Image Source: The Economic Times
Gensol Engineering Ltd is facing intense legal and regulatory attention following the rejection by the Securities Appellate Tribunal (SAT) of its request to suspend a Securities and Exchange Board of India (SEBI) interim order. The SAT, in its order dated April 15, has prohibited Gensol and its major promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from entering the securities market and holding director or key managerial roles in the company. SAT has now ordered Gensol to submit its written response to SEBI within two weeks, while SEBI has to pronounce the final order within four weeks after hearing the company's arguments.
Key Highlights
SEBI’s interim order was triggered by allegations of large-scale fund diversion, forged documents, and serious governance lapses. The probe began after a June 2024 complaint about share price manipulation and misappropriation of funds.
SEBI investigation revealed that the Jaggi brothers purportedly used Gensol as their personal piggy bank, channeling hundreds of crores intended for electric vehicle (EV) purchases into luxury real estate and related-party dealings. While a Rs 978 crore loan had been approved for the purchase of 6,400 EVs, only 4,700 had actually been bought, with Rs 262 crore unaccounted for.
The firm is charged with providing fake lender letters to deceive regulators, credit agencies, and investors. SEBI also discovered no significant manufacturing operations at Gensol's Pune EV factory, which had very few employees and was running from a rented property.
Gensol's appeal to SAT contended that the SEBI order was made without hearing, resulting in severe business disruption, including freezing its demat account and the possibility of cancellation of contracts. But SAT did not make any observations regarding the merits of the SEBI interim order and instead imposed a tight timeline for Gensol's response.
The company has approached legal help to frame its response to SEBI and will contest the findings strongly.
The aftermath has been rapid: Gensol shares have plummeted, Jaggi brothers have stepped down from leadership positions, and the company's planned stock split has been suspended. Both BSE and NSE have put Gensol under close watch, and government agencies have launched additional investigations, including a police complaint by financier PFC in alleged forgery.
What's Next
Gensol has two weeks to submit its explanation to SEBI. The regulator will then hold a hearing and is required to issue a final order within four weeks. The outcome will determine whether the current restrictions on the company and its promoters are lifted or made permanent. The case is being closely watched by investors, regulators, and the broader corporate community for its implications on governance and compliance in India’s fast-growing EV sector.
Sources: The Economic Times, Fortune India, Indian Express, People Matters, ET CFO, ET Energyworld
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