The Securities Appellate Tribunal (SAT) has dismissed Gensol Engineering Limited’s plea seeking a stay on the Securities and Exchange Board of India’s (SEBI) interim order, reinforcing the regulator’s stringent action against the company and its promoters Anmol Singh Jaggi and Puneet Singh Jaggi. This development marks a significant setback for Gensol, which has been embroiled in serious allegations of fund diversion, forgery, and corporate governance lapses.
Background: SEBI’s Interim Order and Allegations
In its April 15 interim order, SEBI barred the Jaggi brothers from accessing the securities market and holding any directorial or key managerial positions in Gensol until further notice. The regulator accused them of misusing loans worth ₹977.75 crore obtained from public sector NBFCs-IREDA and PFC-intended for purchasing electric vehicles (EVs). SEBI’s probe revealed that out of ₹663.89 crore earmarked for acquiring 6,400 EVs, Gensol purchased only 4,704 vehicles, paying ₹567.73 crore to the supplier Go-Auto Private Limited.
SEBI further noted a glaring shortfall of ₹262.13 crore, which remained unaccounted for despite the company’s obligation to provide a 20% equity margin, totaling an expected deployment of ₹829.86 crore. The regulator highlighted that company funds were routed through related parties and diverted for personal expenses of the promoters, including luxury real estate purchases and high-end golf equipment, describing the misuse as “promoters’ piggybank” behavior.
SAT’s Rejection of Gensol’s Appeal: Key Highlights
Gensol challenged SEBI’s interim order before SAT, claiming the regulator’s action was “illegal, unjustified, and unwarranted,” and accused SEBI of selectively relying on facts to create a distorted narrative. The company denied forging conduct letters that were submitted to credit rating agencies ICRA and CARE, which SEBI found to be falsified documents purportedly issued by IREDA and PFC confirming regular debt servicing.
Despite Gensol’s denials, SAT refused to stay SEBI’s order, instructing the company to respond to the interim findings and directing SEBI to issue a final order within four weeks after hearing Gensol’s submissions. SEBI’s counsel emphasized that the alleged forgery was “just the tip of the iceberg,” underscoring the need for a thorough forensic audit of the company’s books.
Impact on Gensol and Subsidiary BluSmart
The ongoing regulatory crackdown has severely impacted Gensol and its related entity BluSmart, an electric mobility startup co-founded by the Jaggi brothers. The Delhi High Court recently barred Gensol and BluSmart from creating third-party rights over an additional 220 EVs, increasing the total number of vehicles under such restrictions to 493. Consequently, BluSmart, which had raised $225 million in funding, has suspended operations following SEBI’s order.
Enforcement Directorate and Corporate Affairs Ministry Probes
Adding to Gensol’s woes, the Enforcement Directorate (ED) has detained Puneet Singh Jaggi in connection with alleged violations of the Foreign Exchange Management Act (FEMA), with investigations focusing on the diversion of funds obtained through loans for EV and EPC contracts. Puneet has claimed his role as a director was nominal, with day-to-day operations managed by his brother Anmol, who is currently abroad.
Meanwhile, the Ministry of Corporate Affairs (MCA) has ordered a probe into Gensol and BluSmart to investigate potential breaches of corporate governance norms. The MCA’s inquiry follows SEBI’s findings of forged documents and misrepresentation of financial health, further intensifying scrutiny on the companies.
What Lies Ahead for Gensol?
With SAT upholding SEBI’s interim order and multiple government agencies probing the company’s operations, Gensol faces a challenging road ahead. The regulator’s directive for a forensic audit within six months aims to uncover the full extent of financial irregularities. Gensol’s attempts to counter the allegations have so far failed to gain judicial reprieve, and the final SEBI order, expected soon, could bring more stringent penalties.
Conclusion
Gensol Engineering’s struggle to overturn SEBI’s interim order has hit a roadblock as the Securities Appellate Tribunal rejected its plea for a stay. The company and its promoters remain under a cloud of serious allegations involving fund diversion, forged documents, and corporate governance failures. With ongoing probes by SEBI, ED, and MCA, and operational disruptions extending to its subsidiary BluSmart, the case underscores the increasing regulatory vigilance in India’s renewable energy and electric mobility sectors. Investors and stakeholders will be closely watching the final outcomes of these investigations and their implications for corporate accountability in the country.