NCLT Ahmedabad Refuses Release Of BluSmart's ₹9.15 Crore DSRA Funds Amid Probe Into Gensol Group Companies

The Ahmedabad bench of the National Company Law Tribunal (NCLT) has recently refused to permit release of Rs 9.15 crore kept in a debt service reserve account (DSRA) linked to Blu-Smart Charge Pvt. Ltd., observing that the amount should remain preserved while investigations continue into the wider Gensol-BluSmart group's Rs 166 crore fund trail.

A bench of Judicial Member Shammi Khan and Technical Member Sanjeev Sharma noted that questions surrounding the disappearance, release and set-off of about Rs 166 crore from the secured account structure were still under investigation.

The bench observed, “...the unresolved circumstances surrounding disappearance/set-off /release of approximately INR 166,00,00,000/- from the broader secured account structure are still subject matter of investigation and factual scrutiny. In such circumstances, this Adjudicating Authority is of the view that permitting release of the remaining amount at this stage may potentially affect the ongoing investigative exercise concerning the overall fund trail and related transactions.”

Catalyst Trusteeship Limited, acting as debenture trustee, had sought release of the DSRA amount after Blu-Smart Charge defaulted on obligations under non-convertible debentures worth Rs 124.5 crore issued in December 2023. The DSRA had been created as part of the security package and was lien-marked in favour of Catalyst.

Catalyst argued that ICICI Bank had confirmed in January 2024 that the DSRA amount would be released on demand without requiring consent from Blu-Smart Charge. It also pointed to default notices issued under the debenture documents and proceedings initiated before the Commercial Court at Ahmedabad to enforce its security interest.

The application sought a limited modification of an ex parte order passed by the NCLT in May 2025 freezing assets and bank accounts linked to Gensol and Blu-Smart entities under investigation.

Opposing the plea, the Union of India contended that the issue could not be treated as a standalone contractual dispute because it formed part of a broader investigation into alleged diversion and misuse of funds within the Gensol-BluSmart group. It highlighted unresolved issues relating to fixed deposits of about Rs 166 crore that were no longer available despite having formed part of the secured account structure.

The Union nevertheless informed the Tribunal that it did not oppose a limited release of the DSRA amount for the benefit of debenture holders, subject to safeguards and disclosures.

The bench declined to accept that position as sufficient ground for releasing the money.

Rejecting Catalyst's reliance on the Union's conditional no-objection, the bench observed,

“Merely because the Union of India has expressed a limited and conditional no-objection regarding possible utilization /release of the DSRA amount, this Tribunal is not denuded of its independent obligation to examine whether release of the said amount at the present stage may prejudice the ongoing investigation or affect preservation of the larger fund trail presently under scrutiny or will be inconsistent with the provisions of IBC, 2016.”

The Tribunal noted that the DSRA was reflected in Blu-Smart Charge's financial statements as a non-current financial asset. It also recorded that investigations concerning the secured account structure and related transactions were still incomplete.

Referring to the unresolved position regarding the fixed deposits, the bench observed:

“The unresolved factual position regarding release/set-off of the fixed deposits assumes significant importance while considering the discretionary relief sought in the present Application.”

The Tribunal further noted that Catalyst's claim of Rs 146.35 crore has already been admitted in Blu-Smart Charge's insolvency process and that the DSRA forms part of the security package underlying that claim.

Dismissing the application, the bench noted,

“The balance lying the fixed deposit with lien of the Applicant also requires to be preserved pending further clarity regarding the larger fund trail and related transactions and acceding to the request of the Applicant would not be appropriate at this interlocutory stage.”