NCLT allows govt to attach Gensol's accounts, lockers

Mint

28-05-2025

New Delhi: A company court has allowed the central government to attach the bank accounts and lockers of Gensol Engineering Ltd, its 10 subsidiaries and several individuals after investigations by multiple agencies and regulators revealed systemic fraud.
'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 National Company Law Tribunal (NCLT) said in its order on Wednesday. 'The pattern of illegal fund diversion, asset misstatement, and share price manipulation has caused irreparable harm to public shareholders, creditors, and other stakeholders.'
The order was based on the findings of probes conducted by the ministry of corporate affairs (MCA), Securities and Exchange Board of India (Sebi), and the Serious Fraud Investigation Office (SFIO). The MCA had moved the tribunal for 10 interim measures in the case. The NCLT took note of the government's submission that Gensol Engineering, along with other respondent companies and associated individuals, 'have committed grave violations of corporate governance norms'.
Queries emailed to Gensol, and its founders Anmol Singh Jaggi and Puneet Singh Jaggi on Wednesday remained unanswered at the time of publishing.
The tribunal took note of 'serious allegations of fraudulent conduct, including diversion of company funds by the promoters of Gensol Engineering and related entities' as well as allegations of violation of corporate governance norms, manipulation of financial statements and illegal alienation of company assets, according to the order.
'The investigation reports and regulatory findings from the ministry of corporate affairs, Sebi and SFIO prima facie support the petitioner's claims of systemic fraud involving substantial public interest,' NCLT said, granting the interim reliefs sought by the government. The tribunal will hear the matter next on 3 June.
One of the provisions of the Companies Act that the ministry has invoked is section 339, which allows holding certain persons like directors, managers or other officers, who are party to a fraud, to be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company.
The ministry had also sought a direction to the Reserve Bank of India (RBI) and the Indian Banks Association to freeze bank accounts and lockers owned by the respondents and attach the same on behalf of the government, which has been granted, showed the order.
The interim relief secured by the government includes restraining the respondent individuals and companies from mortgaging, alienating or creating a lien or third-party interest on their movable or immovable properties, lockers and securities.
The state-run Indian Renewable Energy Development Agency (Ireda) earlier this month filed an insolvency application against Gensol Engineering Ltd for a default of ₹ 510 crore. Ireda has also approached the Economic Offences Wing (EoW) of the Delhi Police.
The matter came to limelight after the market regulator Sebi on 15 April in an interim order barred Gensol's promoters—Anmol Singh Jaggi and Puneet Singh Jaggi—from trading in the securities market, and from holding any key managerial post in Gensol or any other listed company and a forensic audit was ordered.
Sebi's investigation found that the founders of the cleantech company had allegedly siphoned off loans from state-run lenders Power Finance Corp. (PFC) and Ireda for non-related and personal expenses.
PFC has declared its loan exposure to Gensol Engineering as fraud after its preliminary findings and has approached the EoW.
The lender has realized ₹ 44 crore by way of security encashment of fixed deposits and the trust and retention account (TRA), in which the loan was deposited, in the fourth quarter of FY25, taking the outstanding loan amount to ₹ 263 crore, PFC chairman and managing director Parminder Chopra said in a recent briefing.
She said that PFC will consider recovery options through the insolvency process if it falls short of recovery through other methods, while adding that all options, including recovering through the debt recovery tribunal (DRT), are on the table.