SEBI upholds interim order against Gensol

The Securities and Exchange Board of India (SEBI) on Wednesday upheld the directions in its interim order against Gensol Engineering, noting that the promoters had failed to rebut the findings effectively.

The promoters of the company, Anmol Singh Jaggi and Puneet Singh Jaggi, had made submissions to the regulator denying the findings and provided reasons for the same.

However, they did not provide any supporting evidence for denial of the findings in the interim order, SEBI observed.

In its findings in the interim order, SEBI alleged that the promoters indulged in falsification of conduct letters to creditors, diverted funds borrowed from Power Finance Corporation (PFC) and the Indian Renewable Energy Development Agency (IREDA) for personal use, did not disclose layering and related party transactions, failed to report loan defaults and made misleading corporate disclosures. 

Mr. Puneet Jaggi had claimed that he was only a nominal director and was just signing documents for compliance.

“As Puneet Singh Jaggi appears to also be a direct beneficiary of funds diverted from Gensol through Wellray, his contention that he was not involved in the affairs of Gensol cannot be taken at face value. Accordingly, I am not inclined to accept the submissions of Puneet Singh Jaggi at this stage. However, the investigating authority in this matter shall look into this aspect and examine whether Puneet Singh Jaggi had any active role in the violations or not,” Kamlesh C. Varshney, wholetime member of SEBI said in the confirmatory order.

In the interim order, SEBI had directed that the promoters step down from the managerial position until further orders and be barred from dealing in securities market, and a forensic audit be conducted. The promoters had appealed to the Securities Appellate Tribunal (SAT).

“In view of the observations and findings recorded in the above paragraphs, I find that noticees have failed to effectively rebut the prima facie findings recorded in the interim order regarding falsification of conduct letters , submitted to CRAs and diversion/mis-utilisation of funds of Gensol by promoters and promoter related entities. Accordingly, the prima facie findings alleging violation of the provisions …still hold ground,” Mr. Varshney added.

The current observations “are tentative in nature and pending detailed investigation and forensic audit,” Mr. Varshney said in the order.