In continuation with a series of orders passed against Gensol and BluSmart, the Delhi High Court on Thursday directed seizure and relocation of 129 passenger electric vehicles (EVs) in Delhi, Gurugram and Bengaluru that were hypothecated to STCI Finance by the companies after the lender alleged default in loan payments and sought to restrain them from creating any third-party rights in the vehicles.
Gensol had availed a Rs 15 crore equipment term loan from STCI under a 2023 loan facility agreement for acquiring 129 EVs for commercial leasing. The loan was secured by a hypothecation deed and Gensol promoters Puneet Singh Jaggi and Anmol Singh Jaggi had stood as personal guarantors. STCI had allegedly disbursed funds directly to vendors, after which Gensol leased the vehicles to its related entity BluSmart, which is no longer operational.
Justice Manmeet Pritam Singh Arora, while noting the STCI’s apprehensions that there was an imminent risk of dissipation of the vehicles purchased by Gensol using the loan advanced by the lender, asked the three court-appointed receivers to take over the vehicles so as to secure them, make inventories and relocate them to secure locations.
Gensol and the related lease entity were also restrained from selling, transferring or creating third-party rights in the vehicles.
“It will be open for the receiver to take all necessary steps to charge and preserve the vehicles so that they remain in good and working condition,” the court said, while asking Gensol and others to cooperate in identifying the locations where the hypothecated vehicles are parked within two days and not to make any attempt to shift them to any other location.
The receiver shall relocate and store the vehicles in a secure facility and make all the necessary arrangements for supervision, maintenance, and preservation, according to the order.
It further asked Gensol and BluSmart to cooperate with the receiver and also gave liberty to the latter to seek the assistance of the local police station if required. “The SHO of the concerned police station is directed to render full co-operation,” the court said.
The judge also asked ICICI Bank to maintain the status quo on a fixed deposit of Rs 40.62 lakh, which had been separately hypothecated by Gensol as security for the loan.
Citing SEBI’s interim findings that company funds had been misused and diverted by Gensol’s promoters in violation of corporate governance norms, the court also said that Gensol “did not adhere to the terms of the Facility Agreement and the financial discipline … and committed defaults in repaying the loan”.
“The company’s funds were routed to related parties and used for unconnected expenses, as if the company’s funds were promoters’ piggy bank. The diversion of funds... reflects a culture of weak internal control, where even ring-fenced borrowings from institutional creditors were rerouted at the total discretion of the promoters,” the order noted.
Pursuant to the Securities and Exchange Board of India’s (Sebi) April 15 order that found prima facie violations of corporate governance by Gensol and its promoters, STCI had recalled the loan in April. The lender, while seeking recovery of Rs 11.25 crore, cited defaults and credit downgrades for its action.
Gensol had availed a Rs 15 crore equipment term loan from STCI under a 2023 loan facility agreement for acquiring 129 EVs for commercial leasing. The loan was secured by a hypothecation deed and Gensol promoters Puneet Singh Jaggi and Anmol Singh Jaggi had stood as personal guarantors. STCI had allegedly disbursed funds directly to vendors, after which Gensol leased the vehicles to its related entity BluSmart, which is no longer operational.
Justice Manmeet Pritam Singh Arora, while noting the STCI’s apprehensions that there was an imminent risk of dissipation of the vehicles purchased by Gensol using the loan advanced by the lender, asked the three court-appointed receivers to take over the vehicles so as to secure them, make inventories and relocate them to secure locations.
Gensol and the related lease entity were also restrained from selling, transferring or creating third-party rights in the vehicles.
“It will be open for the receiver to take all necessary steps to charge and preserve the vehicles so that they remain in good and working condition,” the court said, while asking Gensol and others to cooperate in identifying the locations where the hypothecated vehicles are parked within two days and not to make any attempt to shift them to any other location.
The receiver shall relocate and store the vehicles in a secure facility and make all the necessary arrangements for supervision, maintenance, and preservation, according to the order.
It further asked Gensol and BluSmart to cooperate with the receiver and also gave liberty to the latter to seek the assistance of the local police station if required. “The SHO of the concerned police station is directed to render full co-operation,” the court said.
The judge also asked ICICI Bank to maintain the status quo on a fixed deposit of Rs 40.62 lakh, which had been separately hypothecated by Gensol as security for the loan.
Citing SEBI’s interim findings that company funds had been misused and diverted by Gensol’s promoters in violation of corporate governance norms, the court also said that Gensol “did not adhere to the terms of the Facility Agreement and the financial discipline … and committed defaults in repaying the loan”.
“The company’s funds were routed to related parties and used for unconnected expenses, as if the company’s funds were promoters’ piggy bank. The diversion of funds... reflects a culture of weak internal control, where even ring-fenced borrowings from institutional creditors were rerouted at the total discretion of the promoters,” the order noted.
Pursuant to the Securities and Exchange Board of India’s (Sebi) April 15 order that found prima facie violations of corporate governance by Gensol and its promoters, STCI had recalled the loan in April. The lender, while seeking recovery of Rs 11.25 crore, cited defaults and credit downgrades for its action.
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