DRT freezes Gensol's assets, bars transfer of IP and tech of BluSmart on plea by IREDA, PFC

The Debts Recovery Tribunal-III (DRT) at Delhi on May 28 granted interim reliefs to Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC) in three separate recovery proceedings against Gensol group entities, collectively involving claims of over ₹992 crore. .The tribunal froze secured assets, appointed court receivers to take possession of electric vehicles (EVs) and restrained the alienation of intellectual property and technology of Gensol's subsidiary, BluSmart, an all-electric cab aggregator which competes with the likes of Uber, Ola etc.Additionally, the Gensol group was directed to disclose audited financial statements and was restrained from engaging in related party transactions, as part of a broader asset-disclosure order..Presiding Officer Shiv Kumar cited findings in SEBI’s interim order dated April 15 which alleged misutilization and diversion of funds by the personal guarantors of Gensol, who were also among its primary beneficiaries.“The balance of convenience lies in favour of the applicant, and if ex parte interim order is not granted, irreparable loss may be caused,” the DRT held in each of the three cases..DRT issued, inter alia, the following interim directions:Freezing of secured movable and immovable assets, including EVs financed under lease agreements;Appointment of court receivers (Harsh Patidar and Swati Malik) to take possession of electric vehicles (EVs) with police assistance;Restraint on alienation of BluSmart’s intellectual property and technology;Mandatory disclosure of audited financial statements and related party transactions;Freezing of DEMAT and bank accounts linked to the promoters;Submission of tracking data and affidavits of assets by the defendants;Bar on settlements with unsecured creditors without Tribunal approval..The counsel for the Gensol group argued that IREDA and PFC failed to disclose pending proceedings before the National Company Law Tribunal (NCLT) at Ahmedabad and that SEBI’s order already addressed asset protection. It was also contended that the borrower accounts had not been classified as NPAs.However, the tribunal dismissed these objections, stating that RDB Act proceedings do not require NPA classification, filing of an NCLT petition does not trigger moratorium unless admitted and overlap with SEBI action does not preclude civil enforcement..On May 23, the Debts Recovery Tribunal (DRT) at Delhi had directed Gensol Engineering and Gensol EV Lease to maintain status quo on secured assets and vehicles. This, after recovery proceedings were initiated by Indian Renewable Energy Development Agency Limited (IREDA) and Power Finance Corporation (PFC) for a combined amount of approximately ₹992 crore.The National Company Law Tribunal (NCLT) at Ahmedabad on May 16 issued notice in IREDA's insolvency plea against Gensol Engineering over a loan default exceeding ₹510 crore.Gensol's troubles began with an April 15 interim order passed by the Securities and Exchange Board of India (SEBI) which said that Gensol diverted hundreds of crores of rupees through related parties, used public and borrowed funds for unrelated luxury purchases - including a high-end apartment - and submitted forged “No Objection Certificates” and conduct letters to credit rating agencies. The markets regulator also found that the company misled investors with inflated EV procurement claims, while actual plant activity was negligible..Based on these findings, SEBI barred the company and its promoters - Anmol Singh Jaggi and Puneet Singh Jaggi - from accessing the securities market and restrained them from holding directorship or key managerial positions.On May 7, Securities Appellate Tribunal (SAT) refused to stay SEBI's interim order. SAT directed Gensol to file its reply to the interim order passed by SEBI and further directed the markets regulator to pass a final order within four weeks of hearing Gensol.Meanwhile, a bunch of lessors have been moving the Delhi High Court time and again seeking to protect their interests in the EVs they had leased to BluSmart..IREDA was represented by Senior Advocate Rajeev Mehra and advocates Saurav Panda, Prateek Yadav, Gaurav Arora, Jyotsna Punshi, Mohana Nijhawan and Vishrut Kansal.PFC was represented by Senior Advocate Sanjiv Kakra with advocates Shivani Sinha, Meera Murali, Akash Madan; assisted by Navdeep Chawla, Praveen Verma, Swati Malik and Prashant Awasthi.Gensol group entities were represented by advocates Vijay K Singh and Siddhant Kumar Singh..[Read Orders].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.