Amid another legal setback from Gensol Engineering Ltd and Electric cycling startup Blusmart, the Delhi High Court on Wednesday banned the companies from renting more than 220 other electric vehicles (EVs) from two separate lessors.
Justice Jyoti Singh issued an order when appointing the court takeover to occupy the vehicle. However, the court denied the lessor's request for retrieval, saying that such relief was not within the scope of Section 9 of the Arbitration and Reconciliation Act of 1996 and filed a petition under the Act.
The court also directed Gensol to file an identity report on the leased electric vehicle within two days of the lessor's concerns about the whereabouts of the vehicle. In addition, Gensol and Blusmart are asked to provide a comprehensive statement on their assets and liabilities.
Read this | Gensol sponsors lost more than half of ownership
The order is a petition by SMAS Auto to lease the Pvt. Ltd and Shefasteq OPC Pvt. Limited, accusing Gensol, Blusmart and its sponsors of breaching the lease agreement and failing to pay membership fees.
Reviewed according to court documents MintSMAS Auto has leased 164 EVs to Gensol and leased Blusmart to Gensol under a separate main lease agreement. Shefasteq claims it has rented another 10 electric vehicles. Both lessors claimed that despite receiving monthly invoices and binding contractual obligations, the companies failed to pay lease rentals and fleet management fees in a timely manner.
“The ongoing unauthorized possession of electric vehicles by respondents is illegal and restricts the petitioner to seek, as is well known, to immediately appoint recipients to detain and possess the electric vehicles described above to preserve and maintain a commercially viable and operational state,” SMAS PLEA said.
It stresses that electric vehicle batteries are sensitive and perishable assets that require regular monitoring and continuous operational uses (especially in extremely high fires) to prevent irreversible damage.
Wednesday’s order marks the third ruling for the same seat in less than two weeks.
On April 25, Justice Singh restricted the company's rights to 175 evs or more rented by Japanese financial services company Orix. Then, on April 29, the court banned Blusmart from selling or transferring the 95 evs leased by Clime Finance Pvt Ltd.
According to the latest order, a total of 493 leased electric vehicles are under judicial protection, prohibiting Gensol and Blusmart from selling, transferring or distributing third-party rights.
Aditya Bhattacharya, partner in the lawsuit against King Kasiva, said: “The court orders protect the interests of fleet leasing companies by requiring Gensol to disclose to the court the current location and operational status of the electric vehicle lease.”
“The ruling clearly emphasizes the importance of battery condition and proper handling methods, which is crucial for efficient operation and maintenance of such vehicles,” Bhattacharya added.
Financial and regulatory challenges
The latest court order is brought amid increasing regulatory scrutiny of companies.
The Securities and Exchange Commission of India (SEBI) recently issued a demonstration notice to Gensol and its sponsors on alleged governance errors, including undisclosed related party transactions and financial violations.
Read this | A gap of 26.2 billion rupees over a year? ”>How Gensol's lender misses ₹The 26.2 billion gap in more than a year?
Regulators also prohibit the Jaggi brothers from taking key management roles in any listed company and prohibit Gensol and its promoters from entering the capital market.
Gensol is also facing questions about processing ₹Power Finance Corp. (PFC) and the Renewable Energy Development Agency of India (IREDA) are aiming to buy 6,400 evs. Disclosures show that only 4,704 cars were actually purchased.
The PFC has filed a complaint with the Economic Crime Department of Delhi Police, alleging that it uses fake documents to secure the loan. IREDA reportedly funded 3,400 electric vehicles, which could shorten 1,400 vehicles based on current filings.
As mentioned earlier MintPFC is considering legal proceedings, including bankruptcy proceedings and debt recovery court applications to restore dues.
Read also | Gensol has won many PSU contracts. This is what happened to them
Meanwhile, Blusmart has temporarily closed its app, informing users that ride reservations will be suspended until May 7. If the suspension continues above that date, the company also promises a refund within 90 days.
