ED Detains Gensol Co-Founder Puneet Singh Jaggi In Delhi, Probes EV Loan Misuse And FEMA Violations

New Delhi: The Enforcement Directorate Thursday conducted searches against beleaguered Gensol Engineering Ltd and detained its co-promoter Puneet Singh Jaggi from a Delhi hotel, official sources said.

The raids were conducted at company's premises in Delhi, Gurugram and Ahmedabad under the provisions of the Foreign Exchange Management Act (FEMA).

The promoter brothers of the company -- Anmol Singh Jaggi and Puneet Singh Jaggi -- are under the scanner of the federal probe agency following a SEBI report against them for alleged financial misconduct, corporate misgovernance and diversion of funds.

The company could not be immediately contacted for comments.

Jagg brothers' another company BluSmart Mobility runs cabs under the brand name BluSmart and it provides electric cab services in Delhi-NCR, Bengaluru and Mumbai. It has halted bookings since the Securities and Exchange Board of India (SEBI) report surfaced.

The markets regulator has also barred the brothers from accessing the securities market until further orders.

The sources told PTI that Puneet Jaggi was detained by the ED from a Delhi hotel while Anmol Jaggi is stated to be in Dubai.

The wives of the two brothers have been traced to Pune in Maharashtra even as the ED officials visited their homes located in The Camellias, DLF Gurugram apart from a location in Ahmedabad, the sources said.

The federal probe agency will soon file a criminal case of money laundering against the promoters once the Delhi Police economic offences wing (EOW) files an FIR in this case based on a complaint by the IREDA and Power Finance Corporation (PFC), they said.

The ED action is based on the SEBI order which claimed that Gensol Engineering obtained loans from PFC and IRDEA Ltd for procurement of EVs and EPC (Engineering, Procurement and Construction) contracts.

However, according to the sources, the company instead of utilising these funds for the intended purposes had "diverted" the funds for purchasing the assets in name of promoters or their relatives or in various shell entities floated by the group.

The agency is understood to have identified such assets and it was also noticed that the group has used such diverted funds for acquiring foreign exchange.

Gensol, as per the sources, has floated various companies outside India including in Dubai and the US.

The sources said the ED is also investigating allegations that Ajay Aggarwal of Go Auto Pvt Ltd, the Tata e-vehicles distributor, "assisted" Gensol in "diverting" the loan funds instead of using it for supply of EVs.

At the heart of the ED's investigation are findings of the SEBI's interim order that said Gensol Engineering's promoters treated the listed company as a proprietary firm, diverting corporate funds to buy a high-end apartment in The Camellias, DLF Gurugram, splurging on a luxury golf set, paying off credit cards, and transferring money to close relatives.

SEBI's findings also said that there was a pattern of fund diversion by the Gensol promoters pointing to governance failures within the company.

Alleged misutilisation of term loans availed by Gensol from IREDA and PFC were also recorded in the SEBI report.

SEBI also noted that the promoters were running the company like their personal piggy bank, routing funds to related parties and spending without regard for shareholder interest.

The result of these transactions would mean that these diversions would, at some time, need to be written off from the company's books, ultimately resulting in losses to the investors, SEBI has said.

Listed on BSE and NSE, Gensol Engineering is engaged in providing solar consulting services, EPC services, leasing of electric vehicles, etc.

Disclaimer: This is a syndicated feed. The article is not edited by the FPJ editorial team.