Shares of Gensol Engineering hit 5% upper circuit on May 15 even as Indian Renewable Energy Development Agency (Ireda) on May 14 said it has filed a bankruptcy application against the beleaguered firm before the National Company Law Tribunal.

According to a regulatory filing, Ireda has filed an application on May 14, 2025, under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Gensol Engineering Limited, a listed company bearing an amount of default of Rs 510,00,52,672 (about Rs 510 crore).

At 10:40 am on May 15, Gensol Engineering's shares on BSE were trading 5% higher at Rs 62.44 apiece, this is the third straight upper circuit that the stock witnessed. The stock's 52-week high is Rs 1,124.9 and 52-week low is Rs 51.25. The market cap of the stock is Rs 240 crore.

Last month, in an interim order, Sebi barred Gensol Engineering and promoters — Anmol Singh Jaggi and Puneet Singh Jaggi — from the securities markets till further orders in a fund diversion and governance lapses case.

On May 12, Jaggi brothers resigned from the company following market regulator Sebi’s interim order, according to an exchange filing. Anmol Singh Jaggi held the post of Managing Director while Puneet Singh Jaggi was a Whole-time Director.

Meanwhile, Gensol Engineering on Wednesday said the Securities Appellate Tribunal (SAT) disposed of its appeal but allowed the company to file its response on Sebi’s interim order to bar the firm and its promoters from the securities market.

In a regulatory filing, the company said the appeal filed by it before the SAT has been disposed of, granting it an opportunity to file its response to Sebi’s interim order within two weeks.

It further informed that the markets regulator has been given directions to hear the company within two weeks thereafter and pass an appropriate order within four weeks.

The tribunal has given no observations on Sebi’s interim order, it stated.

In its order on April 15, 2025, the Sebi also debarred Jaggi brothers from holding the position of a director or key managerial personnel in Gensol until further orders.

The order came after the Securities and Exchange Board of India (Sebi) received a complaint in June 2024 relating to the manipulation of share price and diversion of funds from GEL and thereafter started examining the matter.

In the 29-page order, Sebi had said, “The prima facie findings have shown mis-utilisation and diversion of funds of the company (GEL) in a fraudulent manner by its promoter directors, Anmol Singh Jaggi and Puneet Singh Jaggi, who are also the direct beneficiaries of the diverted funds”.

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 Gurgaon, splurging on a luxury golf set, paying off credit cards, and transferring money to close relatives, Sebi said in its interim order.

“The company has attempted to mislead Sebi, the CRAs (credit rating agencies), the lenders and the investors by submitting forged conduct letters purportedly issued by its lenders,” the regulator had said.

The noticees 1, 2 and 3 (GEL, Anmol and Puneet Singh Jaggi) are alleged to have violated the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules, it had added.

Sebi had noted that the promoters were running a listed public company as if it were a proprietary firm. GEL’s funds were routed to related parties and used for unconnected expenses as if the company’s funds were promoters’ piggy banks.

Between 2021 and 2024, Gensol secured term loans totaling Rs 978 crore from IREDA and PFC, with Rs 664 crore earmarked specifically to acquire 6,400 EVs for leasing to BluSmart. Gensol Engineering was also required to contribute an additional 20 percent equity margin, bringing the total expected investment for the EV purchases to around Rs 830 crore.

However, in a February exchange filing, the company disclosed that it had procured only 4,704 EVs instead of 6,400. This was corroborated by Gensol’s EV supplier, Go-Auto, which confirmed that the vehicles were purchased for Rs 568 crore.

SEBI has pointed out that a discrepancy of Rs 262.13 crore remains unexplained, even though more than a year has passed since the company received the final tranche of funding.

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

The internal controls at Gensol appear to be loose, and through the quick layering of transactions, funds have seamlessly flowed to multiple related entities/individuals, the regulator had said.

It had also directed the firm to appoint a forensic auditor to examine the books of accounts of Gensol and its related parties.