The Enforcement Directorate on Thursday detained BluSmart co-founder Puneet Jaggi from a Delhi hotel after the agency conducted raids in a case related to Gensol Engineering Ltd, news agency PTI reported, citing official sources.
The agency searched the company’s offices in Delhi, Gurugram, and Ahmedabad under the Foreign Exchange Management Act (FEMA).
The ED is investigating Gensol promoter brothers Anmol Singh Jaggi and Puneet Singh Jaggi after a SEBI report accused them of financial irregularities, corporate misgovernance, and fund diversion.
The company has not yet issued a response, PTI added.
BluSmart bookings halted
The Jaggi brothers' other venture, BluSmart Mobility, operates electric cabs under the BluSmart brand in Delhi-NCR, Bengaluru, and Mumbai. However, it has paused bookings following the release of a SEBI report.
The Securities and Exchange Board of India (SEBI) has also prohibited the brothers from accessing the securities market until further notice.
Sources told PTI that Puneet Jaggi was detained by the Enforcement Directorate (ED) at a hotel in Delhi, while Anmol Jaggi is reportedly in Dubai.
{{/usCountry}}Sources told PTI that Puneet Jaggi was detained by the Enforcement Directorate (ED) at a hotel in Delhi, while Anmol Jaggi is reportedly in Dubai.
{{/usCountry}}The wives of the two brothers have been located in Pune, Maharashtra. The ED officials also visited their residences in The Camellias, DLF Gurugram, and a site in Ahmedabad.
The ED is expected to file a money laundering case against the promoters once the Delhi Police Economic Offences Wing (EOW) registers an FIR, based on a complaint by IREDA and Power Finance Corporation (PFC), the sources added.
What are the allegations against Gensol Group?
The Enforcement Directorate's action stems from the SEBI order, which alleged that Gensol Engineering secured loans from PFC and IREDA Ltd for the purchase of electric vehicles (EVs) and Engineering, Procurement, and Construction (EPC) contracts.
However, sources revealed that instead of using these funds for their intended purposes, the company "diverted" the money to purchase assets in the names of promoters, their relatives, or various shell entities established by the group.
The agency has reportedly identified these assets and noted that the group also used the diverted funds to acquire foreign exchange.
According to sources, Gensol has set up multiple companies abroad, including in Dubai and the US.
The ED is also looking into claims that Ajay Aggarwal from Go Auto Pvt Ltd, the Tata e-vehicles distributor, "assisted" Gensol in "diverting" the loan funds instead of using them for EV supply.
Central to the ED's investigation are SEBI's findings, which suggested that Gensol Engineering's promoters treated the listed company as a proprietary firm, misusing corporate funds to buy a high-end apartment in The Camellias, DLF Gurugram, splurge on luxury golf sets, pay off credit cards, and transfer funds to close relatives.
What are SEBI's findings?
SEBI's findings also highlighted a consistent pattern of fund diversion by Gensol promoters, pointing to serious governance issues within the company.
The SEBI report documented the alleged misuse of term loans taken by Gensol from IREDA and PFC.
The report also observed that the promoters were managing the company as if it were their personal asset, channelling funds to related parties and spending recklessly, disregarding the interests of shareholders.
According to SEBI, these diverted funds would eventually need to be written off from the company's books, leading to significant losses for investors.
Gensol Engineering, listed on BSE and NSE, offers solar consulting, EPC services, and electric vehicle leasing, among other services.
(With PTI inputs)