No Respite For Gensol As SAT Rejects Appeal For Stay On SEBI Order

The Securities Appellate Tribunal (SAT) rejected a plea filed by troubled Gensol engineering against SEBI’s interim order, which said that the company’s promoters Anmol Singh Jaggi and Puneet Singh Jaggi misutilised and diverted its funds.

The EPC company had sought a stay on SEBI’s order, saying it was “illegal, unjustified, and unwarranted” as the regulator relied on selective facts to present a skewed narrative against Gensol, Bar and Bench reported.

However, SAT asked the company to respond to the interim order. It also asked the markets regulator to issue its final order in the matter within four weeks after hearing back from Gensol. 

In its appeal, Gensol said that SEBI’s findings of diversion of funds meant for procurement of EVs was false. It said that funds were transferred to Go-Auto in the ordinary course of business.

It is pertinent to mention that the matter began with Gensol’s communication to credit rating agency (CRA) ICRA after the latter downgraded the company’s rating for defaulting on debt. Following this, when CRAs sought term loan statements from Gensol, the company provided the statements of all its lenders, except IREDA and PFC. 

For PFC and IREDA, Gensol provided ‘Conduct Letters’ purportedly issued by them, which said that the company was regular in its debt servicing. However, the conduct letters turned out to be forged as both the lenders denied having issued any such letter, as per the SEBI order.

In the SAT hearing, Gensol denied forging the conduct letters, yet again. However, SEBI’s counsel Chetan Kapadia said that the alleged forgery of documents was “just the tip of the iceberg” and insisted that the company’s transactions need to be examined in depth. 

Meanwhile, in its prayer to the tribunal, Gensol said that the freeze on its funds has impacted it as well its subsidiaries. 

The development came on the same day when the Delhi HC barred Gensol and its related entity BluSmart from creating third-party rights over 220 additional EVs, taking the total number of EVs with such orders to 493.

The troubles for Gensol have also brought BluSmart to a grinding halt. The startup, which has raised a total funding of $225 Mn to date, suspended its operations following SEBI order. 

Meanwhile, the troubles for Jaggi brothers, who are also the cofounders of BluSmart, continue to rise. The Enforcement Directorate (ED), which is probing Gensol for alleged FEMA violations, detained Puneet for questioning last month.

Later, while seeking anticipatory bail from the Delhi HC, Puneet said that he was a director for namesake and the day-to-day operations at the EPC company were led by his brother Anmol, who is currently in Dubai. 

Notably, the corporate affairs ministry has also ordered a probe into Gensol and BluSmart to ascertain if the companies indulged in corporate governance violations.