 "Gensol Engineering")
The Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC), two public sector non-banking financial companies (NBFCs) that extended loans to Ahmedabad-based Gensol Engineering Ltd (GEL), are likely to approach the Economic Offences Wing (EOW) of the Delhi Police to report alleged forgery by the firm of their official letters, according to people familiar with the matter.
Furthermore, the Ministry of Corporate Affairs on Monday said it will take necessary action in the GEL matter after examining the Securities and Exchange Board of India’s (Sebi’s) interim order against the firm, and its promoters Anmol Singh Jaggi and Puneet Singh Jaggi. The ministry, according to a PTI report, is examining the April 15 order in light of the provisions of the Companies Act, 2013.
Emailed queries sent to the spokespersons of both PFC and IREDA last week remained unanswered at the time of going to press.
GEL, it’s been alleged, submitted “conduct letters” and “no objection certificates” in the name of PFC and IREDA, which the lenders later discovered to have been forged by the company. The two state-owned financiers are believed to have been alerted to the issue as early as February, prior to a report last week by the markets regulator, detailing preliminary findings of governance failures, fund diversion, and submission of falsified documents by GEL.
The irregularities reportedly came to light after two major credit rating agencies, CARE Ratings and ICRA, attempted to verify the documents with the lenders. In February, as part of a credit rating review, the agencies asked Gensol -- engaged in providing solar consulting services, and engineering, procurement and construction (EPC) services -- to provide term loan statements from all its lenders. In response, GEL is said to have submitted “conduct letters” instead of the requested statements from IREDA and PFC, along with “no objection certificates” -- documents typically required when withdrawing credit ratings.
Sources claimed that PFC and IREDA denied issuing any such letters. “As soon as it came to the NBFCs’ attention, they issued a show-cause notice to GEL, asking the company to explain within 7-15 days,” one person said. “In reply, GEL claimed that the forgery was the work of one of its employees, and that the company was unaware of the matter.”
An official familiar with the development said: “IREDA and PFC chose to first follow their standard internal investigation processes before reporting the matter to investigative agencies, such as the EOW, Sebi, or the Union finance ministry.”
These internal processes involve referring such cases to committees dedicated to examining fraud and investigating potentially fraudulent activity by a company. If a company fails to demonstrate that such misconduct was an isolated act by an individual, and instead appears complicit in the fraud, NBFCs then refer the matter to the EOW, which proceeds with a formal investigation.
One source said the NBFCs intend to continue pursuing their investigation alongside Sebi’s probe. While Sebi has been investigating Gensol for stock manipulation, the NBFCs have been looking into forged documents and delays in loan repayments. “Now that Sebi’s preliminary report is out, there is no reason for us to wait. We can immediately report the fraud to EOW,” the person said.
Both IREDA and PFC have also flagged payment delays since January. “While GEL eventually cleared January’s dues, it did so a month late. February’s payment was also delayed, and the March dues remain unpaid,” another person said. “The company has yet to provide any clear timeline for settling these dues.”
Sebi issued the interim order against GEL and its promoters after uncovering financial mismanagement, governance lapses, and fund diversion. According to the investigation by the markets regulator, Gensol secured loans totalling ₹977.75 crore from IREDA and PFC, of which ₹663.89 crore was earmarked for the purchase of 6,400 electric vehicles. However, only 4,704 units were reportedly procured.
The regulator launched its investigation following a complaint last June alleging share price manipulation and misappropriation of company funds. The probe revealed what Sebi described as a “complete breakdown” of internal controls and corporate governance at GEL.
Meanwhile, the corporate affairs ministry is implementing the Companies Act, 2013, under which it has various powers to deal with instances of corporate misdoings. Among other options, the Registrar of Companies (RoC) can inspect the books of the company concerned and in case there are significant financial misdoings, a probe by the Serious Fraud Investigation Office (SFIO) can also be ordered.
