SEBI tightens noose on Gensol and Jaggi brothers in fund diversion case, retains ban

SEBI's tightening grip remains on Gensol Engineering and its former directors Anmol Singh Jaggi and Punit Singh Jaggi. Market regulator SEBI on Wednesday upheld its interim order prohibiting the company and its former directors from participating in securities markets. The action was taken due to concerns over fund diversion and lapses in corporate governance.

Additionally, SEBI stated that the Jaggi brothers will continue to be banned from holding director or key managerial roles in Gensol. The brothers are also co-founders of the electric vehicle ride-hailing firm BlueSmart Mobility. This final order comes as the company is going through bankruptcy proceedings overseen by a court-appointed professional. 

SEBI has accused the Jaggi brothers of diverting loan funds from their publicly listed company Gensol for personal use, raising issues of corporate misconduct and poor governance. The order noted that the promoters have not refuted SEBI's initial conclusion of money misappropriation and manipulation in communications with credit rating agencies (CRAs). 

SEBI stated it sees no reason to lift or alter the restrictions imposed earlier, reaffirming the directives of its interim order. However, the regulator clarified that restrictions related to Gensol will stay in place unless modified by a higher tribunal or court involved in the bankruptcy process. 

According to the order, Punit Singh Jaggi argued he was not involved in daily operations as he had relocated to Bengaluru to focus on another project. SEBI rejected this claim, asserting that Jaggi holds a responsible board position and cannot deny involvement, especially since he appears to benefit directly from diverted funds through an entity called Velray. 

The regulator directed its investigative team to further probe Jaggi's precise role. In its interim order, SEBI explained that funds intended for electric vehicle purchases were often diverted back to Gensol or related entities linked to the Jaggi brothers. Some of these funds were used for personal expenses, such as buying a luxury apartment, transferring money to close relatives, and investments in private entities owned by the promoters. Following the order, both brothers resigned from their positions as company directors.