Bhagat's career declined after losing from East Delhi in 1991. Towards the end of his political career, he was named by the Nanavati Commission for an alleged involvement in the 1984 Anti-Sikh Riots. The Commission concluded that there was "credible evidence". The government ultimately declined to prosecute Bhagat because of his poor health by that time. He was acquitted by the courts in both cases citing lack of evidence as many witnesses including his security personnel testifying that Bhagat was next to late PM Indira Gandhi's body for 3 days and did not leave her premises. The then Lieutenant Governor of Delhi also testified to Nanavati commission that HKL Bhagat called him multiple times asking for the Army to be brought in.