Investigation reports, regulatory findings support MCA's claim of systemic fraud in Gensol: NCLT
The vacation bench of National Company Law Tribunal (NCLT), Ahmedabad on Wednesday said investigation reports and regulatory findings prima facie support the Union Ministry of Corporate Affairs (MCA) claims of systemic fraud by promoters of Gensol Engineering Ltd. and related entities and granted the interim reliefs sought by the Ministry.
However, the NCLT's order did not specify the reliefs. Media reports said relief included freezing of accounts held by Gensol and its promoters, among others.
Gensol Engineering Ltd. along with other respondent companies and associated individuals, have committed grave violations of corporate governance norms, the counsel for the Ministry of Corporate Affairs told NCLT.
The funds, raised for specified purposes by the companies, were illicitly transferred to various related parties, in gross violation of the provisions of the Companies Act, 2013. The pattern of illegal fund diversion, asset misstatement, and share price manipulation had caused irreparable harm to public shareholders, creditors, and other stakeholders, he noted.
Considering the emergent nature of the case, the substantial public interest involved, and the possibility of further dissipation of evidence or assets, NCLT said it finds it appropriate to grant exemption from advance service of the Company Petition on the Respondents.
The Tribunal, based on available records, noted serious allegations of fraudulent conduct, including diversion of company funds by the promoters of Gensol Engineering and related entities, violation of corporate governance norms, manipulation of financial statements, default in loan repayments despite false declarations, and illegal alienation of company assets.
The investigation reports and regulatory findings from the Ministry of Corporate Affairs, Securities and Exchange Board of India (SEBI), and Serious Fraud Investigation Office prima facie support the Ministry of Corporate Affairs claims of systemic fraud involving substantial public interest, NCLT said.
It listed the matter before regular bench on June 3.
Meanwhile in a separate orders, Debts Recovery Tribunal (DRT), Delhi on Wednesday restrained Gensol Engineering Ltd. and its arm Gensol EV Lease Ltd. and its promoters from selling, transferring, alienating, damaging, removing and disposing off or otherwise creating third party interest with regard to immovable & movable secured assets.
It also restrained Gensol from entering into settlement with any unsecured creditor without its prior approval.
DRT had granted interim reliefs sought by state-run Indian Renewable Energy Development Agency Ltd. (IREDA), which is seeking to recover ₹510 crore from Gensol Engineering and over ₹218 crore from Gensol EV Lease Ltd.
It also granted relief sought by Power Finance Corporation, which is seeking to recover over ₹264 crore from Gensol.
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