The National Company Law Tribunal (NCLT) in Ahmedabad has admitted Gensol Engineering Limited (GEL) and its subsidiary, Gensol EV Lease (GEVL), into insolvency proceedings following a petition by the Indian Renewable Energy Development Agency (IREDA). The tribunal’s decision, delivered on June 13, comes after Gensol defaulted on loans amounting to ₹510 crore for GEL and ₹218.95 crore for GEVL. This development marks a significant turn for the renewable energy and electric vehicle company, which has faced mounting regulatory and financial challenges in recent months.
IREDA’s Insolvency Plea and Tribunal’s Order:
IREDA, a government-backed lender specializing in renewable energy projects, approached the NCLT seeking redress for Gensol’s loan defaults. The tribunal, after reviewing evidence such as ledger extracts, demand notices, and statements, confirmed the existence of substantial financial debt. The bench, comprising Judicial Member Shammi Khan and Technical Member Sanjeev Kumar, admitted both Gensol Engineering and Gensol EV Lease to the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC).
The NCLT has appointed Keshav Khaneja as the interim resolution professional (IRP) for both companies, rejecting IREDA’s nominee in favor of a professional from the official list maintained by the Insolvency and Bankruptcy Board of India (IBBI). With the boards of both companies suspended, the IRP will now take charge of management and operations, while a committee of creditors (CoC) will be formed to consider resolution plans. If no viable plan emerges within 180 to 330 days, liquidation proceedings may follow.
Regulatory and Legal Troubles for Gensol:
Gensol’s insolvency comes amid a series of regulatory setbacks. In April, the Securities and Exchange Board of India (SEBI) issued an interim order against the company, citing grave lapses in corporate governance. SEBI’s investigation alleged that Gensol diverted large sums through related parties, submitted forged documents to credit agencies, and overstated its electric vehicle procurement numbers. The order resulted in the barring of Gensol’s promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities market and from holding key managerial positions. Both subsequently resigned from their posts.
The company’s troubles deepened when the Securities Appellate Tribunal (SAT) refused to stay SEBI’s order and directed Gensol to respond formally. Further, the Ministry of Corporate Affairs (MCA) filed a petition resulting in the freezing of assets belonging to Gensol and 16 associated entities, citing violations of several sections of the Companies Act. These regulatory actions highlighted a breakdown in governance and raised concerns about the company’s ability to continue as a going concern.
Impact on Gensol’s Business and Stakeholders:
Gensol Engineering, known for its work in renewable energy project development and financial assistance for clean energy initiatives, also owns BluSmart, an electric vehicle ride-hailing firm. The insolvency proceedings have cast uncertainty over ongoing projects and the company’s future in the rapidly evolving green energy sector. The appointment of an IRP and the imposition of a moratorium under the IBC are intended to protect the company’s assets and prevent further erosion of value while a resolution is sought.
IREDA’s legal action was prompted not only by loan defaults but also by Gensol’s dilution of promoter shareholding without lender approval, a breach of contractual obligations. The lender also filed complaints with the Economic Offences Wing over falsified documentation, further complicating the company’s legal landscape. In parallel, other creditors like Power Finance Corporation have initiated recovery proceedings, with claims totaling nearly ₹992 crore. The Debts Recovery Tribunal has ordered the possession of electric vehicles and restricted the transfer of Gensol’s intellectual property and technology assets, while lessors have approached the Delhi High Court to protect their leased vehicles.
What Lies Ahead for Gensol:
With the insolvency process underway, the immediate focus will be on the IRP’s efforts to stabilize operations and work with creditors to explore resolution options. The committee of creditors will play a critical role in evaluating and approving any restructuring or sale proposals. If no resolution is reached within the statutory timeline, Gensol and its subsidiary could face liquidation.
The case serves as a cautionary tale for companies in the renewable energy and EV sectors, emphasizing the importance of robust governance, transparent financial practices, and adherence to regulatory norms. For Gensol, the coming months will determine whether it can emerge from insolvency with a viable future or if it will be forced to wind down its operations entirely.
