The government will set up a “cross-functional” team of multiple agencies probing the Gensol Engineering case, with a view to speed up the investigation process, an official source told FE.
Gensol Engineering and its affiliate BluSmart Mobility are currently being probed by various agencies under different rules and Acts, for diversion of funds and alleged violation of laws, including the Companies Act. Last week, the Securities Appellate Tribunal refused to stay the market regulator’s interim order. It also asked Gensol to file its reply and directed the Securities and Exchange Board of India (Sebi) to pass the final order within four weeks of the firm’s hearing.
Besides Sebi, the ministry of corporate affairs (MCA), via the registrar of companies, the Enforcement Directorate (ED), which functions under the ministry of finance, and the Institute of Chartered Accountants of India (ICAI) are looking into some or the other aspects of the company’s alleged misconduct. Simultaneously, the National Financial Reporting Authority (NFRA) is examining the role of auditors for any lapses in performing their statutory duties.
The markets regulator had recently appointed Raju and Prasad Chartered Accountants to do forensic audit of Gensol’s financial statements between FY22 and FY25.
“We are discussing the possibility of a joint investigation. If an inter-departmental team is formed, it will have members from all the agencies,” the official said. “Sebi’s investigation is progressing well, and they might prepare a groundwork for other agencies. The market regulator might have seized key documents which will be required by other agencies to prove fund diversions and fraud allegations. It’s only appropriate for the investigating agencies to join hands,” the official said.
The registrar of companies (RoC) is currently probing Gensol and BluSmart for the corporate governance violations under Section 210 of the Companies Act, which gives powers to the central government to probe into the affairs of a company.
Last month, the ED raided the offices of Gensol in two states under the provisions of the Foreign Exchange Management Act (FEMA).
“The MCA, ED, and NFRA come under the same minister (minster for finance and corporate affairs), and since there’s going to be work overlap, a multi-disciplinary team of experts/inspectors could reduce the investigation time,” the official said.
The MCA is likely to submit report in three months while the forensic auditor has been given six months by Sebi to submit its findings. Experts said that manpower crunch in these investigating agencies could be a trigger behind the joint probe.
On April 15, Sebi had issued an interim order that barred the promoters of Gensol – Anmol Singh Jaggi and Puneet Singh Jaggi – from holding any key managerial positions in the company besides restraining them from dealing in the securities market over alleged involvement in fraudulent activities. In its order, Sebi said that Gensol attempted to mislead the agency, credit ratings companies (ICRA and CARE), lenders and investors by submitting forged conduct letters purportedly issued by its lenders.
In its 29-page order, Sebi also revealed that funds availed by Gensol as loans for procuring electric vehicles were utilised for buying a high-end apartment in The Camellias, DLF Gurgoan, and other personal expenses such as purchasing of golf set, travel and shopping.