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NCLT Ahmedabad Appoints Forensic Auditor to Verify ₹1.34 Crore Deposit in Gensol-Mufin Dispute
The (NCLT) has taken a crucial step in a contentious insolvency dispute by appointing an to determine whether a ₹1.34 crore was adjusted before or after the commencement of the . The decision, issued on , underscores the tribunal's insistence on where conflicting records cloud the determination of a potential violation.
The dispute pits Gensol Engineering Limited, the corporate debtor, against Mufin Green Finance Limited, a financial creditor, over the timing and manner of the of a substantial . With CIRP having commenced on , the contends that Mufin adjusted the deposit on —well after the kicked in—thereby violating . Mufin, however, insists that the adjustment occurred on , before the insolvency process began, and that the later date was a mere .
Background: The Lease Agreement and
The commercial relationship between Gensol Engineering and Mufin Green Finance was formalised through an Electric Vehicles Services Agreement and a Purchase Agreement dated . Under these agreements, Gensol procured 100 electric vehicles from Mufin, and as per Clause 5(d) of the lease arrangement, Gensol furnished a of ₹1,34,14,800. This amount was recorded as 10% cash collateral of the funded asset value, intended to secure the lessor against defaults or damages.
Clause 5(d)(iii) of the agreement stipulated that the deposit would be returned or adjusted only after the expiry of the lease term, which was recorded as . However, by early 2025, the relationship had soured. Gensol began defaulting on its lease payments from March 2025, prompting Mufin to terminate the lease in April 2025. Mufin subsequently repossessed 92 of the 100 vehicles, many of which were allegedly damaged or missing accessories, incurring significant costs for repossession, transportation, restoration, and repairs.
The Insolvency and the Conflict Over Dates
On , CIRP was initiated against Gensol Engineering, and Keshav Khaneja was appointed as the resolution professional. On , Mufin filed its claim in Form C, initially claiming ₹1.95 crore. The RP, upon examining the records, alleged that Mufin had adjusted the on —over a month after the had taken effect. He demanded the refund of the deposit along with interest, arguing that the adjustment was both contractually premature and legally impermissible during the .
The RP relied heavily on a communication from Mufin dated , which expressly stated that the had been adjusted on . He contended that this admission, coupled with the plain language of Clause 5(d)(iii), made it clear that the deposit could not have been adjusted before the lease term expired in 2028. He further argued that required him to take custody of and protect the corporate debtor's assets, and that Mufin's action had unlawfully diminished the asset pool.
Mufin countered that the deposit was a under Clause 5(d)(i), capable of against outstanding dues. It submitted that the adjustment had actually been effected on , before CIRP commenced, and that the reference to was a in its internal records. To support this, Mufin pointed to its own ledger entries and argued that no refundable deposit remained with it when the insolvency process began on .
The Tribunal's Approach: Over Legal Assertions
The NCLT, comprising Judicial Member Shammi Khan and Technical Member Sanjeev Sharma, noted that the dispute turned on a question of fact: the actual date and manner of adjustment of the . The bench observed:
“On consideration of the present record, we find that the question requiring is the actual date and manner of adjustment of the , particularly in view of the Respondent's email dated 06.12.2025 and its subsequent explanation.”
The tribunal acknowledged that the , in , had clearly prohibited of deposits during the . However, it stressed that the legal merits of the rival contentions would depend on a reliable determination of when the adjustment actually took place. Given the conflicting records—Mufin's email pointing to July 2025, but its ledger showing April 2025—the bench concluded that a forensic examination was essential.
Appointment of the Forensic Auditor
By its order dated , the NCLT appointed CA Anmol Bindra as an . Bindra has been directed to examine the books of account, ledgers, vouchers, and electronic data relating to the ₹1.34 crore . Specifically, he is tasked with verifying the date and time of creation or modification of the relevant accounting entries and reconciling them with the supporting records. The tribunal made it clear that the auditor's findings would be critical in determining whether Mufin's adjustment violated the .
The matter has been listed for further consideration on , giving the auditor sufficient time to conduct a thorough investigation.
Legal Implications and Practical Impact
This case highlights a recurring challenge in insolvency proceedings: the tension between a creditor's contractual rights to appropriate security and the statutory that freezes all assets of the corporate debtor. The NCLT's decision to appoint a forensic auditor reflects a pragmatic approach—rather than ruling on conflicting affidavits, the tribunal is seeking objective evidence from financial records.
For insolvency practitioners, the order serves as a reminder that the timing of entries in a creditor's books can be as crucial as the contractual terms themselves. Resolution professionals must be vigilant in scrutinising pre-CIRP adjustments, and creditors must maintain impeccable records to justify the timing of any . The case also underscores that a simple defence may not suffice if electronic records and communication logs tell a different story.
From a broader perspective, the appointment of an independent auditor ensures that the factual matrix is settled before any legal conclusion is reached. This not only enhances the integrity of the insolvency process but also prevents premature findings that could prejudice either party.
Conclusion
As the forensic auditor begins his examination, the insolvency community will be watching closely. The outcome of this verification could set a precedent on how closely courts and tribunals will scrutinise pre- adjustments of security deposits, especially when the debtor's financial distress is evident. For now, the NCLT has chosen the path of evidence over assertion, ensuring that the truth behind the ₹1.34 crore deposit will come to light through the books, not just the arguments.
