Shares of the Indian Renewable Energy Development Agency (IREDA) are under scrutiny after the company initiated insolvency proceedings against Gensol Engineering Limited. The state-run financier filed the application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, due to a default of ₹510 crore.
IREDA's action follows an earlier complaint filed with the Economic Offences Wing (EoW) in late April, where the agency alleged that Gensol had falsified documents. IREDA also initiated an internal review of Gensol. Another lender, Power Finance Corporation (PFC), has also made similar allegations against Gensol.
The loan default is part of a larger loan of ₹977.75 crore that Gensol had taken from IREDA and PFC. Out of this amount, ₹663.89 crore was specifically earmarked for purchasing electric vehicles (EVs) for BluSmart, a ride-hailing platform co-founded by Gensol's Anmol Singh Jaggi. However, investigations revealed discrepancies in the utilization of these funds. SEBI's investigation revealed that of the ₹978 crore term loan sanctioned jointly by IREDA and PFC to finance 6,400 electric vehicles for BluSmart Mobility, only 4,700 vehicles costing ₹567 crore were delivered, leaving ₹262 crore unaccounted for.
The Securities and Exchange Board of India (SEBI) had previously barred Anmol Singh Jaggi and his brother, Puneet Singh Jaggi, from holding key managerial positions in Gensol. Subsequently, both resigned from their positions as directors of Gensol Engineering. SEBI's interim order alleges that the brothers diverted company funds towards personal luxury purchases and defaulted on loans, including those intended for BluSmart's EV fleet. In late April, the Enforcement Directorate (ED) raided Gensol's premises, seizing documents and electronic devices. SEBI has also ordered a forensic audit of the company.
IREDA had clarified that while Gensol's account was under stress, it had not yet been classified as a Non-Performing Asset (NPA). However, according to the National Company Law Tribunal (NCLT), the date of default, not the date of NPA, triggers the insolvency proceedings. If the NCLT admits the petition, the value of equity holdings in Gensol is likely to be wiped out. In such a scenario, all creditors of the company would be required to file their claims with the court-appointed resolution professional for debt resolution.
