Ireda Drags Gensol Engineering To Bankruptcy Court For Rs 510-Crore Default
The action follows Ireda's complaint with the Economic Offences Wing in late April over alleged falsified documents and Gensol's dilution of promoter holding without its approval.
Indian Renewable Energy Development Agency Ltd. on Wednesday filed a bankruptcy application against Gensol Engineering Ltd. for a default of Rs 510 crore.
The public sector green energy financier filed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, according to a stock exchange filing.
Section 7 of the IBC outlines the process for initiating the corporate insolvency resolution process (CIRP) against a corporate debtor by a financial creditor. A financial creditor can initiate the CIRP by filing an application with the National Company Law Tribunal when a default has occurred.
The action follows Ireda's complaint with the Economic Offences Wing in late April over alleged falsified documents and Gensol's dilution of promoter holding without its approval.
The company had then clarified that while Gensol's account is currently under stress, it is not classified as a non-performing asset yet. The financial firm had initiated an internal review, and its investigation and risk committees are "closely" examining the matter.
On Monday, promoters Anmol Singh Jaggi and Puneet Singh Jaggi stepped down from key managerial positions of Gensol after market regulator SEBI barred both of them from accessing the securities market and restrained them from holding any key managerial position in its interim order.
The market regulator, citing its investigation, claimed that the company's funds were diverted to buy luxury property and pay for personal expenses of promoters.
The investigation majorly revolves around Rs 975 crore in loans raised by Gensol to purchase 6,400 electric vehicles , of which only 4,704 EVs were actually procured for Rs 567.73 crore. This left over Rs 200 crore unaccounted.
Notably, Gensol had obtained loans over Rs 977 crore in term loans from Power Finance Corp. and Ireda for the procurement of EVs.
However, only 4,707 vehicles were bought and leased to BluSmart, an EV cab operator linked to the promoters. This left more than Rs 262 crore unaccounted for over a span of one year, as per the SEBI order.
The market watchdog said funds were transferred from Gensol to Go Auto Pvt. for EV purchases but were subsequently routed back or diverted to other entities linked to the Jaggi brothers. These funds were then used for personal expenditures, it claimed.
In one instance, Rs 93.88 crore from an Ireda loan was transferred to Go Auto. Of this, Rs 50 crore was moved to Capbridge Ventures LLP and later used to purchase a luxury apartment in DLF Camellias worth over Rs 42 crore, as per SEBI.
In another case, Go Auto sent Rs 40 crore to Wellray Solar Industries Pvt Ltd, which later transferred funds to four other entities, it added.
