Price Waterhouse (PW) will have to face the fact-finding inquiry initiated by the Securities and Exchange Board of India (SEBI) last June after all, as the Bombay High Court has dismissed a petition filed by the accounting firm.
The order, made public on Wednesday, was passed on August 13.
PW had moved the court challenging a show-cause notice issued by SEBI on June 30, 2009 seeking to prohibit the accounting firm from auditing accounts of any listed company. The notice was issued in the wake of Rs 7,136-crore Satyam Computer Services accounting scam.
The firm had contended SEBI had no jurisdiction to issue such a notice, since PW had nothing to do with the securities market. It said only the apex body of accountants, the ICAI, could prohibit it from practicing as a Chartered Accountant, and only shareholders of companies involved had the authority to remove an auditor.
But the Bombay High Court held that the market regulator indeed had jurisdiction to inquire into the role of PW in the accounting scam.
A division bench of Justice P.B. Majmudar and Justice R.M. Sawant dismissed Price Waterhouse’s plea that the content and tenor of the notice did not suggest that SEBI seeks to prohibit the accountancy firm from practicing as a CA.