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Bangalore , Oct. 5

THE case of sexual harassment filed against Mr Phaneesh Murthy and Infosys was not likely to have a major impact on on the parties involved.

In fact the onus for meeting the liabilities would be on the insurers, sources said. Normally corporates take cover against such unforeseen liabilities through a directors' and officers' liability policy. Infosys, when contacted, declined to name the insurer or with whom it has taken the cover or the policy details. Mr Phaneesh Murthy himself, at the conference call to the media said, "We assume we are covered. I don't have the details."

However, industry sources said, that this year the cover has been placed with Cholamandalam General Insurance Company Ltd (CGICL). Infosys in the past has placed all its policies for directors and officers' liabilities only with foreign insurance companies. Infosys has paid out a premium of Rs 6 crore for this kind of liability. CGICL, when contacted, confirmed that Infosys had indeed placed the cover with it.

The sources said that normally such covers have a retroactive date. This implied that the insurers liability could be retro-effective, if the claims are for a past event when the policy was taken. But sources said here that in the case of the policy placed with CGICL, the coverage is only effective from this year. Besides Cholamandalam itself has ceded these premiums to foreign and domestic reinsurers, since such covers are entirely reinsurance driven.

This would mean that the liability would be on the consortium of American insurance companies. These insurers were involved in the out-of-court settlement involving a sum of $3 million. The American insurers paid nearly half of this amount by meeting the claims made on them involving sexual harassment.

The sources said directors' liability covers are however not open-ended. Directors' liability covers normally have sunset clause. Such a clause specifies a period during which the policy would remain effective. Further there are other riders. These riders include restricting the insurers liabilities only to the residual component of the coverage if a claim payout has already been made. Since one claim has already been made, the sources said, assuming that the cover was still within the specified period, the insurers liability would be restricted only to the residual components. Any thing in excess would have to be borne by the company itself, the sources said.

Will fight "till the last"

MR Phaneesh Murthy said he will fight the case even if all his resources get exhausted. "My wife and I have resolved that even if it means digging out the money from our retirement funds, we will fight till the last," he said. He said if he doesn't fight the case, he will be vulnerable to similar suits all his life.

"In the previous case, I was like a deer in front of a headlight. I kept quiet which I shouldn't have. I played like a lamb. I am a born fighter and I will fight. In the earlier case I signed the out-of-court settlement papers under pressure. There was no admission of guilt from either side. I didn't pay a single pie because I was covered by insurance," Mr Murthy said.

Mr Murthy said his lawyer who defended his earlier case, Mr Paul Mellow of Pillsbury and Company would fight this case too. "I am not looking for any help from Infosys," Mr Murthy said.

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