BluSmart Mobility’s Financial Woes Deepen: NCLT Admits Insolvency Petition

BluSmart Mobility’s Financial Woes Deepen: NCLT Admits Insolvency Petition

Introduction

The National Company Law Tribunal (NCLT) in Ahmedabad has admitted a petition filed by creditor Catalyst Trusteeship against electric cab operator BluSmart Mobility for defaulting on dues of approximately ₹1.28 crore. The tribunal’s order initiated the Corporate Insolvency Resolution Process (CIRP) and appointed NPV Insolvency Professionals Private Ltd as the Interim Resolution Professional (IRP).

Factual Background

BluSmart Mobility, once a prominent player in India’s EV-based ride-hailing market, has been battling significant financial stress due to mounting liabilities and cash flow pressures. Despite attracting venture funding and expanding its fleet, the company struggled to meet operating costs and payment obligations, leading to the admitted default.

BluSmart’s financial crisis comes alongside troubles at its key shareholder, Gensol Engineering, and its subsidiary Gensol EV Lease, which are also under insolvency after defaults of ₹510.10 crore and ₹218.95 crore respectively. Cross-default provisions linked these entities, which had taken term loans for EV leasing and infrastructure, backed by personal guarantees from promoters Anmol Singh Jaggi and Puneet Singh Jaggi.

The group’s troubles worsened following a SEBI probe two months ago that alleged the Jaggi brothers diverted loans to buy a luxury flat, inflate Gensol’s stock, fund personal ventures, and forge no-default letters from lenders such as Ireda and Power Finance Corporation.

Procedural Background

Catalyst Trusteeship filed a petition for default of ₹1.28 crore. The NCLT admitted the plea and initiated CIRP, appointing an IRP to take control of BluSmart’s assets and oversee the resolution process.

Contentions of the Parties

Petitioner’s Contentions:

• BluSmart defaulted on dues of ₹1.28 crore.
• The company failed to meet payment obligations despite funding.

Respondent’s Contentions:

• BluSmart tried to resist the insolvency petition by citing temporary financial difficulties and technical defaults that were later fixed.

Reasoning and Analysis

“The NCLT’s decision, despite BluSmart’s attempt to resist insolvency proceedings by citing temporary financial difficulties and minor technical defaults that were later fixed, reinforces that defaulters cannot take shelter under vague grounds,” said Akshit Goyal, Partner at Goyel & Goyal. “It upholds the sanctity of the IBC and reflects that insolvency is a last-resort remedy to protect the lending ecosystem, not a tool for routine recovery.”

Implications

A moratorium now bars any recovery proceedings, asset transfers or enforcement of security while the CIRP is underway. The IRP must take control of BluSmart’s assets within seven days, invite claims from creditors and file progress reports. Catalyst must provide ₹10 lakh as interim funding. The Registrar of Companies has been directed to reflect BluSmart’s insolvency status on the MCA portal.

A key concern for customers is BluSmart’s closed prepaid wallet system. Since these instruments do not allow cash withdrawals or redemptions, refund protections are limited, although a PPI licence may enable partial refunds. The bigger concern will likely be for investors rather than customers, as wallet balances are small. Experts also note that BluSmart’s link to Gensol could raise a possible group insolvency scenario.

Outcome

The NCLT’s order initiates CIRP for BluSmart, appoints an IRP and directs interim funding. Shifts in asset control, creditor claims and possible group insolvency will shape the next steps.