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2022 (10) TMI 1216 - AT - SEBIPower of SEBI to initiation action against Chartered Accountant (CA) / Auditor of the company - Professional negligence by Auditor/CA - IPO proceeds were utilized for the objects other than those mentioned in the prospectus - Sebi alleged actual utilization of IPO proceeds was significantly different from the certificate issued by the appellants and the utilization certificate did not carry any qualification even though the appellants had access to bank statements and books of accounts of the Company - Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market - HELD THAT:- AO has only established that the appellants have falsely certified the Unqualified Utilization Certificate. There is no finding that the appellants were party to preparation of false and fabricated accounts. There is no finding that the appellants had manipulated the books of accounts with knowledge and intention in the absence of which the appellants cannot be accused of fraud. There is also no finding by the AO on collusion with the Company in the absence of which the charge of aiding and abetting the Company cannot be sustained. It is an admitted fact that the appellants had qualified the annual accounts on the matter of utilization of funds of the IPO and such a qualification is mentioned in the Annual Report which is in the public domain. In absence of a finding that there was deceit or inducement, the appellants can only be held guilty for professional lapse or negligence for which the appropriate authority to take action is ICAI. SEBI has already made a complaint to the ICAI in the instant case and ICAI is holding an inquiry against the appellants. Section 12(A)(a) & (b) of SEBI Act is not applicable to the appellants as they are not dealing in securities. Further, in absence of proof of fraud, connivance, deceit or manipulation Section 12(c) of SEBI Act and Regulation (3) and (4) of PFUTP Regulations are not applicable.Thus, for the reasons stated aforesaid, the impugned order cannot be sustained and is set aside.
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