NCLAT upholds forensic audit of Mufin Green Finance books in Gensol insolvency
The NCLAT on 30 October 2026 dismissed Mufin Green Finance's appeal and upheld an NCLT order for a forensic audit to fix when the NBFC used Gensol Engineering's Rs 1.34 crore security deposit.
Key points
- The NCLAT dismissed Mufin Green Finance's appeal on 30 October 2026 and upheld the NCLT's order for a limited forensic audit.
- The audit is to find when the NBFC appropriated a Rs 1,34,14,800 security deposit paid by Gensol Engineering, the order says.
- The NCLAT said the audit arose because the lender gave two different dates; its order may be appealed to the Supreme Court.
The National Company Law Appellate Tribunal (NCLAT) on 30 October 2026 dismissed an appeal by Mufin Green Finance Ltd, a listed non-banking finance company regulated by the RBI, against an order directing a forensic audit of its books in the insolvency of Gensol Engineering Ltd. The audit is to establish when the lender appropriated a security deposit of Rs 1,34,14,800 that Gensol had paid it.
What Happened
According to the order, Gensol and Mufin Green Finance signed agreements on 24 March 2023 for the lease of 100 electric vehicles, with Gensol paying the security deposit. The lender said Gensol defaulted from March 2025, that it adjusted the deposit on 16 April 2025 and that it ended the lease on 21 and 22 April 2025, repossessing 92 vehicles. Gensol's insolvency process began on 13 June 2025.
Gensol's resolution professional told the tribunal that the lender had first said, in an email of 6 December 2025, that the deposit was adjusted on 21 July 2025, during the moratorium, and later gave the April date. The resolution professional sought a refund of the deposit with interest, and the NCLT's Ahmedabad bench on 14 September 2026 appointed an independent forensic auditor to examine the lender's ledgers, vouchers and electronic records.
The lender argued that the NCLT had no power to order a forensic examination of a third party's books. The NCLAT held that the NCLT committed no illegality, because the lender had given two dates, one before and one after the start of insolvency. It said the audit is only for the limited purpose of finding the actual date. It also noted that the lender had not challenged a similar order in the same insolvency.
What It Means
The date matters because the moratorium bars creditors from enforcing claims against a company once insolvency begins. If the deposit was taken after 13 June 2025, the resolution professional's refund claim stands to be decided on that footing. The NCLAT's order may be appealed to the Supreme Court.
Source: NCLAT order
Sources & Citations
- NCLAT order — National Company Law Appellate Tribunal