NCLT Freezes Gensol's Bank Accounts Over Financial Misconduct Allegations

All of Gensol Engineering Limited's and its affiliated companies' bank accounts and lockers have been frozen and attached by the Ahmedabad-based National Company Law Tribunal (NCLT).

The Ministry of Corporate Affairs (MCA) filed a complaint accusing the corporation of financial mismanagement and substantial corporate fraud, which prompted the action.

The Reserve Bank of India (RBI) and the Indian Banks' Association were able to move quickly to secure Gensol's financial assets since the tribunal granted the government urgent interim relief. The goal is to stop additional financial abuse and evidence manipulation.

The NCLT added that preliminary evidence points to serious wrongdoing on the part of the company's promoters. It has mandated that all parties involved receive notices.

SEBI Barring Jaggi Brothers From Accessing Securities Market

Only a few weeks have passed since Anmol Singh Jaggi and Puneet Singh Jaggi, Gensol's top promoters, were subject to severe action from the Securities and Exchange Board of India (SEBI).

Both were prohibited from holding important managerial positions and from entering the securities market by SEBI on April 15.

According to the regulator's inquiry, Gensol misappropriated money obtained through an electric vehicle (EV) purchasing programme that was loan-financed.

SEBI claims that Gensol borrowed INR 975 crore to buy 6,400 EVs but only bought 4,704 of them, costing INR 567.73 crore. Red flags regarding potential fund misappropriation were raised when more than INR 200 crore could not be accounted for.

ICRA and Care Ratings Downgraded Gensol

Credit rating agencies ICRA and Care Ratings downgraded Gensol's INR 2,050 crore debt to default status in February, further compounding the company's problems. This comprised about INR 400 crore in short-term borrowings and over INR 1,640 crore in long-term loans.

 Gensol allegedly produced fictitious letters asserting they had been consistent with their debt payments in response to enquiries into the abrupt downgrading. State-run lenders IREDA and Power Finance Corporation (PFC) were purportedly the senders of these letters; however, both subsequently denied supplying any such records.

Additionally, investigations showed that despite the company's repeated assurances to rating agencies that repayments were being made on schedule, it started to fall behind on payments as early as December 2024.

Given these events, Gensol has been requested to delay a recently scheduled stock split. In order to properly examine the company's and connected parties' financial records, SEBI has additionally mandated the hiring of a forensic auditor.

Gensol Engineering's stock has dropped up to 94% from its peak due to persistent governance and financial problems.

Gensol shares are now subject to the Enhanced Surveillance Measure (ESM) Stage 2 by SEBI, which limits trading to designated hours of the day.

Due to serious liquidity problems, it is now impossible for the public and other investors to trade or sell their positions on a regular basis, which raises the possibility that they will be stranded with the shares.