The Enforcement Directorate (ED) has detained Puneet Jaggi, co-founder of BluSmart, at a hotel in Delhi as part of an investigation linked to Gensol Engineering Ltd. This action follows a series of raids conducted by the agency at Gensol's offices in Delhi, Gurugram, and Ahmedabad, under the Foreign Exchange Management Act (FEMA).

The ED's investigation targets the Jaggi brothers Puneet and Anmol Singh Jaggi—who are the promoters of Gensol. This comes in response to a report from the Securities and Exchange Board of India (SEBI) that raised concerns about financial irregularities, inadequate corporate governance, and the diversion of company funds. As of now, Gensol has not released an official statement regarding the situation.

In light of the SEBI report, operations for BluSmart Mobility, which operates electric taxis in Delhi-NCR, Bengaluru, and Mumbai, have been suspended. SEBI has also prohibited the Jaggi brothers from participating in the securities market until further notice.

Sources indicate that Puneet Jaggi was apprehended by ED officials at a hotel in Delhi, while his brother Anmol is reportedly in Dubai. Their spouses have been located in Pune, Maharashtra. The ED has also conducted searches at their residences in The Camellias, DLF Gurugram, and another site in Ahmedabad.

The agency is expected to file a money laundering case against the Jaggi brothers once the Economic Offences Wing (EOW) of Delhi Police registers a First Information Report (FIR) based on complaints from the Indian Renewable Energy Development Agency (IREDA) and Power Finance Corporation (PFC).

The ED's actions stem from allegations that Gensol Engineering misused loans obtained from PFC and IREDA, intended for the purchase of electric vehicles and Engineering, Procurement, and Construction (EPC) projects. Instead, it is alleged that the funds were diverted to acquire assets in the names of the promoters, their family members, or various shell companies associated with the group. The agency has reportedly identified these assets and found that some of the diverted funds were used to acquire foreign exchange.

Additionally, the ED is investigating claims that Ajay Aggarwal of Go Auto Pvt Ltd, the authorized distributor for Tata electric vehicles, assisted Gensol in misappropriating loan proceeds instead of fulfilling the intended supply of EVs.

SEBI's report highlights a troubling pattern of fund diversion by Gensol's promoters, indicating significant governance failures within the company. The findings reveal that term loans from IREDA and PFC were misused, with the promoters treating the publicly-listed company as their personal enterprise. This included routing funds to related parties, making extravagant expenditures, and neglecting shareholder interests. SEBI cautioned that these misappropriated funds could ultimately be written off from the company's accounts, leading to substantial losses for investors.

Gensol Engineering, which is listed on both the BSE and NSE, offers solar consultancy services, EPC projects, and electric vehicle leasing, among other services