NCLT Ahmedabad Directs Gensol RP To Hand Over 10 EVs To Mahindra Finance During CIRP

A Bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma directed the Resolution Professional (RP) of Gensol to hand over 10 of the vehicles to MMFSL, holding that they could not be treated as assets of the Corporate Debtor during CIRP. The Tribunal observed:

“…it is necessary to note that the moratorium is intended to preserve the legal and factual position of the Corporate Debtor and its assets during CIRP. It does not, by itself, create ownership or proprietary rights in favour of the Corporate Debtor over assets belonging to another person.”

MMFSL had sanctioned lease facilities aggregating to Rs. 85 crore between 2021 and 2023, pursuant to which 419 EVs were acquired and leased to Gensol Engineering Limited and Blu-Smart Mobility Limited. Following defaults, MMFSL terminated the lease agreements on 18 March 2025, before commencement of CIRP on 13 June 2025.

Of the 419 vehicles, 291 were repossessed, while 128 remained unrecovered, including 17 vehicles allegedly retained by Gensol. MMFSL approached the Tribunal seeking disclosure of their location and restoration of possession, contending that the vehicles did not form part of the CIRP estate as the leases had been terminated before insolvency proceedings commenced.

Indian Renewable Energy Development Agency Limited (IREDA) opposed the claim, contending that the vehicles formed part of Project No. 2583 financed under a Facility Agreement and Deed of Hypothecation dated 24 March 2022. It also relied on a charge allegedly registered with the Ministry of Corporate Affairs.

Go Auto Private Limited, the dealer, confirmed that MMFSL had issued the purchase order on 21 March 2023 and made payments in three tranches. It produced invoices, insurance policies and delivery challans showing MMFSL as the buyer or lessor and Gensol as the consignee. Go Auto also asserted that its role was limited to that of a dealer.

MMFSL relied on registration certificates, purchase orders, tax invoices, proof of payment, insurance policies and gate passes showing hypothecation in its favour. It also relied on Vahan records to establish its rights over the vehicles.

The Tribunal observed that hypothecation does not transfer ownership and held that IREDA's claim had to be correlated with the specific 17 vehicles. It noted inconsistencies in IREDA's documents, including invoices dated before the manufacture of the vehicles and registration records allegedly issued before delivery.

In contrast, the Tribunal found that MMFSL's purchase orders, invoices, payment records, insurance documents and Vahan records were corroborated by Go Auto and verified through physical records obtained from the registering authority.

For 10 vehicles, physical records including Form 20, Form 34, invoices and insurance documents confirmed MMFSL as financier. However, records relating to the remaining seven vehicles were unavailable.

The RP informed the Tribunal that it was unable to trace the 17 vehicles due to incomplete records and conflicting claims by MMFSL and IREDA. It submitted that it had acted with due diligence and in good faith while attempting to verify the existence, ownership and location of the vehicles.

IREDA argued that repossession during the moratorium under Section 14(1)(d) of the IBC, which restricts recovery of property occupied by or in the possession of the Corporate Debtor, was impermissible as it would deplete the insolvency estate. It also contended that MMFSL's reliance on termination of the lease agreements was misconceived as contractual rights cannot override the IBC under Section 238, which gives the Code overriding effect over inconsistent laws and agreements.

On the moratorium issue, the Tribunal held that Section 14(1)(d) does not apply to assets that do not belong to the Corporate Debtor. It observed:

“…an asset is found not to be liable to be treated as an asset of the Corporate Debtor, such asset cannot be retained as part of the insolvency estate merely on account of its physical possession by the Corporate Debtor. The applicability of the moratorium must necessarily be examined with reference to the nature of the asset and the rights established in respect thereof.”

Accordingly, the NCLT partly allowed MMFSL's application, holding that the 10 traced vehicles verified through physical records would not be treated as assets of Gensol during CIRP. It directed the RP to hand over possession of the vehicles to MMFSL within 15 days, prepare an inventory and ensure their safe delivery, while continuing efforts to trace the remaining seven vehicles.

For Applicants: Advocates Sharad Tyagi, Samarth Gogia, K. Gayatri

For Respondents: Advocates Monark Gahlot and Aditya Bihani, Srideepa Bhattacharyya, Neha Shivhare, Shrrijiet Roychowdhary for R1; Advocates Apoorav Sarvaria, Yashika Sarvaria, Khusboo Sharma for IREDA