SAT refuses to stay SEBI interim order barring Gensol promoters from securities market

The Securities Appellate Tribunal (SAT) on Wednesday refused to stay an interim order that barred Gensol Engineering Limited and its promoter-directors Anmol Singh Jaggi and Puneet Singh Jaggi from accessing the securities market, following allegations of fund diversion, forgery and misleading disclosures..A coram of Justice PS Dinesh Kumar (Presiding Officer) and Meera Swarup (Technical Member) 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..SEBI’s interim order dated April 15 alleged 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 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..In its appeal before SAT, Gensol contended that the SEBI order is “illegal, unjustified, and unwarranted,” and fails to meet the statutory threshold for issuing such interim directions without a hearing.The company also argued that the order does not establish any pressing urgency, pointing out that the investigation stemmed from a complaint received nearly 10 months earlier in June 2024. It accuses SEBI of misusing its powers under Sections 11 and 11B of the SEBI Act.Gensol claimed that SEBI relied on 'selective' and biased facts and presented a skewed narrative while ignoring explanations and business context behind the transactions.The appeal specifically challenged the regulator’s conclusion that ₹50 crore was siphoned off through Go-Auto and Capbridge Ventures for personal use, arguing that the latter had repaid a substantial amount well before the SEBI order.Gensol further denies allegations of document forgery, asserting full cooperation with the investigation and consistent compliance with information requests.The company also disputes SEBI’s finding that funds meant for EV procurement were misused, stating that transfers to Go-Auto were in the ordinary course of business, and that actual amounts owed to the dealer were far lower than alleged. It argues that SEBI failed to give the company an opportunity to explain or reconcile figures, which led to “twisting of facts and figures.”.During Wednesday's hearing, Senior Advocate Gaurav Joshi, instructed by Trilegal, appeared for Gensol. He prayed for a stay on the SEBI interim order, stating that it resulted in the freezing of the company’s accounts. This had not only adversely affected Gensol, but also impacted its privately held subsidiary, he said. He further argued that there was no misrepresentation regarding the manufacturing capability of Gensol's Pune plant, as the facility is still under construction.“If I am capable of manufacturing... we would have taken order... It's still at market research stage... to see the market demand... the whole world knows that there is no production,” he said.However, Senior Advocate Chetan Kapadia, representing SEBI, objected to any stay and argued that the alleged forgery of the no-objection certificates submitted by Gensol was “just the tip of the iceberg,” and insisted that the company’s transactions need to be examined in depth..However, the appellate tribunal refused to pass any order in favour of the EV company and disposed of the appeal with a direction to SEBI to pass the confirmatory order within four weeks of hearing it..The Trilegal team included Anuj Berry, Anubhav Ghosh, Vivek SShah, Paras Taneja and Ritwick Kumar.