Satyam case:SAT sets aside SEBI order;allows cross-examination

Setting aside the Sebi order, appellate tribunal SAT on Wednesday allowed PriceWaterhouse to cross examine witnesses in the Satyam fraud case.

PTI | June 2, 2011



Setting aside the Sebi order, appellate tribunal SAT on Wednesday allowed PriceWaterhouse to cross examine witnesses in the Satyam fraud case and asked the regulator to complete the enquiry within four months.

"The Board is directed to allow the appellants (PriceWaterhouse) to cross examine the persons . The Board is further directed to complete the enquiry expeditiously preferably within four months from the date of the order," said the order of the Securities and Appellate Tribunal (SAT).

While passing the order, the Tribunal also directed the PriceWaterhouse (PW) to cooperate with the Board and help early completion of the enquiry into the matter.

Following the order, the PW would be able to cross examine members of the PW team which were associated with the erstwhile Satyam Computer.

These include Srinivas Talluri, C H Ravindranath, P Siva Prasad and N Ramu. Sebi, in its earlier order in December 2010, had rejected the plea of PW and others to cross examine them.

The three-member bench of the SAT on Wednesday issued the order on an appeal filed by the PW.

While upholding the contention of the PW, SAT said, "We are of the view that there has been violation of principles of natural justice in not allowing cross- examination of the witnesses whose statements are being relied upon in the show- cause notice and also in not making available copies of the statements which have been relied upon by the Board in issuing the show-cause notice."

The order pertains to enquiry in the Satyam case, which came to light after the company's founder B Ramalinga Raju admitted in January 2009 to fudging of books of accounts.

Satyam Computer was later taken over by Tech Mahindra and renamed as Mahindra Satyam.

While all the three members of the SAT agreed on allowing cross-examination of witnesses by PW, there was difference of opinion on allowing them access to materials connected with the enquiry.

"In the facts and circumstances of the present case, we are of the view that the appellants (PW) are not entitled to the material collected during the course of investigation by the Board which has not been relied upon in the show-cause notice," said SAT member PK Mehrotra while passing the order on his and on behalf of other member SSN Moorthy.

However, Presiding officer N K Sodhi, in a separate ruling, said, "The Board was not justified in allowing partial inspection of the material to the appellants and that they should have been given access to the entire material collected during the investigations. Not having done this, the principles of natural justice have been violated."

On the contention that PW Bangalore, which audited the accounts of Satyam Computer, was an independent entity and other outfits of the PW were not involved in the case at all, the SAT ruled that the issue should be decided by SEBI.

In case the PW entities are not satisfied with the Sebi, the tribunal said, the aggrieved parties could seek other legal remedies.

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