Delhi HC bars Gensol, BluSmart from creating rights over leased EVs amid financial irregularities
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The Delhi High Court on Tuesday restrained Gensol Engineering , Blu-Smart Fleet and Blu-Smart Mobility from creating third-party rights in respect of 95 Tata Xpres Electric Vehicles leased by Clime Finance.Justice Jyoti Singh appointed a receiver to secure, preserve, inspect, and take immediate possession of the 95 electric vehicles. However, the court said that the receiver will only take "deemed" charge of the electric vehicles and not move them from their existing spot and would be responsible for the upkeep of the vehicles, the judge added.Last week the HC had restrained Gensol Engineering and BluSmart Mobility from creating any third-party rights on 175 electric vehicles leased to them by Orix Leasing and Financial Services to support BluSmart's growing ride-hailing operations in India, saying the Japanese firm made a prima facie case for interim relief. Anmol Singh Jaggi, cofounder of both Gensol Engineering and BluSmart, had acted as a guarantor for the lease obligations.Counsel Abhimanyu Mahajan and Saurabh Seth, appearing for Clime, on Tuesday sought further directions to Gensol and Blu-Smart to deposit pre-termination value, penal charges and TDS due for FY2024-2025 after adjustment of security deposit of over Rs one crore with the court registry.They said that the companies had defaulted in remitting the lease rentals for the EVs from March 2025. 'This default, along with a concerning downgrade in Gensol's credit rating, media reports of financial distress, and breaches of the lease agreement' prompted Clime to issue notices in March and April, which also went unanswered, and then terminate the lease agreement, Clime alleged.Clime had entered into an agreement where it had leased its 95 electric vehicles Gensol and Blu-Smart Fleet in 2022 for use in cab and rideshare services for a period of 36 months, which was to expire in May 2025. The two companies had defaulted in remitting the lease rentals for the 95 vehicles from March, the counsel said.Markets regulator Securities and Exchange Board of India (Sebi) had on April 15 barred the Gensol's promoters, Anmol and Puneet Jaggi, from accessing stock markets and ordered a forensic probe into their listed renewable energy firm. The brothers were later detained under the Foreign Exchange Management Act (Fema) on charges of financial misconduct and diversion of funds.According to Clime, the brothers were also restrained from holding key managerial roles or dealing in securities due to violations of securities laws, including but not limited to siphoning of funds.An interim Sebi report indicated fund diversion and governance failures within the company. The Jaggis face allegations of misuse of term loans availed by Gensol from state-run Indian Renewable Energy Development Agency (Ireda) and Power Finance Corp (PFC).Between FY22 and FY24, Gensol secured Rs 977.75 crore in loans from Ireda and PFC, with Rs 663.89 crore meant for purchasing 6,400 EVs.'Moreover, the media reports also revealed that the respondents ceased operations and faced salary payment delays, indicating severe financial instability. It was also discovered that the respondents were attempting to not only siphon its funds but also transfer their ride-sharing business, including the leased EVs, to third parties without Clime's consent which is in violation of the lease agreement,' Seth stated in his petition. Thus, Clime was 'compelled' to terminate the lease agreement due to the several non-compliances and material defaults, the counsel added.
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