Thaindian News

New Delhi, May 31 (IANS) The Delhi High Court has upheld the Institute of Chartered Accountants of India’s (ICAI) decision for disciplinary action against two partners of Price Waterhouse for wrongfully auditing and inflating the financial statements of erstwhile Satyam Computer Services, now known as Mahindra Satyam.

The court’s order came on the plea filed by the chartered accountancy firm’s two auditors, Talluri Srinivas and Subramani Gopalakrishnan, seeking a stay on the disciplinary proceedings initiated against them by the ICAI for professional misconduct, along with criminal proceedings.

They have also challenged an order of the high court’s single judge in November 2010, refusing to stop the proceedings initiated by ICAI against the two auditors.

The division bench of Chief Justice Dipak Misra and Justice Sanjiv Khanna said: “We are not inclined to interfere with the order of the learned single judge but only direct that the respondents shall proceed with the enquiry keeping in view the convenience of the appellants and affording them adequate opportunity to put forth their case from all spectrums.”

“Since the criminal case against Srinivas is on identical facts as in the disciplinary proceedings initiated by ICAI and the charges in the criminal case are of a grave nature, the disciplinary proceedings should be stayed till the conclusion of the criminal case,” said the petition.

After the confession of scam-hit Satyam Computer’s founder chairman B. Ramalinga Raju of having the firm’s accounts inflated, a criminal case was initiated against Price Waterhouse and its auditors for fraud and criminal conspiracy.

The court rejected the contention of Srinivas’ counsel who argued that there was no scope for his client to exercise the right of silence before the ICAI disciplinary committee and if he did so, an adverse inference could be drawn against him.

“The contention that the petitioners have no right of silence in the disciplinary proceedings and, therefore, their statements in those proceedings will amount to disclosure of their defence in the criminal trial is without merit in view of the fact that the very nature of the two proceedings is different,” the court said.

Senior counsel Ramji Srinivasan, appearing for ICAI, submitted that the subject matter of criminal and disciplinary proceedings were different as the former was to inquire into the charges of criminal conspiracy, fraud and cheating, whereas the latter would be concerned with the discrepancies in Satyam Computers’ accounts.

“On a perusal of the comparative chart of the charges levelled in the disciplinary proceedings and the charge sheet in the criminal proceedings, the list of witnesses, the nature of inquiry, the purpose of inquiry and arraigning the appellants as accused persons in the criminal case are on a different base,” said the bench.

While dismissing the auditors’ plea, the bench took into consideration ICAI’s submission that the inquiry shall be held on such dates which will be suitable and convenient for the chartered accountants.