Delhi High Court restrains Gensol, BluSmart from alienating Orix’s 175 vehicles

The Delhi High Court on Friday restrained Gensol Engineering Limited and BluSmart Mobility from alienating or creating third-party rights over 175 electric vehicles leased to them by Japanese financial services giant Orix..The interim relief was granted by Justice Jyoti Singh in a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996.“Having heard the learned counsel for the petitioner, respondents are restrained from creating third-party rights with respect to 175 vehicles,” Justice Singh directed during the hearing.A copy of the order is yet to be made available. .Orix Corporation, a leading Japanese leasing and financial services company, had entered into lease agreements with Gensol Engineering and BluSmart Mobility as part of a green mobility initiative. Under this arrangement, 175 electric vehicles (EVs) were leased to support BluSmart’s growing ride-hailing operations in India. Anmol Singh Jaggi, co-founder of both Gensol and BluSmart, acted as guarantor for the lease obligations.Alleging breaches of contractual terms, including defaults in lease payments, Orix approached the Delhi High Court seeking interim protection to prevent Gensol and BluSmart from disposing of or encumbering the leased vehicles. The company also informed the Court of its intention to commence arbitration proceedings in accordance with the dispute resolution clause in the lease agreements..BluSmart Mobility operates India’s first all-electric ride-hailing service, offering a sustainable alternative to traditional cab aggregators. Distinct from the typical aggregator model where drivers own or finance their vehicles, BluSmart leases its fleet from financiers like Orix. Drivers are employed on a salaried basis, and BluSmart manages the fleet, charging infrastructure, and maintenance..This litigation comes amid mounting regulatory scrutiny on Gensol Engineering. Earlier this month, the Securities and Exchange Board of India (SEBI) issued a show-cause notice to Gensol over alleged violations of corporate governance norms, including failure to disclose related-party transactions, particularly with BluSmart and other group companies.SEBI is also probing discrepancies in Gensol’s financial statements, including questions over revenue recognition practices and inadequate disclosures regarding contingent liabilities. Sources indicate that SEBI has flagged concerns about Gensol’s dealings in several inter-company transactions, which may have contributed to an inflated financial position.Additionally, SEBI has reportedly barred certain Gensol officials from accessing the securities market pending conclusion of the investigation. The regulatory action has weighed on investor sentiment, with Gensol’s stock witnessing significant volatility.Orix expressed its plans to initiate arbitration against Gensol and Blu Smart amid regulatory scrutiny. .Orix was represented by Senior Advocate Asheesh Jain with Advocates Rajesh Jangra, Shankar Sen and Kush Gupta.