Gensol Faces Insolvency Proceedings Over ₹510 Crore Default to IREDA
| 2025-05-14
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Indian green energy financier IREDA files bankruptcy petition against Gensol Engineering over a ₹510 crore loan default amid fund misuse allegations.
IREDA Files Bankruptcy Plea Against Gensol
In a formal application submitted on 14 May 2025, IREDA sought to initiate corporate insolvency resolution proceedings against Gensol Engineering under Section 7 of India’s Insolvency and Bankruptcy Code (IBC), which allows financial creditors to take action against defaulting borrowers.
According to IREDA’s exchange filing, the company has defaulted on dues amounting to ₹510.05 crore. The application has been made to the National Company Law Tribunal (NCLT), which will determine whether insolvency proceedings can move forward.
"The Company has filed an application… under Section 7 of Insolvency and Bankruptcy Code, 2016 against M/s Gensol Engineering Limited," the IREDA filing stated, confirming the default figure.
Allegations of Misconduct and Financial Irregularities
The insolvency filing is the latest development in a deepening crisis for Gensol, which has come under multiple investigations in recent weeks. In April, IREDA lodged a complaint with India’s Economic Offences Wing, alleging that Gensol submitted falsified documents and diluted promoter shareholding without prior approval.
Although IREDA clarified that Gensol’s account had not yet been classified as a non-performing asset, the agency noted that the financial stress was significant enough to warrant internal scrutiny. Its investigation and risk committees are currently reviewing the matter.
Regulatory Crackdown Intensifies
India’s capital markets regulator, the Securities and Exchange Board of India (SEBI), has also taken action. In an interim order issued on 15 April 2025, SEBI barred Gensol's co-promoters—Anmol Singh Jaggi and Puneet Singh Jaggi—from accessing the securities market or serving as directors in listed companies, citing “fund diversion and governance lapses”.
According to SEBI, Gensol misused a portion of a ₹977.75 crore term loan sanctioned by IREDA and the Power Finance Corporation. The funds were intended for the procurement of 6,400 electric vehicles (EVs), which were to be leased to BluSmart Mobility, an affiliate company. However, SEBI alleges that only around 4,700 vehicles were actually purchased, leaving over ₹260 crore unaccounted for.
The regulator further claimed that substantial sums were rerouted through shell companies and ultimately used for unrelated personal expenses. In one instance, ₹50 crore allegedly found its way to a real estate purchase in Gurgaon’s DLF Camellias complex, including a luxury apartment worth more than ₹42 crore.
Leadership Changes and Forensic Audit
Following SEBI’s interim order, both Anmol and Puneet Singh Jaggi resigned from their roles in Gensol. Additionally, the regulator appointed an independent firm, Raju and Prasad Chartered Accountants, to conduct a forensic audit of Gensol’s financial statements for fiscal years 2022 to 2025.
The audit aims to trace the financial trail and determine the extent of any irregularities involving related-party transactions or fund misappropriation.
Tribunal Grants Right to Respond.
Gensol recently informed stock exchanges that the Securities Appellate Tribunal (SAT) has disposed of its appeal against SEBI’s interim order but granted the company the right to respond. According to the tribunal, Gensol has two weeks to file a formal reply, after which SEBI must provide a hearing and issue a final decision within four weeks.
The company cited staffing shortages, including the absence of a compliance officer and key managerial personnel, as the reason for delays in regulatory disclosures. Gensol is currently consulting legal advisors to formulate its response.
Context: A Broader Setback for India’s EV Financing Sector
The Gensol case marks a significant setback in India's broader effort to accelerate electric vehicle adoption through subsidised lending and government-backed financing. Agencies such as IREDA and Power Finance Corporation have been instrumental in channelling public funds to clean energy projects, often relying on developers and mobility platforms to deploy assets efficiently.
BluSmart Mobility, the EV ride-hailing firm associated with Gensol, is one of several new-generation mobility ventures aiming to scale sustainable transportation in urban India. Allegations of misuse of funds intended for such initiatives could undermine investor confidence and slow public-private collaboration in green transport infrastructure.
Furthermore, the regulatory action underscores growing scrutiny over corporate governance in India's renewables and clean tech sectors. With significant state capital deployed, both regulators and financiers are expected to tighten compliance frameworks in response to the ongoing investigations.
The NCLT’s decision on whether to admit the insolvency plea will be closely watched, as it may set a precedent for similar cases involving state-backed finance and corporate default.
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