipulated the company’s stock price. 

In its interim order, SEBI also barred the Jaggi duo from holding any board positions or participating in the securities market. Eventually, the two brothers stepped down from the company.

Not just this, the Enforcement Directorate (ED) also conducted raids at several premises linked to Gensol as well as the residence of Jaggi brothers last month. While Puneet was detained during the searches, he was later granted anticipatory bail by the Delhi HC, which directed the Delhi Police to serve a seven day notice to him before arresting. 

Amid all this, the operations of BluSmart have been hit and the company has suspended operations, leaving thousands of drivers and 800 full-time employees without salaries and jobs.