SAT Declines Relief To Gensol Engineering In Appeal Against SEBI's Interim Order

The Securities Appellate Tribunal on Wednesday refused to provide any relief to Gensol Engineering Ltd. in an appeal filed by the company against the SEBI order passed on April 15.

Last month, the markets regulator had barred Gensol and its promoters from the securities market, due to fund diversion and governance concerns.

The appellate tribunal's bench comprising Justice PS Dinesh Kumar and Technical Member Meera Swarup have also given the company two weeks to reply to SEBI with regards to the temporary ex parte order. Meanwhile, the regulator has been asked to give a final order in Gensol's case within four weeks.

In its prayer, the company submitted before the the SAT bench that it wants removal of the freeze that SEBI has put on the company's demat account so that it can sell shares of its subsidiaries and pay financial institutions. Gensol also requested a stay on the forensic audit until being heard by SEBI.

On April 15, the Securities and Exchange Board of India barred Gensol Engineering, CEO Anmol Singh Jaggi and Promoter-Director Puneet Singh Jaggi from accessing the securities market. SEBI 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 learned 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.