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TCS provisions $165 million for Epic claim, continues legal battle

Following an order by an US court to pay $140 million, TCS has made a provisioning of $165 million towards the claims while continuing the legal battle

Rukmini Rao | April 12, 2021 | Updated 22:27 IST
TCS provisions $165 million for Epic claim, continues legal battle

Following the order by the US Court of Appeals, 7th Circuit, Chicago, last August, upholding an award against Tata Consultancy Services (TCS) asking to pay $140 million, the company has provisioned $165 million towards the legal claim.

TCS, in the financial statements for the quarter and year ended March 31, 2021, said, "Pursuant to ruling at the Appeals Court on August 20, 2020, in the case relating to Epic Systems Corporation (referred to as Epic) for alleged unauthorised access to and download of Epic's confidential information and use thereof in the development of the company's product MedMantra, the Company had provided Rs 1,218 crore ($165 million) towards this legal claim in its consolidated statement of profit and loss for the year ended March 31, 2021."

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The company further said that it had filed a petition for re-hearing of the awards for both compensatory and punitive damages at the Appeals Court on September 3, 2020. While Epic has also gone to seek a re-hearing of the Appeals Court's decision that invalidated a portion of the award of punitive damages.

"In November 2020, the petitions for re-hearing filed by the Company and Epic, respectively, were denied by the Appeals Court. The proceedings for assessing punitive damages have been remanded back to the District Court," said the note.

Earlier the US court held that the punitive damages award of $280 million was constitutionally excessive and had directed the Trial Court to reassess the punitive damages while upholding the compensatory damages award of $140 million. With both TCS and Epic having filed their briefs at the District Court in relation to punitive damages, the matter is currently under consideration of the courts.

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"On April 8, 2021, Epic has approached the Supreme Court seeking review of the order of the Appeals Court vacating the award of Rs 2,055 crore ($280 million) towards punitive damages and remanding back to District Court with an instruction to reassess the punitive damages, to no more than Rs 1,028 crore ($140 million). The Company will continue to pursue all legal options available in the matter," TCS said.

Epic systems had sued TCS way back in 2014, accusing the company of illegally downloading documents of software and stealing confidential information and trade secrets.

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