Case Law Details
Mani Oommen Vs SEBI (Securities Appellate Tribunal)
SAT held that once the appellant is not found responsible for the preparation of the financials of the company merely because he was not cautious or did not carry out due diligence properly will not suggest that the appellant colluded with the promoters and the directors of the company. This finding of conclusion, in our opinion, is based on surmises and conjectures and is against the specific finding given by the WTM, namely, that the understatement was specifically designed and carried out by the promoters and the directors of the company.
In our opinion, in order to give a finding on collusion, there must be some material which could lead to an inference of collusion. Once a finding is given that the appellant was not involved in the fabrication and fudging of the books of accounts and the balance sheet and if the appellant had no intention or knowledge of such understatement being shown in the financials, the charge of fraud or collusion or connivance with the directors and promoters of the company cannot be levied, only on the ground that he was not diligent or cautious or did not check the outstanding loan details from the banks and through other sources. Lack of due diligence can only lead to professional negligence which would amount to a misconduct which could be taken up only by ICAI.
FULL TEXT OF THE ORDER OF SECURITIES APPELLATE TRIBUNAL, MUMBAI
1. The present appeal has been filed against the order dated December 31, 2019 passed by the Whole Time Member (hereinafter referred to as ‘WTM’) of Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) whereby the appellant who is a statutory auditor / chartered accountant has been prohibited from issuing any certificate of audit and has been restrained from rendering any other auditing services to any listed companies and intermediaries for a period of one year.
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