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Arbitration – Termination of License Agreement of SBI Card for its Mobile App – Transition period of 12 months – Interim protection to prevent interruption of services

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SBI Card is public listed company on BSE and NSE.  SBI is its single largest share holder.   SBI Card has 1.8 crores card holders served.

On 25.4.2014, SBI Card agreement with Kony INC and obtained licence for Mobile App with self-service features with permission for sub-licensing, transfer or use of said licence.  Clause 17 of the said agreement provided for arbitration clause.

The initial period of licence from 2014 to 2017 was extended till 2023.

The negotiations for further renewal have culminated into a contract as final commercial proposal for 3 years and only payment was to be made.   A draft master service agreement was also sent by the respondent no.4 but it was not executed.   It is said that the respondent no.4 had entered into a strategic sales delivery partnership with respondent no.4.

Thereafter, in October, 2023, the entire proposal was changed by the respondents and different proposal as mentioned in para 12 was given.  There was no consensus on new proposal.

On 19.4.2024, the cease-and-desist notice, which in effect Is the termination agreement was given.

Since this notice has damaging and adverse impact not only on SBI Card but also its subscribers and customers, SBI Card filed section 9 petition.

Section 3 of the Agreement provides for the term of licence and transition period and support.  It was agreed that SBI card shall retain and continue to use all the copies of the Licensed Materials, software, documentation and confidential information in its possession or control during the transition period.

Section 17.2 provides for Governing Law and Disputes that Kony shall continue work under the Contract during the arbitration proceedings unless otherwise directed by SBI card.

Thus, even if there is a termination or arbitration proceedings between the parties, the transition period of 12 months has to be given and if arbitration proceedings commence, then the work of Respondent no.1 and other entities connected to it under the contract and license agreement has to continue.

HELD the agreement shows that the parties have fully appreciated the critical nature of services and effect of any disruption on the petitioner and its customers.  Therefore, interim protection measures of ex parte ad-interim injunction are essential to maintain the smooth operation of credit card related software for uninterrupted service delivery and financial services.

 

Order dated 26.4.2024 in O.M.P. (I)(COMM.) – 127 / 2024 of SBI Cards and Payment Services Private Limited  Vs. Kony Inc and others.

 

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