The Mumbai City Crime Branch filed a chargesheet against Sundaram BNP Paribas Home Finance Ltd., Sundaram Infotech Solution and five of its senior executives recently in a copyright violation case. Kensoft Infotech has accused the Financier of tampering with the source code of the software 'KEN HFS' developed by Kensoft in 1994 and using the software in more number of systems than licensed in the agreement. KEN HFS is a housing finance software for use by companies engaged in the said business. In 2010, Kensoft filed an FIR against Sundaram Finance Ltd. , pursuant to which the CID directed Sundaram Finance to submit material evidence and other documents for investigation purposes. Notices were issued to Sundaram Finance under Section 91 of the Criminal Procedure Code. On realising that Kensoft filed a criminal complaint on the same subject matter for an alleged offence under Sections 406 and 420 IPC besides the provisions of the Information Technology Act [S. 65, 66, 72A, 75, 78, 80, 81] and Copyright Act[S. 55, 62, 63] Sundaram Finance and its affiliates filed writ petitions[W.P. Nos. 2513, 2514 and 2922 of 2011] in the Madras High Court challenging the FIR and notices issued under the investigation. Sundaram Finance also contended that since a decision on the same subject matter(discussed below) was pending in the High Court, the complainants should be precluded from initiating criminal action.
The Madras High Court held that Kensoft's claim on their IPR and its ownership pending in the same court had nothing to do with the allegation of criminal offence stated to have been committed by the petitioners, and dismissed the writ petitions. Thus, investigations could be resumed on basis of the complaint.
Going further back in time, in 2009, Kensoft filed a suit in the Madras High Court seeking to injunct Sundaram from using Kensoft due to copyright infringement. Sundaram stated that the new software was in fact developed by Sundaram Infotech, a division of Sundaram Finance Ltd, and that they have been using it for over two decades. The licensing agreement between Sundaram BNP Paribas and Kensoft had a clause for arbitration of disputes. Kensoft had named Sundaram BNP Paribas Home(Defendant 1) and Sundaram Infotech Solution(Defendant 2) as defendants in the case. Meanwhile, defendant 1 filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 and sought for arbitration. Defendant 2 later filed a memo expressing willingness to submit to arbitration. The Single judge bench directed the parties to proceed for arbitration, in spite of no contractual agreement whatsoever between plaintiff and defendant 2.
The order was appealed against by the plaintiff(appellant). The Division Bench of Madras High Court accepted the contentions of the appellant (plaintiff) and held that Sec.8 of the Arbitration and Conciliation Act, 1996 does not envisage or answer a situation when some of the parties to the suit were not parties to the arbitration agreement. Parties to the suit can be referred to arbitration, only if they were parties to the agreement containing the arbitration clause. Merely because the second defendant has filed a memo stating that he would be ready to submit to arbitration, the Court cannot exercise its power under Sec. 8. The Division Bench remitted the case to the single judge of the High Court for fresh consideration of the matter. Subsequent to which Sundaram BNP Paribas Finance filed a Special Leave Petition[SLP (Civil) No. 13085 to 13087] before the Supreme Court in 2010- which was eventually withdrawn in 2011.
The order was appealed against by the plaintiff(appellant). The Division Bench of Madras High Court accepted the contentions of the appellant (plaintiff) and held that Sec.8 of the Arbitration and Conciliation Act, 1996 does not envisage or answer a situation when some of the parties to the suit were not parties to the arbitration agreement. Parties to the suit can be referred to arbitration, only if they were parties to the agreement containing the arbitration clause. Merely because the second defendant has filed a memo stating that he would be ready to submit to arbitration, the Court cannot exercise its power under Sec. 8. The Division Bench remitted the case to the single judge of the High Court for fresh consideration of the matter. Subsequent to which Sundaram BNP Paribas Finance filed a Special Leave Petition[SLP (Civil) No. 13085 to 13087] before the Supreme Court in 2010- which was eventually withdrawn in 2011.
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