NCLT Orders Asset and Account Freeze Against Gensol Engineering Amid ₹975 Crore Corporate Fraud Probe
In a significant development, the National Company Law Tribunal (NCLT) has issued orders to freeze the assets and accounts of Gensol Engineering Limited, following allegations of a ₹975 crore corporate fraud. The action comes in response to a petition filed by the Indian Renewable Energy Development Agency (IREDA), which has accused Gensol of defaulting on substantial loan amounts and misusing funds intended for electric vehicle (EV) procurement.
Background of the Case
Gensol Engineering, a company involved in renewable energy and EV solutions, had secured loans totaling ₹977.75 crore from IREDA and Power Finance Corporation (PFC) between FY22 and FY24. A significant portion of these funds, approximately ₹663.89 crore, was earmarked for the purchase of 6,400 electric vehicles to be leased to BluSmart, a related-party ride-hailing startup promoted by Gensol's founders, Anmol Singh Jaggi and Puneet Singh Jaggi.
However, investigations revealed that Gensol had acquired only 4,704 EVs valued at ₹567.73 crore, leaving a gap of over ₹96 crore unaccounted for. Further scrutiny uncovered that the company had allegedly used fake documents to conceal debts and misrepresented its financial position to lenders
Regulatory Actions and Investigations
The Securities and Exchange Board of India (SEBI) initiated an investigation into Gensol's activities, leading to an interim order on April 15, 2025, that barred the company and its promoters from the securities markets. SEBI's findings indicated significant fund diversion and governance lapses, prompting the resignation of the Jaggi brothers from their directorial positions.
In parallel, the Ministry of Corporate Affairs (MCA) launched a suo motu inquiry into Gensol Electric, examining the company's regulatory filings and financial records for potential corporate governance lapses and financial irregularities.
NCLT and DRT Proceedings
On May 14, 2025, IREDA filed an insolvency petition against Gensol Engineering under Section 7 of the Insolvency and Bankruptcy Code, citing a default of ₹510 crore. The NCLT has admitted the plea and scheduled a hearing for June 3, 2025.
Concurrently, the Debts Recovery Tribunal (DRT) in Delhi has ordered Gensol and its EV leasing subsidiary to maintain the status quo on secured assets and electric vehicles. This directive aims to prevent any asset dissipation amid ongoing recovery proceedings initiated by IREDA and PFC, which together seek to recover ₹992 crore.
Implications and Outlook
The unfolding events surrounding Gensol Engineering underscore the critical importance of corporate governance and financial transparency. The company's alleged misuse of funds and fraudulent activities have not only led to legal and regulatory repercussions but have also eroded investor confidence.
As investigations continue, stakeholders await further developments, including the outcomes of the NCLT hearing and the MCA's inquiry. The case serves as a cautionary tale for companies operating in the rapidly evolving renewable energy and EV sectors, highlighting the need for stringent compliance and ethical business practices.
For investors and industry observers, the Gensol case is a stark reminder of the risks associated with corporate misconduct and the far-reaching consequences it can entail.