An important issue recently arose before Delhi High Court in the case of Upaid Systems Ltd v Satyam Computer Services and Anr. The court was approached by a foreign company requesting the enforcement of a letter of request sent by the Federal Court of Texas, seeking judicial assistance from the National Association of Software and Services Companies (NASSCOM), an industry body for India’s IT industry.
A letter of request, or letter rogatory, is a formal request from a court to a foreign court for judicial assistance.
Upaid, a privately held company registered in the British Virgin Islands, executed a project for developing software for mobile prepaid technology with Satyam Enterprise Solutions, a subsidiary of Satyam Computer Services (now Mahindra Satyam). Soon after, Upaid wished to patent the technology for which the software coding was done by Satyam. For this, they needed the signatures of the 20 Satyam employees who had worked on the project.
Satyam helped Upaid obtain these signatures, even though some of the employees had left the company. Armed with the patent, Upaid filed a suit against Qualcomm and Verizon Wireless in 2005, alleging that they were using the patented technology. However, one of the original Satyam employees who had worked on the Upaid project was by then working at Verizon; he pointed out that the signature designated as his on the patent application was in fact a forgery. As a result of this revelation Upaid was forced to retreat from the suit.
In 2007 Upaid filed a civil proceeding before the federal court of Texas alleging fraud, negligent misrepresentation, forgery and breach of contract by Satyam, and seeking more than US$1 billion in damages. Upaid submitted that NASSCOM’s testimony was important in the matter, as Mahindra Satyam was a member company and the firm’s founder, B Ramalinga Raju, was a former chairman of the industry body.
Upaid approached Delhi High Court with a formal letter of request from the federal court of Texas, seeking approval for the appointment of a local commissioner to record witness depositions in response to questions that were appended to the letter. The letter also contained a request for the production of certain documents by NASSCOM.
Upaid’s request met with stiff opposition from Satyam, which disputed the jurisdiction of Delhi High Court to entertain the petition. Satyam contended that although the letter of request was issued pursuant to the Hague Convention on Taking of Evidence Abroad in Civil or Commercial Matters, 1970, to which India was a signatory, no law had been enacted by parliament to give effect to this treaty. Satyam held that, as a result, the court may not execute the letter of request issued by the foreign court.
The questions before the court were (i) whether the court can give effect to the terms of the Hague Convention in absence of a law specially enacted to facilitate its obligations, and (ii) whether order XXVI, rule 19 of the Code of Civil Procedure bars the production of documents, as requested in the letter.
In its judgment, the court allowed the letter of request sent by the federal court of Texas, and further appointed an advocate as a local commissioner to examine the witnesses of NASSCOM and secure the documents being sought. In its finding the court relied on order XXVI, rule 19, and on section 78(c) of the Code of Civil Procedure, which concerns the deposition of witnesses.
It has recently been reported by Reuters that, following the conclusion of the court case, Mahindra Satyam has agreed to a US$70 million settlement with Upaid. The settlement requires Upaid to give Mahindra Satyam a worldwide, royalty-free licence on its patents, and provides for the dismissal of all pending actions.
The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at [email protected] Readers should not act on the basis of this information without seeking professional legal advice.