The ban against Price Waterhouse would come into effect from the financial year 2018-19, without affecting the auditing work of 2017-18.
With the Sebi order now jeopardising its operations in India, the worldwide auditing giant claimed that Price Waterhouse Network firms in the country had learnt the lessons of Satyam and invested heavily over the last nine years in building a robust and high quality audit practice.
"Listed companies who are being audited may think of moving to other auditors due to the uncertainty, even if Price Waterhouse manages to get a stay order", said Shriram Subramaniam, who is founder of proxy advisory InGovern.
The network structure of operations adopted by the worldwide accounting firm should not be used as a shield to avoid legal implications arising out of certifications issued under the brand name of the network, the order said.
"As laid down by the Hon'ble Supreme Court, it is incumbent on Sebi to take stern view of market abuse and fraudulent practices, particularly when persons tasked with protecting the interest of investors are themselves hand-in-glove with the main perpetrators of the fraud", Sebi said.
The ban stipulates that PW and the firms in its network (PWC India) can not audit listed companies and intermediaries for two years.
There was no "intentional wrongdoing by PW firms in the unprecedented management perpetrated fraud", Price Waterhouse said in a statement after the SEBI order, adding that it had "learnt the lessons of Satyam" and invested heavily to build a high-quality audit practice.
Price Waterhouse Bangalore and its two erstwhile partners - S Gopalakrishnan and Srinivas Talluri - have been ordered to return the wrongful gains of Rs 13,09,01,664 with interest at the rate of 12 percent per annum for nine years within 45 days of the issuance of the order.
In India, all audit functions within the group are conducted under the PwC brand, with a network of local firms operating under the banner.
Ramalinga Raju, Satyam's chairperson in 2009, admitted that he made up about US$1 billion of the firm's cash on it books. The public had no reason to believe that the audit reports were false and misleading.
Satyam was an IT services company which has ceased operations after an accountancy scandal in 2009.
In a 108-page statement, SEBI said that the manner in which various entities bearing the PwC name had been registered in India in a "nebulous way", made it hard not to take notice of the "loss of faith of the investors in the brand name".