Indian electric cab service BluSmart, seen as a rival to Uber, suspended services on Thursday, days after a market regulator’s investigation found a co-founder misused funds at an affiliate company and bought a luxury apartment with money allocated for electric vehicles.

BluSmart rode India’s clean energy boom but its sudden suspension puts the livelihood of thousands of drivers at risk. With more than 8,000 taxis, it set up charging hubs in cities like New Delhi, Mumbai and Bengaluru to take on Uber and Ola, both ride-hailing services that largely use gasoline-powered fleets.

In an e-mail to customers on Thursday, BluSmart said: “We’ve decided to temporarily close bookings on the BluSmart app”, without giving any reasons.

Amid concerns expressed on social media about customer funds blocked in BluSmart wallets, the email said the company will only “initiate a refund within the next 90 days if services do not resume before then.”

India’s market regulator this week barred brothers Anmol and Puneet Jaggi from the stock market and ordered a forensic investigation of their listed solar energy company in Mumbai, Gensol, which used to procure electric vehicles and then lease them for the ride-hailing service.

Anmol Jaggi is one of several co-founders of BluSmart, and the managing director of Gensol.

There is “a complete breakdown of internal controls and corporate governance norms in Gensol … the fund diversion primarily occurred in the context of electric vehicle (EV) purchases intended for leasing to a related party,” the market regulator said in its order this week.

“Funds availed by Gensol as loans for procuring EVs were, through layered transactions, partly utilised for buying a high-end apartment in The Camellias, DLF,” it added, referring to one of India’s most expensive luxury apartment complexes.

Gensol has said it will comply with market regulator’s directives.

(Reuters)