The Securities Appellate Tribunal (SAT) on Wednesday declined to stay the Securities and Exchange Board of India’s (SEBI) interim order that barred Gensol Engineering Limited and its promoter-directors, Anmol Singh Jaggi and Puneet Singh Jaggi, from accessing the securities market.

The interim action follows serious allegations of fund diversion, forgery, and misleading disclosures.

A bench comprising Justice PS Dinesh Kumar (Presiding Officer) and Meera Swarup (Technical Member) directed Gensol to respond to SEBI’s interim findings and instructed the regulator to issue a final order within four weeks of completing the hearing.

SEBI’s April 15 order alleged that Gensol routed hundreds of crores through related parties, misused public and borrowed funds for personal luxury purchases—including a premium apartment—and submitted forged “No Objection Certificates” and conduct letters to credit rating agencies. The company was also accused of inflating electric vehicle (EV) procurement claims despite minimal operational activity at its plant.

In light of these findings, SEBI barred the company and its promoters from participating in the securities market and from holding any directorial or key managerial positions.

Challenging the order before SAT, Gensol contended that SEBI's action was “illegal, unjustified, and unwarranted,” and argued that the regulator failed to meet the legal threshold for issuing ex-parte interim directions. The company also questioned the urgency cited by SEBI, noting that the investigation was triggered by a complaint received nearly 10 months earlier, in June 2024.

Gensol alleged that SEBI had selectively relied on facts and ignored contextual explanations, thereby misrepresenting the nature of the transactions. It disputed the claim that ₹50 crore was siphoned off through Go-Auto and Capbridge Ventures, asserting that Capbridge had already repaid a significant portion of the funds prior to the issuance of SEBI’s order.

The company further denied any forgery, claiming full cooperation with the investigation and consistent compliance with requests for information. It also rejected the allegation of fund misuse meant for EV procurement, asserting that transactions with Go-Auto were part of regular business activity and that the amounts in question were substantially lower than what SEBI alleged. Gensol argued that the regulator failed to offer it an opportunity to explain or reconcile figures, leading to a distorted representation of facts.

Appearing for Gensol, Senior Advocate Gaurav Joshi, briefed by law firm Trilegal, sought a stay on the interim order, highlighting that the freezing of accounts had adversely impacted not only Gensol but also its privately held subsidiary. He argued there was no misrepresentation regarding the company’s Pune plant capacity, which remains under construction. "If we were capable of manufacturing, we would have taken orders. The plant is still at the market research stage,” Joshi submitted.

Opposing the stay, Senior Advocate Chetan Kapadia, representing SEBI, described the alleged document forgery as “just the tip of the iceberg” and emphasized the need for a deeper examination of the company’s transactions.

Ultimately, SAT declined to grant relief to Gensol and disposed of the appeal with a direction to SEBI to issue a confirmatory order within four weeks of hearing the company.

The Trilegal team representing Gensol included Anuj Berry, Anubhav Ghosh, Vivek Shah, Paras Taneja, and Ritwick Kumar.