The Delhi High Court has refused to halt disciplinary proceedings against two Price Waterhouse partners by the apex body of chartered accountants for wrongly auditing and inflating the financial statements of Satyam Computer, now known as Mahindra Satyam. Justice S Muralidhar refused to stop the proceedings initiated by the Institute of Chartered Accountants of India against the two auditors, saying he found no reason to grant a stay.
While rejecting the plea by the two auditors, Talluri Srinivas and S Gopalkrishnan, the court also imposed a cost of Rs 10,000 on each of them.
“This court finds no ground having been made out by the petitioners for the grant of the reliefs as prayed for. The writ petitions are dismissed with costs of Rs 10,000 each, which will be paid by them to the ICAI within a period of four weeks,” the court ruled.
The court’s order came in response to the pleas of Srinivas and Gopalkrishnan seeking a stay on the disciplinary proceedings against them on the ground that it violated their Fundamental Right against self-incrimination under Article 20 (3).
After scam-hit Satyam Computer Founder Chairman B Ramalinga Raju’s confession to having the firm’s accounts inflated, a criminal case was initiated against Price Waterhouse and its auditors for fraud and criminal conspiracy.
The ICAI has initiated disciplinary proceedings against the auditors of the firm for professional misconduct.
The court rejected the contention by senior counsel S Ganesh, appearing for Talluri Srinivas, who argued that there was no scope for his client to exercise any right of silence before the ICAI Disciplinary Committee and if he did so, an adverse inference could be drawn against him.
He would, therefore, be compelled to disclose his defence, he added.
“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 the ICAI, submitted that the subject matter of the two proceedings — criminal and disciplinary — were different, as the former was to inquire into the charges of criminal conspiracy, fraud and cheating, whereas the latter would be concerned only with the discrepancies in Satyam Computer’s accounts.