NCLT admits Gensol Engineering to corporate insolvency resolution process

The National Company Law Tribunal (NCLT) at Ahmedabad on Friday admitted an insolvency plea filed by Indian Renewable Development Agency (IREDA) against Gensol Engineering Limited, owner of BluSmart..A coram of Judicial Member Shammi Khan and Technical Member Sanjeev Kumar said,"The insolvency plea is admitted. However we are not appointing the RP suggested by IREDA, we have chosen from the list given by IBBI (Insolvency and Bankruptcy Board of India)." In the evening session, the NCLT also admitted Gensol EV Lease Limited to the Corporate Insolvency Resolution Process (CIRP), hours after Gensol Engineering Limited was admitted during the morning session, making it the second Gensol group entity to face insolvency on the same day..IREDA was represented by Senior Advocate Navin Pahwa with a team from Shardul Amarchand Mangaldas comprising Saurav Panda (Partner) Rishabh Jaisani (Partner), Grishma Ahuja (Counsel) Vishurt Kansal (Principal Associate), Shalin Jani (Principal Associate) Mohana Nijhawan (Principal Associate) Swati Vyas (Senior Associate), Siddhant Marathe (Associate), Richa Bharti (Associate) and Anant Agarwal (Associate). .Gensol was represented by Senior Advocate Devang Nanawati with Advocate Vijaykumar Singh..The NCLT reserved its judgment on June 11, noting that Gensol had not raised any defence disputing the existence of the debt..Gensol's troubles began with SEBI’s April 15 interim order alleging that it 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 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, the Securities Appellate Tribunal (SAT) refused to stay SEBI's interim order. The Appellate Tribunal 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.On May 28, NCLT ordered for freezing of bank and demat accounts, restrained trading of securities and directed asset disclosures of Gensol Engineering and 16 other companies and their promoters.The Tribunal further admitted the petition filed by the Central government through the Ministry of Corporate Affairs (MCA) against Gensol and its associated entities under Sections 241, 242, 246 read with Section 339 of the Companies Act, 2013, citing grave violations of corporate governance norms, diversion of funds and financial misstatements..Meanwhile, the Debts Recovery Tribunal (DRT) at Delhi granted interim relief to IREDA and Power Finance Corporation (PFC) in three separate recovery proceedings against Gensol group entities, collectively involving claims of over ₹992 crore.The DRT 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.On May 16, the NCLT issued notice in IREDA's insolvency plea against 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 Gensol's subsidiary BluSmart..Read Judgment