In a significant decision Bombay High Court have held that ICAI dont have exclusive right for governing auditors.
Price Waterhouse & Co. v. SEBI (Satyam Case)
The court analyzed the powers of SEBI under various provisions of the SEBI Act. It found various measures were available to SEBI that could be employed in regulating the securities markets. Those powers were of wide amplitude which would “take within its sweep a chartered accountant if his activities are detrimental to the interest of the investors or the securities market”. The court found that by taking remedial measures to protect the securities markets, it cannot be said that SEBI is regulating the accounting profession. SEBI’s general domain extends to protecting investors of listed companies and the securities markets. In exercise of such powers, there is no reason why SEBI cannot prevent any person from auditing a public listed company. Even though the auditors are not directly involved in the securities markets, the court found that since investors rely heavily on the audited accounts of the company, the statutory duty of the auditors and discharge thereof “may have a direct bearing in connection with the interest of the investors and the stability of the securities markets”. The court finally ruled that the powers of SEBI are independent of those held by the ICAI and hence SEBI cannot be said to encroach upon the powers of the ICAI under the Chartered Accountants Act.
For detailed analysis of case check the link -
https://indiacorplaw.blogspot.com/2010/08/sebis-domain-over-auditors-of-listed.html
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