Roadblocks Ahead: BluSmart, Gensol Face MCA Heat Over Fund Diversion Allegations

Image Source: Hindustan Times

A top-level regulatory investigation has been initiated into BluSmart Mobility and Gensol Engineering, both of which are promoter group companies of Anmol Singh Jaggi, on charges of diversion of funds, document manipulation, and grave lapses in corporate governance. The probe was ordered by the Ministry of Corporate Affairs (MCA) after SEBI action and in the wake of continued financial and operational instability at both firms.

Background and Context

The MCA directed an investigation under Section 210 of the Companies Act, 2013, citing in the interest of the public and potential contraventions of company law.
Gensol Engineering and BluSmart Mobility are both promoted by Anmol Singh Jaggi, who, along with Puneet Singh Jaggi, was forbidden by SEBI from the securities market in April for regulatory contraventions.

Regulatory Actions and Allegations

SEBI’s interim order cited alleged diversion of loan funds, document falsification, and misleading regulators and investors.
Gensol allegedly misused loans intended for electric vehicle (EV) purchases, with over ₹262 crore unaccounted for out of ₹977.75 crore borrowed.
BluSmart, an EV ride-hailing service, is also under scrutiny for similar governance lapses and financial irregularities.

Scope and Process of the Probe

The MCA probe will examine company books, bank accounts, assets, and financial records; results are due in three months.
In case of suspected serious fraud, the matter could be referred to the Serious Fraud Investigation Office (SFIO).
The Institute of Chartered Accountants of India (ICAI) is independently examining the FY24 financial accounts of both companies, with results due in six months.

Operational Fallout

BluSmart has allegedly ceased operations in major cities such as Delhi NCR, Mumbai, and Bengaluru after the crisis.
More than 800 employees of BluSmart have not been paid since March, and close to 10,000 drivers are now out of work.
A number of senior executives of BluSmart have quit in the aftermath of regulatory action.

Further Investigations

The Enforcement Directorate (ED) is also investigating forex violations and raided premises associated with Gensol and its promoters.

What's Next?

The MCA will submit its investigation report within three months, which may lead to further legal action or referral to specialized fraud agencies.

ICAI’s review will provide additional clarity on the companies’ financial conduct.

Sources: Tribune India, Economic Times, Financial Express, ABP Live, Inc42

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