Mumbai: Securities Appeal Tribunal (SAT) on Wednesday refused to deliver interim relief to Gensol Engineering Ltd, and the Securities and Exchange Commission of India (SEBI) is investigating alleged misunderstanding and fraudulent disclosures.
Although SAT did not leave Sebi on April 15, it instructed Gensol to respond to the notification of Sebi's performance reasons within two weeks. Four weeks after the hearing, SEBI confirmation order is expected.
On April 15, Sebi banned Gensol founder promoters Anmol Singh Jaggi and Puneet Jaggi to take executive positions from the securities market and the company on the grounds of transfer of funds and abuse of loan proceeds. Gensol proposed the order, arguing that Sebi proposed a distorted narrative that caused serious reputation and commercial damage.
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Legal experts point out that Gensol still has avenues to appeal, including contact with the Supreme Court or challenged once a confirmation order is issued.
“Although SAT appears to have dropped interim relief at this stage, Gensol reserves the right to a final confirmation order issued by SEBI,” said DMD advocate partner Saiyam Chaturvedi. “In addition, in exceptional circumstances, there is scope to seek recourse in the Supreme Court.”
However, some experts are skeptical of the Supreme Court at this stage.
“Gensol has the right to resort to the Supreme Court with the Supreme Court under the former party order of SEBI, but now SAT has provided SEBI with four weeks to pass the confirmation order and approved the company’s hearing opportunity, Apex Court may choose not to intervene because the natural justice principles are already adhered to,” said Shah M. Shah M. Shah, senior securities law firm, said.
Akshaya Bhansali, partner at Mindspright Legal, responded to this view, which shows that Gensol is focused on governance strategies.
“Companies should contact the Department of Corporate Affairs (MCA) and work with the National Corporate Law Tribunal (NCLT) to appoint a new group of directors,” Bhansali said. “Fast action and support from the government is critical, so that due to poor management of key staff at the company, funding provided by PFC, IREDA and investors will not be compromised.”
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Gensol described Sebi's order in his appeal – driving the company and its executives from the securities market as “selective and sensational people”, noting that it caused irreparable losses without providing any opportunity.
“The order selectively studied facts and intentionally missed facts in an attempt to clarify the circumstances of AD's temporary direction,” the appeal said. It further claimed that Sebi failed to consider the cascading consequences for shareholders and business continuity. Gensol argued: “If anything, the effect of the above order is counterintuitive and directly harms public shareholders.”
The appeal stressed that the company's stock fell more than 90%, and clients such as NTPC and JSW have canceled or threatened to withdraw from the contract.
“In the past few weeks, news on Gensol's media has completely destroyed its image,” the company said, warning that even profitable businesses could face bankruptcy.
The key allegation for SEBI is that Gensol abuses ₹A Rs 71.41 crore loan from IREDA is purchased through the affiliate Capbridge LLP. Gensol denied this, stressing that Sebi's order itself acknowledged Capbridge had been repaid ₹On March 31, 2023, Rs 4.75 crore arrived automatically.
“The facts related to Capbridge’s purchase of apartments are unnecessarily highlighted, just to gain some media leverage and create media madness on the same media, while deliberately ignoring and denying the fact that Capbridge purchased properties that Capbridge did not pay anything at Gensol’s expense.”
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The company also criticized SEBI for not providing opportunities to respond before imposing full market restrictions. It said: “These incorrect facts … If Sebi provides Gensol with the opportunity to refute a particular allegation, it can be avoided altogether.”
