BluSmart follows Gensol group firms into insolvency after ₹1.28 cr default

Mint

29-07-2025

The wheels have come off the fraud-hit BluSmart Mobility, once hailed as a pioneer in India's electric ride-hailing startup, as the company has been formally admitted into insolvency by the National Company Law Tribunal (NCLT) in Ahmedabad.
The move follows payment defaults totalling over ₹ 1.28 crore and adds BluSmart to a growing list of Gensol-linked entities now undergoing bankruptcy proceedings, including its parent Gensol Engineering Ltd and sister concern Gensol EV Leasing Pvt Ltd.
In an order dated 28 July, a two-member bench comprising Justice Shammi Khan (Judicial Member) and Sanjeev Sharma (Technical Member) admitted BluSmart into the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016.
'In light of the above findings, this Tribunal is satisfied that the Financial Creditor is entitled to the relief as sought. The Corporate Debtor's default justifies the admission of the petition and the initiation of CIRP under the Code,' the tribunal said in its order, reviewed by Mint.
The dispute with the financial creditor began after BluSmart Mobility raised ₹ 150 crore through 15 non-convertible debentures (NCDs) in April 2023, with Catalyst Trusteeship as the debenture trustee.
Under the agreement, BluSmart was to start repaying the principal by 30 April 2023, but unilaterally deferred it to 31 May, which Catalyst viewed as a breach. In early 2025, BluSmart defaulted on payments due in February, March, and April—totalling ₹ 1.28 crore, prompting Catalyst Trusteeship to seek insolvency proceedings against the company.
Supporting documents included default notices, bank records, and an email from co-founder Anmol Singh Jaggi admitting liability that led to the admission of insolvency plea.
BluSmart opposed the insolvency plea, arguing that the defaults were temporary, the petition was premature and motivated and that procedural issues such as missing IRP details and vague timelines weakened the creditor's case.
The company also pointed to the 15 April Securities and Exchange Board of India (Sebi) order against Gensol Engineering and its promoters as background pressure behind the filing.
However, the tribunal rejected all objections, holding that the defaults were material and proven, the promoter had admitted liability, and procedural gaps had been corrected.
It also stated that the Sebi order had no bearing on BluSmart's contractual obligations to repay its lenders.
The tribunal appointed NPV Insolvency Professionals Pvt Ltd as the Interim Resolution Professional (IRP), which will now take control of BluSmart's management, issue public notices and invite claims from creditors.
A moratorium has also been imposed, halting all ongoing or new legal actions, asset transfers and recovery proceedings against the company.
Under IBC timelines, the IRP must invite claims within three days and constitute a Committee of Creditors (CoC) within 30 days.
The entire resolution process must be completed in 180 days, extendable by another 90 days. If no viable resolution plan is approved within that time, BluSmart may face liquidation.
With BluSmart joining Gensol Engineering and Gensol EV Leasing in insolvency, legal experts believe the case may become a landmark test for group insolvency in India—a concept not yet formally codified in law.
Courts have, however, allowed consolidated proceedings in rare cases like Videocon, where 13 related companies were treated as a single economic entity.
'This could set the stage for group insolvency. If operational and financial links between these firms are clearly established, it may prompt courts to adopt a similar approach,' said Raheel Patel, partner at Gandhi Law Associates.
'The real challenge ahead is determining whether their assets and debts should be resolved jointly or separately, and whether overlapping creditors and related-party transactions will be prioritized for scrutiny,' Sonam Chandwani, managing partner at KS Legal & Associates, said.
When BluSmart defaulted and suspended operations, those same vehicles used as collateral for Gensol loans became value at risk. Power Finance Corporation Ltd and the Indian Renewable Energy Development Agency Ltd (Ireda) were thus exposed to defaults arising from both entities, effectively making them overlapping creditors, she added.
BluSmart's insolvency is the latest and perhaps the most visible blow to the Gensol Group, which has been under intense regulatory scrutiny.
In June, Ireda revealed that Gensol Engineering had defaulted on loans worth ₹ 510 crore.
On 15 April, the Sebi issued an interim order accusing Anmol and Puneet Jaggi of diverting investor funds meant for electric vehicle purchases towards personal luxuries, including a $5 million apartment and high-end golf equipment.
Sebi also found that Gensol had procured only 4,704 electric vehicles despite claiming funding for 6,400.
Both promoters resigned from Gensol's board on 6 May. The Securities Appellate Tribunal (SAT), on 7 May, declined to stay Sebi's order and asked the company to respond, with the market regulator expected to issue a final decision thereafter.
Meanwhile, Gensol Engineering, now also under CIRP, has issued advertisements seeking to lease out pre-owned EVs at fixed rentals, in what appears to be an effort to monetize stranded assets amid the group's widening financial crisis.