The Delhi High Court on Wednesday restrained Gensol and Blu Smart from alienating 220 more vehicles belonging to lessors Smas Auto Leasing and Shefastaq OPC..Justice Jyoti Singh also appointed receivers for the upkeep of the vehicles.The Court refused to order repossession of the vehicles by the lessor, as it is beyond the scope of Section 9 of the Arbitration and Conciliation Act, 1996. "When the receivers reach the site, they will ensure that they identify where the vehicles are parked. However, they will not move the vehicles from the location."The Court also ordered Gensol and Blu Smart to file a statement of assets and liabilities. .During the course of the proceedings, Senior Advocate Rajshekhar Rao, who appeared for Smas, argued that the parties entered into a lease deed in 2021 and 2022 for the lease of vehicles. He sought for the vehicle's possession be given to the lessor, as the receivers might not have the wherewithal to maintain the vehicles. He contended that electric vehicles (EV) will have a short shelf life if not maintained properly. Rao also argued that there are news reports that the vehicles are being sub-leased to third parties. .Advocate Saurabh Seth appeared for Shefastq and contended that the parties entered into a lease agreement in November 2024. He argued that the petitioner has apprehension in light of the recent developments in Gensol. .Advocate Mayank Pandey also appeared for Smas along with Rao. They were briefed by Advocates Aditya Bhattacharya (Partner), Simran Tandon (Associate Partner), and Sarthak Miglani (Associate) from King Stubb and Kasiva.Seth was briefed by Advocates Sonia Dube, Neelampreet Kaur, Abhiroop Rathore and Tanishq Sharma..Last week, the Court appointed a receiver to take deemed custody of 95 electric vehicles leased to BluSmart Cabs by Clime Finance Private Limited, while restraining Gensol from creating third-party rights over the fleet.On April 25, the Court restrained Gensol and BluSmart from alienating or creating third-party rights over 175 electric vehicles leased to them by Japanese financial services giant Orix..This litigation comes amid mounting regulatory scrutiny on Gensol Engineering. Earlier this month, the Securities and Exchange Board of India (SEBI) issued a show-cause notice to Gensol over alleged violations of corporate governance norms, including failure to disclose related-party transactions, particularly with BluSmart and other group companies.SEBI is also probing discrepancies in Gensol’s financial statements, including questions over revenue recognition practices and inadequate disclosures regarding contingent liabilities. Sources indicate that SEBI has flagged concerns about Gensol’s dealings in several inter-company transactions, which may have contributed to an inflated financial position.Additionally, SEBI has reportedly barred certain Gensol officials from accessing the securities market pending conclusion of the investigation. The regulatory action has weighed on investor sentiment, with Gensol’s stock witnessing significant volatility.
