A company law court on Friday admitted Gensol Engineering Ltd and its EV leasing subsidiary to insolvency proceedings, and appointed an interim resolution professional (IRP) to take charge of the company’s affairs.
The Ahmedabad bench of the National Company Law Tribunal (NCLT) accepted an insolvency petition filed by state-run Indian Renewable Energy Development Agency Ltd (Ireda) that said Gensol had defaulted on loans of ₹510 crore.
The NCLT bench of Shammi Khan and Sanjeev Kumar Sharma passed the order under Section 7 of the Insolvency and Bankruptcy Code (IBC).
The Ireda petition pressed for urgent oversight, stating Gensol had effectively become “headless” after its top leaders exited amid ongoing regulatory scrutiny.
“By virtue of Sebi’s order, the company is now headless. Directors have walked out, and the company has projects worth crores of rupees. Somebody needs to manage the show,” Ireda’s counsel told the tribunal during earlier proceedings.
The application also alleged a “complete breakdown of internal controls and corporate governance norms” at the publicly listed renewable energy firm, accusing its promoters of treating the company “as if it were their proprietary firm.”
Ireda pointed to Gensol’s sizable order book, involving capital-intensive renewable EPC (engineering, procurement, and construction) contracts awarded by the government and public sector entities.
A separate insolvency plea against Gensol EV Leasing Ltd, a group company was also admitted to insolvency. According to the tribunal, the same IRP will manage both companies.
The NCLT clarified that it would not appoint the resolution professional (RP) suggested by the lender. “The insolvency plea is admitted. However, we are not appointing the RP suggested by IREDA; we have chosen from the list given by IBBI (Insolvency and Bankruptcy Board of India),” the bench remarked.
The IRP will immediately take charge of the company, issue public notices, and ask creditors to file claims.
Legal experts said insolvency resolution may turn increasingly complex due to simultaneous regulatory investigations by Sebi and the ministry of corporate affairs (MCA) into alleged fund diversion, financial misstatements and governance failures.
“There will be some overlap between what MCA does (and SFIO, if it gets involved) and the duty cast on IRP/RP under the IBC. This is because fund diversion is also covered under IBC as transactions defrauding creditors,” said Jayesh H., co-founder of Juris Corp. “The parallel proceedings may at most add to the complexities, but should not by themselves delay the CIRP.”
With multiple Gensol-linked entities under scrutiny—including BluSmart Mobility—lawyers say this could evolve into a test case for group insolvency, a concept not yet codified under Indian insolvency law. “The consideration of group insolvency in the Gensol-BluSmart scenario could position the case as a landmark, if the NCLT opts to consolidate the insolvency processes of the parent and subsidiary,” said Sonam Chandwani, managing partner at KS Legal and Associates.
“A ruling consolidating Gensol and BluSmart’s CIRP—driven by evidence of interlinked operations and alleged fund diversions—could establish a clearer judicial standard for group insolvency, influencing future cases where subsidiaries are implicated in a parent’s financial distress,” Chandwani added.
The IRP, who will replace Gensol’s management, will form a committee of creditors (CoC) to assess resolution proposals. If no plan is approved in 180-330 days, the company may face liquidation.
Ireda first had issued a notice to Gensol on 25 April and disclosed on 14 May that it had filed an insolvency petition. Since then, several other financial creditors have also initiated insolvency proceedings against the company.
On 28 May, the NCLT had also allowed the Central government to freeze the bank accounts and lockers of Gensol Engineering, its 10 subsidiaries, and several individuals linked to the matter.
Gensol and related entities—including BluSmart Premium Fleet and Matrix Gas & Renewables—subsequently approached the National Company Law Appellate Tribunal (NCLAT) against the asset freeze, but were directed to approach the NCLT for relief.
Simultaneously, state-run lenders Ireda and Power Finance Corp.(PFC) also filed separate petitions before the Debt Recovery Tribunal (DRT) to recover combined dues of approximately ₹992 crore.
Regulatory and legal headwinds
Gensol’s troubles mounted following a 15 April interim order by the Securities and Exchange Board of India (Sebi), which accused promoters Anmol Singh Jaggi and Puneet Singh Jaggi of misappropriating company funds for luxury personal expenses and defaulting on loans—particularly those linked to electric vehicles procured for BluSmart, an EV ride-hailing venture founded by Anmol.
Sebi further charged the company with misleading investors by overstating its EV procurement capabilities, despite limited activity at its manufacturing units. The Jaggi brothers resigned from the board on 6 May, nearly a month after Sebi barred them from holding any key managerial positions.
On 7 May, the Securities Appellate Tribunal (SAT) refused to stay Sebi’s interim order, directing Gensol to file a formal response, and asked Sebi to pass a final order within four weeks of receiving it.
Gensol had borrowed a total of ₹977.75 crore from Ireda and PFC, including ₹663.89 crore specifically earmarked for EV procurement for BluSmart. In April, both lenders lodged complaints with the Economic Offences Wing of the Delhi Police, accusing it of falsifying loan-related documents.
The Enforcement Directorate (ED) raided Gensol’s offices in late April, seizing documents and electronic records as part of a broader financial probe. Sebi has since ordered a forensic audit of the company’s accounts and practices.
Source:https://www.livemint.com/companies/news/gensol-engineering-insolvency-proceedings-nclt-ireda-plea-gensol-corporate-governance-blusmart-matrix-gas-11749796340338.html