(This is in continuation of yesterday's discussions on the need for Software companies to learn some lessons out of Mr Arun Jain's arrest in Indonesia and the experience of Elcomsoft in USA)

No responsible software company wants to violate the laws of any country whether it is Indian or foreign. However, violation of laws do happen...and now every one knows that the consequences are very unpleasant.

When naavi.org highlighted the arrest of software professionals in Chennai and Bangalore for an alleged Copyright violation by Radiant Software, neither the industry not the press could appreciate our concern that disproportionate penal action was being initiated on the professionals.

Nasscom, the industry representative was actually behind this stringent action supporting Oracle and ensuring maximum press publicity for what they termed as the consequence of "Software Piracy".

Today, when Mr Arun Jain was arrested by the Indonesian Police, Nasscom realized that they had a duty to the industry to oppose the unfair treatment of a commercial dispute.

Now that the dust on Mr Arun Jain's arrest is settling down, it is necessary for us to reflect, how the rights of the branch managers of Radiant Software against the local Police were considered less valuable than the rights of Polaris senior executives in the hands of a Indonesian Police.

In principle both were commercial disputes between two business entities In both cases the arrested persons did not have a direct hand in the alleged offence except in their vicarious capacity. The arrests therefore were only a demonstration of power from the other side and a means of harassment. 

One of the lessons that we should draw as a nation therefore is to avoid physical arrests of corporate executives for the offences of a Company in the usual course of business. Unless there is a risk of the person absconding, there should be no case for arrest. The next option in such cases should be preventive house arrest rather than moving the person to a jail.

If the provisions of the CrPC do not provide for such options, then it is time that an amendment is brought to the CrPC that arrest of any Corporate executive for the offences of the Company must be through a separate procedure.

I am sure that this goes against the thinking of some regulators and the public when it comes to offences such as Cheque Bouncing cases, Company Deposit defaults, SEBI related offences etc.

 However, it must be remembered that by putting he CEO s of NBFC s in jail, RBI has not been able to get the public money back and many times the arrests have brought an abrupt end to the transactions of a business leading to further erosion of investor prospects.

What is important to note is that not all public deposit defaults have arisen due to promoter's committing frauds. Most of them occur due to business failures. If one analyses in depth, it may be perhaps due to the Regulator's guidelines (eg: Credit rating guideline of RBI which led to the collapse of NBFCs) , or a National Policy (eg: Globalization) that could have caused such failures.

naavi.org urges therefore a debate on the "Arrest Policy" of Corporate Executives for indirect offences.

Naavi

December 24, 2002

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