The Bombay High Court on Friday ruled that Securities and Exchange Board of India (SEBI) had the powers to conduct an inquiry into multi-crore Satyam scam and also to issue show cause notice to Pricewaterhouse Coopers (PWC) to explain its alleged role in concealing the scam.
Hearing a petition, filed by PWC, challenging the show cause notice issued by the market regulator, Justice PB Majmudar and Justice RM Savant asked SEBI not to proceed with the inquiry until four weeks to enable PWC move the Supreme Court in appeal.
SEBI had issued a show cause notice to PWC, an international auditors firm, asking them to explain why it had kept quiet on the Satyam scam although it was associated with the company for several years.
PWC then moved the Bombay High Court, saying that SEBI -- being a stock market regulator -- has no jurisdiction to issue show cause notice to auditors' firm.
Only a body such as the Institute of Chartered Accountants of India can do this, it contended.
On the other hand, SEBI said that auditors have a "direct, fiduciary" relationship with shareholders and shareholders incurred losses due to decisions based on Satyam's balance sheet.
SEBI had issued the show cause notice to PWC under the Fraudulent and Unfair Trade Practices (FUTP) regulations.