The National Company Law Tribunal (NCLT) has directed a former director of Barracks Retail India Pvt. Ltd. to repay over ₹50.36 lakh along with 12% annual interest after finding prima facie evidence of alleged fraudulent diversion of rental income during insolvency proceedings.
The case arose during insolvency proceedings under the Insolvency and Bankruptcy Code, 2016. Allegations of asset concealment and unauthorized financial transactions were initially raised by the Resolution Professional. Financial creditor ASREC (India) Ltd. later pursued the matter after approval of the company’s resolution plan.
According to the tribunal, former director Puneet P. Bhatia allegedly entered into leave and licence agreements in his personal capacity for properties owned by the corporate debtor in Bhiwandi shortly before the Corporate Insolvency Resolution Process (CIRP) began.
The tribunal observed that rental income from these properties was allegedly diverted to accounts linked to the former director instead of being credited to the company’s accounts. It further noted that multiple sections of the same property were reportedly leased to different parties while forged documents were allegedly submitted to create the impression that the premises had been leased to a single entity.
The tribunal stated that tenants had paid nearly ₹9.67 lakh and ₹40.68 lakh into accounts associated with the former director instead of the corporate debtor. It held that these funds legally belonged to the company and that the diversion adversely impacted creditor interests.
The NCLT observed that the conduct amounted to alleged fraudulent trading under Section 66 of the Insolvency and Bankruptcy Code and violated moratorium provisions under Section 14. It also noted that the suspended management failed to maintain transparency and fully disclose financial details during the CIRP.
The tribunal directed the former director to deposit the diverted amount along with any additional sums received within 30 days, along with 12% annual interest calculated from the date of receipt until repayment.
The matter has also been referred to the IBBI for possible action under Sections 70, 72, 73, and 74 of the Insolvency and Bankruptcy Code.
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