Stock Crash: Court allows freezing of company's bank accounts

News Topical, Digital Desk : Amidst the investigation of serious financial irregularities, the Central Government has got the approval to freeze the bank accounts and lockers of the company and its 10 subsidiaries and some individuals. The Ahmedabad Bench of the National Company Law Tribunal (NCLT) gave this order. Let us tell you that the stock is falling continuously. The company's share has fallen from Rs 1100 to Rs 60. The decline in the stock is not stopping. On May 29, 2025, the stock got a lower circuit.

What is the case- This company is Gensol Engineering- NCLT found that the funds raised by the company for specific purposes were illegally transferred to related parties, which is a direct violation of the Companies Act, 2013. The NCLT order states that the money raised by the companies was wrongly sent to related parties, which is a serious violation of the law.

What irregularities came to light-
Fund diversion (sending money to the wrong place)
Mistakes in financial reports
Manipulation of share price Violation of corporate governance All these allegations have been made on the basis of reports of Ministry of Corporate Affairs (MCA), SEBI, and SFIO (Serious Fraud Investigation Office). MCA had demanded to take 10 necessary steps, which NCLT approved. Order to RBI and Indian Banks' Association to freeze the bank accounts and lockers of these companies and individuals. Prohibition on selling, mortgaging or transferring property, securities, and valuables.

Personal responsibility of directors can also be fixed- MCA has implemented section 339 of the Companies Act, under which if fraud is proved, the directors and officers of the company can be held personally responsible for the debts.

Insolvency and past action- IREDA (Indian Renewable Energy Development Agency) has initiated bankruptcy proceedings against Gensol for loan default of ₹510 crore. On April 15, SEBI barred Gensol founders Anmol and Puneet Jaggi from trading in the stock market and becoming directors in any listed company. According to SEBI's report, they used the loans taken from PFC and IREDA for personal expenses.