NCLT admits BluSmart Mobility into insolvency

Time of India

12 hours ago

BENGALURU: The National Company Law Tribunal (NCLT) in Ahmedabad has admitted Catalyst Trusteeship's petition against electric‑cab operator BluSmart Mobility for defaulting on dues of about Rs 1.28 crore.
The tribunal's order initiated the corporate insolvency resolution process (CIRP) and appointed NPV
Insolvency
Professionals Private Ltd as the Interim Resolution Professional (IRP).
BluSmart, once a high‑profile player in India's EV‑based ride‑hailing market, has been battling mounting liabilities and cash flow pressures. Despite attracting venture backing and expanding its fleet, the company struggled to keep pace with operating costs and payment obligations, culminating in the admitted default that triggered the insolvency process.
The proceedings come at a time when BluSmart's key shareholder, Gensol Engineering, and its subsidiary Gensol EV Lease are also under insolvency. The tribunal recently admitted separate petitions by the Indian Renewable Energy Development Agency (Ireda) for defaults of Rs 510.10 crore against Gensol Engineering and Rs 218.95 crore against Gensol EV Lease. According to Ireda's filings, cross‑default provisions linked the two entities, which had availed term loans for electric vehicle leasing and infrastructure.
Personal guarantees by promoters Anmol Singh Jaggi and Puneet Singh Jaggi and corporate guarantees from Gensol Engineering were also invoked.
Troubles at Gensol and BluSmart deepened after a Sebi investigation two months ago alleged that the Jaggi brothers diverted loans taken in Gensol's name to buy a luxury flat, inflate Gensol's stock price and fund personal ventures, while also forging no‑default letters from lenders such as Ireda and Power Finance Corporation to falsely claim that the company was not in default.
'The NCLT's decision, despite BluSmart's attempt to resist insolvency proceedings by citing temporary financial difficulties and minor technical defaults that were later fixed, reinforces that defaulters cannot take shelter under vague grounds,' said Akshit Goyal, partner at Goyel & Goyal. 'It upholds the sanctity of the IBC and reflects that insolvency is a last‑resort remedy to protect the lending ecosystem, not a tool for routine recovery.
'
As part of the BluSmart order, the tribunal imposed a moratorium that bars any recovery proceedings, transfer of assets or enforcement of security interests against the company while the CIRP is underway. The IRP has been directed to take control of assets within seven days, invite claims from creditors, and file progress reports with the tribunal. Catalyst has been asked to provide Rs 10 lakh as interim funding to run the process, a procedural deposit that will later be adjusted by the committee of creditors.
The Registrar of Companies has also been instructed to reflect BluSmart's insolvency status on the MCA portal.
A significant concern for customers arises from BluSmart's wallet system. The company operated a closed‑system prepaid payment instrument (PPI), which is essentially an app‑based wallet that could only be used for BluSmart rides and related services. As per the Reserve Bank of India's master directions, these instruments do not permit cash withdrawal or redemption and do not require authorisation from the Reserve Bank.
This means funds parked in such wallets are outside the purview of RBI regulation and lack the protections available to regulated payment instruments.
'There is a chance that customers may get refunds because the company's wallet operates through a PPI licence. If there was no PPI, customers would have had to file their claims, as they rank last in the recovery waterfall," Sonam Chandwani, managing partner at KS Legal & Associates, told TOI. 'The larger concern will likely be for investors rather than customers, given that wallet balances are usually small. Since BluSmart has tangible assets, the case could attract serious resolution interest, and there is also a possibility of a group insolvency angle.
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