| Jain: In a spot
Mumbai, Dec. 16: The chairman of Polaris Software Laboratories, Arun Jain, was arrested in Jakarta when he went there to resolve a commercial tiff with a client.
The company was working on a software development project for Bank Artha Graha, an Indonesian finance company that had become unhappy with the way it was being serviced as a customer.
According to information sent by the Chennai-based software firm to the Bombay Stock Exchange (BSE), Jain has been ‘unlawfully detained’ since Friday, along with Rajiv Malhotra, senior vice-president. The Indonesian cops arrested the duo after they were called in on Saturday. Two other officials were let off, a Polaris spokesperson told The Telegraph from Chennai.
Bank Artha Graha served a notice of termination on November 27, prompting Polaris to respond on December 3 with a letter which said the grounds for calling off the deal were ‘incorrect’, the BSE notice says. It offered to resolve the issue through talks.
On December 13, Jain and his team were not allowed to leave the office of Bank Artha Graha, which filed a report with the Jalan Truno Joyo Tiga police station in the Indonesian capital to put them in custody.
Till late on Monday, Jain and his colleague were still in detention even as the company made frantic efforts to secure their release through the ministry of external affairs, ministry of information technology, Nasscom and the Indian Embassy in Jakarta, the notice says.
The announcement came after the end of trading on BSE, where the share had lost Rs 4.40 to close at Rs 184.80. Govind Singhal was chosen as the acting CEO at an emergency board meeting in Chennai this evening.
According to sources in Polaris, disputes in the $ 1 million deal with Artha Graha can only be resolved through arbitration in Singapore. “The good intentions of the company are evident in the fact that the Polaris delegation to Indonesia was led by the CMD himself. This is not the way to treat a businessman,” a Polaris official said tonight.
The dramatic development has sent shock-waves through the Indian software industry, which has asked Nasscom and the ministry of information technology to use its good offices in helping Jain walk free.
Polaris Software is a conservative software company headquartered in Chennai with a collective turnover of more than Rs 600 crore after it merged recently with Orbitech, a subsidiary of financial giant Citibank.
The company said it had signed agreements with Bank Artha Graha in June 2002 and August 2002 covering central processing, disaster recovery and branch server related work. The contract was supposed to be completed by July 2003, Polaris officials said.
Polaris Software, which specialises in software that is extensively used in the banking and telecom industries, had floated its initial public offer (IPO) four years ago.
Jain, who made it a point to trumpet his middle-class roots and values, entered the software industry by being one of the founder promoters of Nucleus Software in New Delhi, and branching out on his own later.