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Updated: May 16, 2025 19:52
The Indian Renewable Energy Development Agency (IREDA), a government-owned financier for the renewable energy sector, has filed a historic insolvency petition against Gensol Engineering Limited for recovery of a defaulted loan of ₹510 crore. This high-profile case is the first instance in which a creditor has taken Gensol Engineering, a leading solar energy and electric vehicle procurement company, to the National Company Law Tribunal (NCLT) for bankruptcy.
Key Highlights
IREDA had petitioned for insolvency under Section 7 of the Insolvency and Bankruptcy Code, 2016, when Gensol had defaulted on a ₹510 crore loan. The application was submitted officially on May 14, 2025.
Gensol Engineering had taken a total of ₹977.75 crore from IREDA and Power Finance Corporation (PFC), out of which ₹663.89 crore was particularly earmarked to buy electric vehicles for ride-hailing platform BluSmart. But 4,704 vehicles were purchased against only sanctioned 6,400 vehicles, so more than ₹262 crore are unaccounted for.
The NCLT has issued a notice to Gensol Engineering, asking the company to submit its response to IREDA's plea for insolvency. The next date of hearing is June 3, 2025.
IREDA had already filed a complaint with the Economic Offences Wing, charging Gensol with forgery of documents and unauthorized reduction in promoter shareholding, which amounts to a violation of contract. Power Finance Corporation too has filed complaints in similar lines.
The Securities and Exchange Board of India (SEBI) had been probing Gensol for fund diversion and governance lapses. On 15 April, SEBI prohibited Gensol's promoters, Anmol Singh Jaggi and Puneet Singh Jaggi, from the securities market and from acting as directors or key managerial persons in the company.
Following SEBI’s interim order, both Jaggi brothers resigned from their roles at Gensol earlier this week. The company’s shares have been under pressure, with credit rating agencies downgrading over ₹2,000 crore of its debt to default status earlier this year.
Regulatory and financial scrutiny has intensified, with raids by financial crime agencies, a forensic audit ordered by SEBI, and mounting concerns about the company’s ability to meet its debt obligations.
What's Next?
If the NCLT accepts IREDA's insolvency plea, all the creditors will be called upon to submit claims before a resolution professional appointed by a court. This may result in a complete debt resolution process, with the possibility of equity holders having their investments erased. The current regulatory probes and leadership departures further complicate Gensol's future.
Sources: Reuters, PTI, NDTV Profit, Outlook Business, Economic Times, Business Standard, Energy Economic Times
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