“We want to gather all evidence and complete the investigation internally while the matter is still hot,” the official source said.
The MCA has been conducting its due diligence in the Gensol Engineering fund diversion matter through its Director General and the Registrar of Companies offices since April. The government is looking into the books of around 17 companies related to Gensol Engineering, sources said.
The National Financial Reporting Authority (NFRA), on the reference of the Securities and Exchange Board of India (Sebi), is in the process of conducting a preliminary enquiry into the role of auditors of Gensol Engineering in allegations of fund diversion by its promoters.
An order by Sebi had stated that the steep decline in the promoters’ stake in Gensol Engineering was not organic but allegedly orchestrated through a network of false disclosures, sham transactions and diverted funds, which effectively led to a near-total promoter exit, even as unsuspecting investors were left holding the bag.
The irregularities reportedly came to light after two major credit rating agencies, CARE Ratings and ICRA, attempted to verify the documents with the lenders.
The Financial Reporting Review Board (FRRB) of the Institute of Chartered Accountants of India (ICAI) is also reviewing the financial statements and the statutory auditor’s report of Gensol Engineering and BluSmart Mobility Private Limited for the financial year 2023–24.
The government would initiate a probe by the Serious Fraud Investigation Office (SFIO) against Gensol Engineering based on the evidence gathered by the MCA, sources said.
Company law experts say that this development should reignite the debate on introducing mandatory board evaluation and performance assessment as a compliance check for high-risk ventures.
 "Gensol Engineering")