Delhi High Court Saves The Day For 18 Million SBI Credit Card Holders. Here's How
The court restrained a company from disrupting SBI Card's IT services.
The Delhi High Court recently shielded 18 million credit card holders, and restrained Kony, Inc. from disrupting SBI Card's IT services.
SBI Cards & Payment Services Ltd. filed a case against four connected entities: Kony, Temenos India Pvt., Bahwan Cybertek LLC, and Bahwan Cybertek Pvt.
In 2014, SBI Cards started using IT services from Kony. It developed a platform called Mobile Application Development Platform, which lets SBI Card make client-facing apps for devices like phones and tablets for their customers.
The platform has two main parts: Kony Visualizer and Kony Mobile Fabric. The Visualizer helps developers make mobile apps for different devices and systems, while the Mobile Fabric helps with the backend for those apps.
Background
As per SBI, the initial period covered by the licence agreement was from 2014 to 2017. This agreement was subsequently renewed, extending from 2017 until 2020, and then renewed again for three years until 2023.
Therefore, up until June 2023, there was a valid and active licence agreement in place and negotiations to renew began before the expiry.
Based on negotiations conducted in early 2023, it was agreed that the total cost to SBI would be approximately Rs 1.75 crore for the renewal of the agreement for three years.
The renewal process was almost finalised, with only the payment remaining, according to SBI. However, during this period, SBI was informed that Kony had entered into a strategic sales delivery partnership with Bahwan Cybertek in India.
Subsequent correspondence took place, and unexpectedly, in later communications around October 2023, the entire commercial proposal was altered. Following this change, the cost to SBI escalated to over Rs 10 crore for one year.
Due to the lack of communication between the parties and the significant increase in the proposed amount, SBI issued a cease and desist notice to Kony. A cease and desist notice is a formal letter telling someone to stop doing something illegal or harmful.
SBI's Arguments
SBI submitted before the Delhi High Court that it provides credit card services to over 18 million people in India. Any disruption to such agreements could lead to serious risks for customers, including potential data breaches and financial losses, the bank said.
It further argued that the court's intervention is crucial because any disturbance in software licensing or operational access could severely impact the development and functionality of mobile banking apps, which are essential for credit card services.
SBI also highlighted that even if there's a dispute or termination of the agreement, there should be a transition period of 12 months, as specified in the contract. Additionally, if arbitration proceedings begin, the work of Kony and its connected entities under the contract must continue.
The court observed that SBI Card has shown enough evidence for the court to issue a temporary injunction without hearing the other side.
However, the court's order is conditional upon SBI Card depositing a sum of Rs 55 lakh with the Registrar General of the Court within one week.
