Gensol’s Auditors in Trouble? NFRA joins Probe against Promoters’ Financial Irregularities

The National Financial Reporting Authority ( NFRA ) has now joined the investigation against the Gensol Engineering Promoters into the allegations of fund diversion and financial irregularities by the company’s promoters.

The financial authority entered into the investigation after the findings of the Securities and Exchange Board of India ( SEBI ). It has barred the promoters of the company from the capital market, preventing them from taking any role in listed companies.

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The NFRA will investigate if there were any deficiencies in financial reporting, auditing norms, and internal controls that facilitated the suspected diversion of funds. This audit might be extended to Gensol's external auditors, who could be held accountable for not detecting or informing about any discrepancies. The authority never spared the auditors who did not discharge their responsibilities or discovered any audit lapses or any kind of involvement.

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The authority has debarred 85 auditors until 2025, with suspension periods ranging from six months to ten years, following the discovery of serious audit lapses. In addition, monetary penalties have been imposed on several of them.

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The background of the Gensol Engineering financial case is that the SEBI identified the irregularities and consequently issued an interim order dated April 15, 2025. According to the board, the financial irregularity was not organic but an organised scam.

The regulator accused the promoters-Anmol Singh Jaggi and Puneet Singh Jaggi-of treating company resources as their “own piggy bank,” using diverted funds for personal purchases, including luxury real estate and jewelry.

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The board also found submission of false documents to credit rating agencies to hide loan defaults, and arbitrary diversion of ring-fenced loans that were supposed to be used for buying electric vehicles (EVs).

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Following the SEBI’s findings, the Ministry of Corporate Affairs (MCA) has rolled out a suo motu inquiry into Gensol’s regulatory filings and accounts, reviewing potential violations of the Companies Act, including fraud and breaches of directors’ duties.

Further, The Indian Renewable Energy Development Agency (IREDA), a major lender, has accused Gensol’s promoters of diluting their shareholding without lender approval-a breach of contract-and has filed a complaint with the Economic Offences Wing (EOW)

Along with these, the Enforcement Directorate (ED), Central Bureau of Investigation (CBI), and Serious Fraud Investigation Office (SFIO) may also initiate parallel probes, given the scale and nature of the alleged financial misconduct.

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