Gensol Engineering promoters quit after Sebi order on fund diversion

Promoters of beleaguered Gensol Engineering, Anmol Singh Jaggi and Puneet Singh Jaggi, have 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.

Earlier on April 15, the Securities and Exchange Board of India (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.

The regulator also debarred Anmol and Puneet Singh Jaggi from holding the position of a director or key managerial personnel in Gensol until further orders. The markets watchdog also directed Gensol Engineering Ltd to put on hold the stock split announced by it.

Gensol Engineering in the exchange filing stated that Anmol Singh Jaggi, Managing Director, and Puneet Singh Jaggi, Whole-time Director, have tendered their resignation. They shall also cease to be a Member of the various committees of the company.

Citing the Sebi order of April 15, 2025, as the main reason for the resignation, the company stated as per the resignations, they relinquished charge of their posts "with effect from the close of business hours on May 12, 2025".

The SEBI 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 a 29-page interim 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".

"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 propriety firm.

GEL's funds were routed to related parties and used for unconnected expenses as if the company's funds were promoters' piggy banks.

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.

"...prima facie evidence of a blatant violation of rules of corporate governance is writ large over the workings of the company. The diversion of funds of the company (GEL) by promoter entities reflects a culture of weak internal control, where even ring-fenced borrowings from institutional creditors were rerouted at the total discretion of the promoters," Sebi's whole-time member Ashwani Bhatia said in the order.

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, Bhatia had said.

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