SC partially stays tribunal order on Sebi’s power to bar auditors

NEWDELHI: The Supreme Court on Monday partially stayed the Securities Appellate Tribunal’s (SAT) order holding that markets watchdog Securities and Exchange Board of India (Sebi) is not empowered to bar auditors from inspecting the accounts of listed companies even if they are found to have committed fraud.

A bench comprising justices Arun Mishra and Indira Banerjee also issued notice to Price Waterhouse and Company on the appeal filed by Sebi against the SAT’S September 9 order. SAT’S order came on a Price Waterhouse’s plea against Sebi’s two-year ban on the auditing firm. The watchdog slapped the ban in connection with the ₹7,800 crore fraud at the erstwhile Satyam Computer Services Ltd which came to light in 2009.

Before the court, Sebi’s lawyers, attorney general KK Venugopal and advocate Pratap Venugopal argued that SAT’S order crippled the markets watchdog’s ability to act against errant auditors and rendered its special unit, constituted to deal with such fraud, ineffective.

Senior advocate Mukul Rohatgi, arguing for Price Waterhouse, said the firm had already suffered a penalty. “We have paid ₹14 crore. We have already suffered. How many times will we be killed?”

Though the bench stayed SAT’S direction that prevented SEBI from debarring auditing firms, it refused to clarify, as had been requested by Price Waterhouse, that its order will not have a bearing on the auditing firm. “We do not want to say anything right now,” the bench said.