sebi:WTM/MSS/SRO/83/10

SEBI · SEBI · 2010-08-13 · M. S. Sahoo, Whole Time Member

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Facts / Headnote

Cross-examination granted for eight persons sought in Application I; all other requests in Application I rejected; Application II rejected

Provisions invoked

• s. 11

Parties

• Price Waterhouse, Bangalore (Reg. No. 007568S)
• Noticees 2 to 11 (other firms of the PW network)

Holding

The adjudicator held that there is no automatic right to cross-examination merely because a statement is relied upon in a Show Cause Notice; the Noticees must make out a case for each person by showing the statement is relied upon in the SCN, disputed by them, and prejudicial if cross-examination is denied. Cross-examination was granted for eight named persons and rejected for all others.

Full text

Page 2 of 14 postponed at the Noticees’ request to May 7, 2010. Price Waterhouse, Bangalore (Reg. No. 007568S) (Noticee 1/ PW) filed a comprehensive reply raising a number of preliminary objections and also dealing with the SCNs on merits. The other firms of the PW network (Noticees 2 to 11) filed replies contending that SEBI had no jurisdiction to take the proposed actions against them.

Page 3 of 14 4. In the meantime, the Noticees had filed two Writ Petitions (Writ Petition Nos. 5249 of 2010 and 5256 of 2010) before the Hon’ble Bombay High Court for quashing the proceedings before SEBI on the ground that SEBI lacked jurisdiction in the matter. These two Writ Petitions were dismissed by the judgment dated August 13, 2010 of the Hon’ble High Court wherein it was held that the SCNs had not been issued in excess of jurisdiction. SEBI was directed to proceed with the matter and adjudicate on the same in accordance with law as under: “The SEBI shall now proceed with the matter as indicated above in accordance with law and pass appropriate orders after conclusion of the inquiry. At the time of passing the ultimate order, the SEBI shall consider the aspect as to whether any directions can be issued by SEBI on the basis of evidence available on record as per the provisions of Section 11 and 12 of the SEBI Act. The ultimate jurisdiction of SEBI for giving any such direction will depend upon the evidence which may be available during the course of inquiry. By this judgment, we have only indicated that on the face of it, it cannot be said that SEBI has absolutely no jurisdiction to issue show cause notices against the petitioners simply because they are professionals and whether the facts stated in the show cause notice are correct or not may be adjudicated as per the evidence available, after affording reasonable opportunity of hearing to the petitioners.”

Page 4 of 14 the basis of allegations against it. The first set of persons mentioned in Paragraph 2 of the Application I is as under: a. Shri Ramalinga Raju, former Chairman, Satyam b. Shri Rama Raju, former Managing Director, Satyam c. Shri Vadlamani Srinivas, former Senior Vice President & CFO, Satyam d. Shri G. Ramakrishna, former Vice President (Finance), Satyam, and e. “undisclosed persons” whose statements have been relied upon in Paragraphs 3.1.3.1, 3.1.3.2, 3.1.4.9, 3.1.4.10, 3.2.2 and 3.3.1 of the SCN dated February 14, 2009 (wrongly mentioned as 2010 in the Application I). The second set of persons mentioned in Paragraph 4 of the Application I is as under: a. Shri Srinivas Talluri, PW Partner b. Shri C. H. Ravindranath, PW engagement team c. Shri P. Siva Prasad, PW engagement team d. Shri P. S. Sudhakar, PW engagement team e. Smt. Madduri N. V. Gayatri, PW engagement team f. Shri Samvit Durga, PW engagement team g. Shri Girish B. K. Tallam, PW engagement team h. Shri N. Ramu, PW engagement team i. Shri V. V. K. Raju, Senior Vice President (Finance) Satyam, and j. Shri Srinivas K. Anapu, Head of Internal Information Systems, Satyam. In the other application (Application II) filed by the Noticees 2 to 11, it was stated that they wished to cross examine the persons mentioned in the Application I in order to establish that they were never the statutory auditors of SCSL.

Source: SecMarx — sebi:WTM/MSS/SRO/83/10. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.