The scam-hit Satyam has some relief in its fight with one-time customer Upaid. The Supreme Court of the state of New York has ruled in its favour, asking the British mobile solutions company to bear the tax burden while settling its dispute with the Hyderabad-based company.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Upaid had earlier filed a forgery and fraud case against Satyam involving the issue of patent infringement. Upaid had raised a demand for $1 billion in damages. Upaid had alleged that the then Satyam management, led by B Ramalinga Raju, had handed over forged documents, which had denied the British company in getting the technology patented for monetising it.

Though Satyam changed hands after the founder of the company confessed to committing an accounting scam in the company, Upaid pursued the case. In fact, the case was seen as a major roadblock in selling off Satyam after Raju’s confession had forced the government to intervene for keeping the stakeholders in the company afloat.

Tech Mahindra, which took over Satyam, later entered into an agreement with Upaid to settle the case out of court. It was agreed by both the parties to settle the dispute for $70 million.

Though Satyam had agreed to pay the agreed amount, Upaid insisted that the payment should be exclusive of taxes on which the issue landed in courts once again.

According to a statement issued by Satyam, the court was in favour of Upaid bearing the tax burden. “The Court adjudged and declared that the Settlement Agreement requires that Upaid must cooperate with the Escrow Agent (IDBI Bank Ltd.) to allow the Escrow Agent to withhold any applicable taxes from the $70 million Settlement Amount.”

This implies that the contention of Upaid on $70 million to be paid net of taxes was denied by the court.

Though the actual tax component of the agreed amount is still not known, sources said that the British company would pay $20-30 million towards taxes as per the US laws.