August 14, 2010 3:33:22 am
In a setback to Price Waterhouse,the Bombay High Court today ruled that Securities and Exchange Board of India can conduct an inquiry against auditor Price Waterhouse in connection with the Satyam scam. SEBI had issued a show-cause notice to Price Waterhouse,which it had challenged,saying that market regulator cannot regulate chartered accountants.
A division bench of Justices P B Majmudar and R M Savant today dismissed PW’s petition,but since PW wants to file an appeal in the Supreme Court,the court asked SEBI not to start an inquiry for the next four weeks. PW,which had been associated with Satyam for several years as auditors,had contended that only Institute of Chartered Accountants of India can hold inquiry with regard to its professional conduct.
The market regulator had issued a show cause notice to PW asking it to explain why it had kept quiet about murky financial dealings of Satyam,although it was associated with the company for several years. SEBI’s lawyer argued that auditors have a “direct,fiduciary relationship with shareholders” and shareholders incurred losses for decisions taken by them based on Satyam’s balance sheet.
However,the Bombay High Court has said that SEBI can not pass any order prohibiting the practice of any professional chartered accountant or CA as that power rests only with the accounting regulator — the Institute of Chartered Accountants in India (ICAI).
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“We are informed that the Bombay High Court has disallowed the writ petitions of Price Waterhouse challenging SEBI’s jurisdiction over accounting and auditing professionals. However,further proceedings of SEBI have been stayed by the High Court for four weeks. Meanwhile,we await receipt of the High Court written order,which we will examine to decide our next course of action including the option of filing an appeal to the Supreme Court,” PW said.
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