Blusmart-Gensol Debacle: Fresh Insolvency Petitions Filed Before NCLT
The National Company Law Tribunal's Ahmedabad bench is set to adjudicate upon two separate insolvency petitions against BluSmart Mobility Ltd. and a fresh application against Gensol Engineering Ltd., signalling mounting troubles for the two.
According to tribunal proceedings, Spectrum Trimpex Pvt. and Catalyst Trusteeship Ltd. have filed insolvency applications against BluSmart Mobility, alleging defaults in payment obligations.
In one of these matters, the NCLT has issued a notice to BluSmart based on Spectrum Trimpex's application, where the claimed default amount exceeds Rs 1 crore. The tribunal has also directed Spectrum to place on record evidence of having issued an intimation of default to the company.
In a parallel development, the tribunal has issued a notice to Gensol Engineering in response to an insolvency petition filed by Equentia Financial Services Pvt. The alleged default amount in this case is approximately Rs 9 crore, and Gensol has been granted seven days to submit its reply.
Gensol has been embroiled in controversy, with serious allegations of corporate fraud and financial misconduct by the Ministry of Corporate Affairs, as well as insolvency proceedings filed by IREDA.
Additionally, in the previous hearing, the tribunal ordered the freezing and attachment of all bank accounts and lockers belonging to Gensol Engineering Ltd. and its associated entities, following allegations made by the MCA.
Gensol's Issues
On April 15, the Securities and Exchange Board of India barred Gensol Engineering promoters Anmol Singh Jaggi and Puneet Singh Jaggi from accessing the securities market. The markets regulator also prohibited them from holding any key managerial roles, following findings that funds had been diverted in a loan-financed electric vehicle purchase scheme.
According to SEBI's investigation, Gensol raised Rs 975 crore in loans to acquire 6,400 electric vehicles but purchased only 4,704 units for Rs 567.73 crore. The regulator found that more than Rs 200 crore remained unaccounted for, triggering concerns about fund misuse.
Credit rating agencies ICRA and Care Ratings downgraded Rs 2,050 crore of Gensol's debt to default status in February. This included over Rs 1,640 crore in long-term borrowings and more than Rs 400 crore in short-term debt.
When the regulator called upon them to explain the sudden downgrade, it was revealed that the company submitted fabricated debt servicing conduct letters from state-run lenders IREDA and Power Finance Corp.
Later on, it was learnt by the credit rating agencies from IREDA and PFC that no such conduct letters were issued to Gensol by them.
Despite defaults beginning as early as December 2024, the company falsely assured rating agencies that it was regular in its payments.
Furthermore, Gensol has been asked to hold the stock split it announced, and the regulator has directed the appointment of a forensic auditor to examine its books of accounts and those of related parties.
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