Mumbai: NCLT Orders Former Director To Repay ₹50 Lakh In Barracks Retail Insolvency Fraud Case
May 06, 2026
The NCLT has directed former Barracks Retail India director Puneet P. Bhatia to repay over Rs 50 lakh with 12% interest after finding alleged diversion of rental income during insolvency proceedings. The tribunal also referred the matter to the IBBI for action over suspected fraudulent trading and forged documents.
Mumbai, May 6: The National Company Law Tribunal (NCLT) has directed a former director of a Mumbai-based firm specialising in apparel manufacturing, Barracks Retail India Pvt. Ltd., to deposit over Rs 50 lakh along with interest into the company’s account, after finding evidence of alleged fraudulent diversion of rental income during the insolvency process.
The application was initially moved by the Resolution Professional appointed in the case under provisions of the Insolvency and Bankruptcy Code, 2016, alleging fraudulent conduct and concealment of assets by the suspended management of the company. It was later pursued by the financial creditor, ASREC (India) Ltd., after approval of the resolution plan.
Former director accused of concealing transactions
The tribunal found that Puneet P. Bhatia, a former director, had entered into leave and licence agreements in his personal capacity for properties owned by the corporate debtor in Bhiwandi shortly before the commencement of CIRP.
“Indubitably, the Respondent No. 1 (Bhatia) was well aware that he needed to disclose the details of all the assets of the corporate debtor to the Applicant; however, Respondent No. 1 chose to provide forged documents to the Applicant, thus concealing the genuine nature of the transactions as well as details of the rentals accruing from licensing of these properties, which were to accrue to the corporate debtor but were never received in its account,” the order copy reads.
He also furnished forged agreements to the Resolution Professional to create the impression that the entire premises had been leased to a single entity.
Tribunal cites violations during insolvency process
“Suspended Management agreed to his violations and accepted his mistake of not disclosing complete details and withdrawing funds belonging to the corporate debtor for personal use, thus alienating the wealth of the corporate debtor in violation of Section 14 and other provisions of the IB Code. Suspended Management gave an assurance that he shall cooperate completely and provide all the information at the earliest. The members of the Committee and Resolution Professional categorically stated that since the last date of CIRP is 25.08.2025, there cannot be delayed responses by Suspended Management any further,” the order states.
However, investigations revealed that different portions of the property had been licensed to multiple parties, and rental payments were being diverted to accounts linked to Bhatia instead of the corporate debtor, the order further notes.
NCLT refers matter to IBBI for further action
The tribunal noted that tenants had paid substantial sums — Rs 9.67 lakh and Rs 40.68 lakh respectively — to accounts connected with Bhatia. It held that these amounts rightfully belonged to the corporate debtor and were siphoned off to the detriment of creditors.
Observing clear alleged fraudulent intent, the bench held that the conduct amounted to fraudulent trading under Section 66 of the Code and violations of the moratorium under Section 14.
The NCLT directed Bhatia to deposit Rs 50.36 lakh along with any additional amounts received into the corporate debtor’s account within 30 days. The amount will carry interest at 12% per annum from the date of receipt until repayment.
Also Watch:
Taking serious note of the violations, the tribunal also referred the matter to the Insolvency and Bankruptcy Board of India (IBBI) for initiating appropriate action under Sections 70, 72, 73, and 74 of the Code, which deal with misconduct during insolvency proceedings.
The tribunal observed that the former director’s actions obstructed the Resolution Professional, misled stakeholders, and resulted in unauthorised diversion of the company’s income.
The application was initially moved by the Resolution Professional appointed in the case under provisions of the Insolvency and Bankruptcy Code, 2016, alleging fraudulent conduct and concealment of assets by the suspended management of the company. It was later pursued by the financial creditor, ASREC (India) Ltd., after approval of the resolution plan.
Former director accused of concealing transactions
The tribunal found that Puneet P. Bhatia, a former director, had entered into leave and licence agreements in his personal capacity for properties owned by the corporate debtor in Bhiwandi shortly before the commencement of CIRP.
“Indubitably, the Respondent No. 1 (Bhatia) was well aware that he needed to disclose the details of all the assets of the corporate debtor to the Applicant; however, Respondent No. 1 chose to provide forged documents to the Applicant, thus concealing the genuine nature of the transactions as well as details of the rentals accruing from licensing of these properties, which were to accrue to the corporate debtor but were never received in its account,” the order copy reads.
He also furnished forged agreements to the Resolution Professional to create the impression that the entire premises had been leased to a single entity.
Tribunal cites violations during insolvency process
“Suspended Management agreed to his violations and accepted his mistake of not disclosing complete details and withdrawing funds belonging to the corporate debtor for personal use, thus alienating the wealth of the corporate debtor in violation of Section 14 and other provisions of the IB Code. Suspended Management gave an assurance that he shall cooperate completely and provide all the information at the earliest. The members of the Committee and Resolution Professional categorically stated that since the last date of CIRP is 25.08.2025, there cannot be delayed responses by Suspended Management any further,” the order states.
However, investigations revealed that different portions of the property had been licensed to multiple parties, and rental payments were being diverted to accounts linked to Bhatia instead of the corporate debtor, the order further notes.
NCLT refers matter to IBBI for further action
The tribunal noted that tenants had paid substantial sums — Rs 9.67 lakh and Rs 40.68 lakh respectively — to accounts connected with Bhatia. It held that these amounts rightfully belonged to the corporate debtor and were siphoned off to the detriment of creditors.
Observing clear alleged fraudulent intent, the bench held that the conduct amounted to fraudulent trading under Section 66 of the Code and violations of the moratorium under Section 14.
The NCLT directed Bhatia to deposit Rs 50.36 lakh along with any additional amounts received into the corporate debtor’s account within 30 days. The amount will carry interest at 12% per annum from the date of receipt until repayment.
Also Watch:
Taking serious note of the violations, the tribunal also referred the matter to the Insolvency and Bankruptcy Board of India (IBBI) for initiating appropriate action under Sections 70, 72, 73, and 74 of the Code, which deal with misconduct during insolvency proceedings.
The tribunal observed that the former director’s actions obstructed the Resolution Professional, misled stakeholders, and resulted in unauthorised diversion of the company’s income.