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Raja Simhan T.E.

CHENNAI, April 17

THE Swadhan, India's first shared payment network service, has run into rough weather, with the ACI India, part of the US-based Applied Communication Inc, threatening to physically remove the software products from India Switch Company (ISC), the service provider for Swadhan, within the next few weeks for not paying the arrears.

Compaq Computer India is also initiating legal proceedings against ISC for its inability to pay its debt. ACI and Compaq's decision follows a recent Madras High Court order vacating ISC's application for granting an injunction to prevent the termination of the licence granted by ACI India.

ISC is a joint venture promoted by the city-based HMA Data Systems Pvt Ltd, Compaq Computers (India) Ltd, Applied Communication Inc, US (Base24 - switch to route transactions) and Financial Software and Systems (P) Ltd, Chennai.

Over 56 banks are in the network and over 40 have so far gone live. More than 1,000 ATMs nationwide are Swadhan-enabled, connecting over 67 cities, and servicing about 2.6 million consumers. The average transaction per day in the Swadhan network was around 2,500, sources said.

In a communication to the Indian Banks Association (IBA), ACI India has said, ``in view of the dismissal of the injunction, we have written to ISC of our intention to physically remove the software products within the next few weeks. As a confirmed creditor, we have also notified ISC of our intention to wind up the company (ISC).''

Mr Justice E Padmanabhan of the Madras High Court in his order said that the applicant (ISC) had committed breach of the memorandum of understanding (MoU) and even altered agreements the validity of which were not in dispute. There was neither equity nor any justification for the interim orders being continued.

"To the total detriment of the respondent (ACI India) the interim orders cannot be continued and the very fact that the applicant is not prepared even to deposit the current licence fee, not to speak of arrears for the earlier years amounting to $1.436 million which would show the unfair conduct on the part of the applicant in trying to exploit the licence without paying any amount and to the detriment of the respondent."

"In the foregoing circumstances this court holds that no prima facie case has been made out and the balance of convenience is not in favour of the applicant and the applicant has to blame itself for the persistent breaches committed by it in respect of the stipulations agreed to between the parties".

"Further, no amount, as agreed to, has been paid at all for the past five years. This again is fatal to the applicant's claim and if injunction is to be granted as prayed for or continued as prayed for, it will work hardship to the respondents besides, it will be highly unjust as well," the order said.

The Swadhan member banks include Bank of Baroda, Bank of India, Canara Bank, Bharat Overseas Bank, IDBI, ICICI, Janata Sahakari Bank, Rupee Co-operative Bank and foreign banks such as ABN Amro, Standard Chartered and American Express.

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Swadhan network of ATMs in trouble -- US co threatens to remove software products

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