NCLAT Sends Gensol Case Back to NCLT, No Relief on Asset Freeze
Gensol had approached the appellate tribunal seeking relief from the NCLT’s directions, which included the attachment and freezing of all bank accounts and lockers.
The Delhi bench of National Company Law Appellate Tribunal has declined to grant any relief to Gensol Engineering Ltd. The appellate tribunal has sent the matter back to the Ahmedabad bench of the National Company Law Tribunal , which had earlier ordered the freezing of the company’s assets.
Gensol had approached the appellate tribunal seeking relief from the NCLT’s directions, which included the attachment and freezing of all bank accounts and lockers held by the company and its associated entities.
These directions were issued as part of interim reliefs granted to the Ministry of Corporate Affairs (MCA), which has filed a case against the company alleging serious governance lapses and financial misconduct.
The NCLT had observed prima facie evidence of grave misconduct by Gensol’s promoters and permitted urgent measures to be taken by the Reserve Bank of India and the Indian Banks’ Association to secure the financial assets of Gensol and related entities.
Background
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. 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 the 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.
