NCLT Freezes Gensol Accounts Amid Fraud & Governance Allegations, What's Next for BluSmart?

For years, Gensol Engineering was seen as a shining example of India’s growing capabilities in the clean energy and electric mobility sectors. With a presence in engineering, procurement, and construction (EPC) projects, and even a foray into the EV space via its association with BluSmart, Gensol had positioned itself at the crossroads of sustainability and innovation.

But that image has now been shattered.

In a dramatic turn of events, the Ahmedabad bench of the National Company Law Tribunal (NCLT) has ordered the freezing and attachment of all bank accounts and lockers belonging to Gensol Engineering and 37 associated individuals and entities. The move follows a scathing petition filed by the Ministry of Corporate Affairs (MCA), which alleged systemic fraud and gross mismanagement—raising serious questions about the integrity of the company’s financial and operational conduct.

Allegations of Systemic Fraud and Public Interest Concerns

The tribunal, in its May 28 order, didn’t mince words. It found prima facie evidence that Gensol had indulged in a wide-ranging and systemic financial fraud—an act the bench said affects substantial public interest. The order cited:

• Diversion of company funds by its promoters

• Severe violations of corporate governance norms

• Manipulation of financial records

• Defaults on loan repayments made worse by fraudulent declarations

• Unlawful alienation of company assets

“The serious allegations of fraudulent conduct by the promoters of Gensol Engineering Limited… are supported by investigation reports and regulatory findings from the Ministry of Corporate Affairs, SEBI, and the Serious Fraud Investigation Office,” noted the tribunal.

The bench, comprising judicial member Mohan Prasad Tiwari and technical member Reena Sinha Puri, issued notices to all respondents and scheduled the next hearing for June 3.

Trouble Spills Beyond the Tribunal: Lease Dispute Hits the Delhi High Court

Even as the NCLT proceedings unfold, another legal tussle is playing out in the Delhi High Court. SMAS Auto Leasing India Private Ltd, a key lessor of electric vehicles, has dragged Gensol’s subsidiary—Param Renewable Energy—to court. SMAS claims that Param defaulted on lease payments for 62 electric vehicles leased in 2022 under a master lease agreement.

What makes the matter urgent is the nature of the leased assets. EVs, unlike their fossil-fuel counterparts, are highly sensitive to usage patterns and storage conditions. With batteries prone to degradation from heat and inactivity, SMAS has urged the court to appoint a receiver to immediately take charge of the vehicles before they become permanently damaged and lose all value.

A Trail of Credit Defaults and Regulator Red Flags

The latest legal blows are just the tip of the iceberg. Gensol has been under intense scrutiny for months.

Last week, the Indian Renewable Energy Development Agency (IREDA) moved the Delhi Debt Recovery Tribunal (DRT) to recover a whopping ₹729 crore from the embattled firm. Meanwhile, Power Finance Corporation (PFC) is also reportedly considering a similar course of action for its outstanding dues.

These financial defaults are part of a larger pattern that has alarmed regulators and industry observers alike.

SEBI’s Scathing Interim Order: “Company Used as Piggybank”

In an earlier interim order, the Securities and Exchange Board of India (SEBI) painted a damning picture of Gensol’s promoters—brothers Anmol Singh Jaggi and Puneet Singh Jaggi. According to SEBI, the duo used Gensol as their personal "piggybank", manipulating financials, forging documents, and even misleading shareholders and rating agencies.

SEBI’s interim findings were so grave that both Jaggi brothers were barred from holding any board positions or participating in the securities market. Subsequently, the brothers stepped down from their positions at Gensol, sending further shockwaves through the already jittery investor community.

Enforcement Directorate Enters the Scene: Raids and Detention

The Enforcement Directorate (ED) has also entered the fray. Last month, ED officials conducted raids across multiple premises linked to Gensol and the Jaggi brothers. During these searches, Puneet Singh Jaggi was detained briefly. He later secured anticipatory bail from the Delhi High Court, which directed police to issue a seven-day notice before any future arrest.

Possibly the most visible impact of this financial storm is on BluSmart, the EV ride-hailing startup cofounded by the Jaggi brothers. Once hailed as a bold green alternative to traditional cab services, BluSmart has reportedly suspended operations in the wake of the financial scandal. Thousands of drivers and more than 800 full-time employees are now facing unpaid salaries and job uncertainty.

What started as a company-level crisis is now affecting livelihoods at scale.

A Cautionary Tale for India’s Startup Ecosystem

Gensol’s dramatic fall from grace is more than just a company’s downfall—it’s a cautionary tale for India’s thriving but vulnerable startup ecosystem. With increased investor interest and public sector funding flowing into green energy and EV segments, the need for regulatory compliance, corporate governance, and ethical leadership has never been more critical.

In the rush to scale and disrupt, fundamentals must not be compromised. The Gensol saga is a stark reminder that while ambition can take a company far, it is integrity that keeps it afloat.

As the NCLT, ED, SEBI, and courts dig deeper, the Indian startup ecosystem will be watching closely—hoping this storm paves the way for cleaner, more transparent business practices in the years to come.