Former Kwality Ltd. promoter-MD was found to have violated insider trading regulations and was requested to return Rs. 2.12 crore in gains

Sanjay Dhingra has also been banned for six months from the securities industry.

Additionally, Sanjay Dhingra was fined Rs 5 lakh.

The erstwhile founder of Kwality Limited, a dairy company, Sanjay Dhingra, has been ordered to forfeit gains from insider trading of more than Rs 2.12 crore.

In addition to being barred from the securities market for six months after the judgment, the former promoter and managing director (MD) who was found to have violated the Prohibition of Insider Trading (PIT) Regulations has also been fined Rs 5 lakh.

The directive was approved on May 14 by the Securities and Exchange Board of India (Sebi).

Dhingra has been required to pay a penalty of ten percent annually from July 24, 2018, till the day of actual payment, in addition to the profit.

After looking into concerns concerning price manipulation in the company's scrip, the regulator discovered that Dhingra, the MD and promoter at the time, had both executed counter transactions and traded within the trading window closing period.

Trades made between May 1, 2018, and July 31, 2018 were the first period of investigation for the authorities, and this time was subsequently extended.

It was claimed that Dhingra had purchased 44,60,225 shares of the firm and sold 2,03,30,184 shares during this time, in violation of the Sebi (PIT) Regulations and contra transactions.

When the trading time ended, he also reportedly sold more than 90.68 lakh shares, worth more than Rs 22.14 crore.

In response to being served with a showcause notice, Dhingra said that he had filed a petition with the Supreme Court challenging the constitutional legality of the bankruptcy proceedings that the Union Bank of India had started against him. Dhingra's writ petitions were rejected by the Supreme Court.

Dhingra further argued that this judgment created an interim moratorium and prevented any creditor, including statutory bodies, from bringing legal action against him.

According to the market regulator, the moratorium applied to the specific debt and not the debtor. Consequently, it could not find any support for Dhingra's claim that he cannot be sued during this moratorium period.

Dhingra had further said that he was unable to refute the accusations made against him since the insolvency resolution professional (IRP) had taken all of the company's documentation. In response, the regulator said that Dhingra had not specified which particular papers he was having trouble locating and that the proceedings were connected to his personal dealings.

These claims also had no validity, according to the agency.