IN THE HIGH COURT OF KARNATAKA AT BENGALURU

Appellate Jurisdiction

Brill Bank AG
Promenade Fabricators Limited
Mrs. Parvathi Puttappa
Mrs. Kamla Soni
Ms. Mia Soni Appellants

versus

Soniser Technologies Limited

Soniser Futuristics Private Limited
Iki Bank Limited Respondents

1. One of the most significant forms of disruptive innovation in the transportation

industry is the emergence of a range of autonomous cars such as the self-driving car.
Using sophisticated inbuilt maps and sensors, the self-driving car is able to process
information regarding the street as well as the lane on which it is driving. The sensors
enable the car to detect various objects surrounding it, and the information is then
utilized by high-end software to classify those objects and then automatically adjust
the speed, direction and other functionalities of the car. The predictive nature of the
car even allows the car to use a safe speed and trajectory based on what other users of
the road might do next. This is tipped to change the face of transportation, both for
movement of people as well as goods.

2. Doobler, Inc., based in Palo Alto, California, is a pioneer in self-driving cars. Its
prototype, the Debla, has been tested extensively around streets in California, and
has shown tremendous results. The self-driving car has been the pet project of Helona
Muskinova, the founder of Doobler, who is well-known for her vigorous pursuits to

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stretch the boundaries of science and technology. One of her goals has been to put
Debla on the streets in every single country of the world.

3. Sensing the immense potential for the success of Debla in India, which is unsurprising
given the huge market, Doobler devised a strategy for entry into the country. It
decided to establish a manufacturing facility in India, initially on a pilot basis to
explore the performance of Debla on Indian roads, and then to gradually expand the
operations to manufacture and sell the cars on a commercial basis. In order to
manufacture the prototype suitable to Indian roads, in 2012 it set up a wholly-owned
subsidiary in India in the form of Doobler Automotives (India) Private Limited. It
took a small facility Hesarghatta near Bengaluru on lease. Doobler was keen that its
business activities integrate well with the markets in which it operates. Accordingly, it
decided to source some of its manufacturing and technological requirements locally in
countries where it operated rather than to export them from the United States (US).

4. In order to take advantage of the local expertise, it decided to partner with a local
entrepreneur in order to source some parts and technology. Mr. Kailash Soni is an
automotive engineer with 20 years experience in leading automotive companies in
the US and Europe. Upon his return to India, he established Soniser Technologies
Limited, which specializes in automation in the transport industry. It is a supplier of
high-end technological parts for use in automobiles. Under Mr. Sonis leadership, the
company had grown to an annual revenue of Rs. 250 crores by the end of the financial
year 2012-13. While Mr. Soni owns 70% shares in Soniser, his wife Mrs. Kamla Soni
and daughter Ms. Mia Soni collectively own 5% shares, and a venture capital firm
South Bridge Investment Partners Private Limited owns the remaining 25% shares.
The board of directors comprises Mr. Soni, Mrs. Kamla Soni and Mr. Chad Berry, a
nominee of South Bridge. Of these, Mr. Soni is the managing director of Soniser,
while the other two are non-executive directors.

5. In early 2013, discussions began between Mr. Subra Venky, the chief executive
officer (CEO) of Doobler India and Mr. Kailash Soni regarding possible arrangements
for development of sensor technology for the Debla cars that Doobler would be
manufacturing in its facility in India. Mr. Venky expressly articulated Dooblers
global policy of handing over the entire task of supplying sensors to one party in each
country. In other words, Doobler would rely upon one single entity to supply the

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entire sensor equipment for the Debla cars by taking full responsibility for the same.
Although Doobler was aware that a supplier could in turn outsource some parts of the
manufacturing or technology to other entities, it wished to have a relationship with
only the ultimate supplier. Translating these terms to the Indian scenario, Mr. Venky
clarified that its relationship would be solely with Soniser, irrespective of the fact that
Soniser may parcel out portions of the design or manufacturing of the sensors (to be
supplied to Doobler India) to other entities.

6. Accordingly, on May 8, 2013 a Sensor Supply Agreement (Supply Agreement) was

entered into between Doobler India and Soniser. Under the terms of the Supply
Agreement, Soniser would supply to Doobler India the sensors to be used in the
manufacture of the Debla cars in India. The Supply Agreement contained details of
the pricing of the sensors, the supply schedule, quantity of supply and related matters.
The Supply Agreement was entered into for a period of five (5) years, with the
possibility of renewal on mutually negotiated terms. The Supply Agreement contained
a clause, which mentioned that Soniser intends to obtain some parts and technology
from other entities in order to fulfil its commitments under the Supply Agreement.
However, it did not contain any details regarding from whom and how those would be
obtained by Soniser. Doobler India did not bother to seek those details from Soniser
as, accordingly to its business philosophy, it would only look to Soniser for a
packaged product, without having regarding how that product is being put together.
Doobler Indias focus was on a one-stop solution from Soniser.

7. The total value of the sensors to be suppled under the Supply Agreement was
estimated to be in the range of Rs. 450 crores. Under the terms of the SSA, upon
execution of thereof, Doobler India was to pay Soniser a sum of Rs. 45 crores as
advance, which was in fact paid on May 10, 2013. This then enabled Soniser to utilize
a part of the advance to obtain materials and services from other suppliers. After using
a sum of Rs. 10 crores towards those purposes, Soniser retained Rs. 30 crores in its
bank account with Iki Bank at its M.G. Road, Bengaluru branch, and paid over a sum
of Rs. 5 crores into the bank account of Soniser Futuristics Private Limited, also
maintained with the M.G. Road, Bengaluru branch of Iki Bank. Soniser Futuristics is
a wholly-owned subsidiary of Soniser, and its directors are Mr. Kailash Soni and Mrs.
Kamla Soni. Both these banks accounts with Iki Bank were segregated accounts, and

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were not utilized for any purposes other than for holding the respective funds
mentioned above.

8. Although Soniser has the requisite expertise in the automotive sensor industry, it does
not have all the resources of manufacturing as well as development of technology.
Hence, it was compelled to outsource some of the activities (required to fulfil its
commitments to Doobler India) to other entities. Towards this end, Mr. Soni
approached his good friend Mr. Sundaram Tukai, who ran two successful companies
in the automotive sector. One was Retrofit Automotive Parts Limited, which was a
manufacturing entity that supplied various spare parts to companies in the automotive
industry. More recently, it has been conducting research into manufacturing sensor
equipment for self-driving cars, and even hired a couple of engineers from world
leading car manufacturers to assist in this process. Another company was
Reprogramming Technologies Limited, which writes customized software for the
automotive industry. Reprogramming has witnessed tremendous success in recent
years due to the greater technological reliance of the car industry. Reprogramming has
been developing the software required for use in sensors for driverless cars. The
combination of the hardware manufactured by Retrofit and software developed by
Reprogramming would turn out to be a winning combination for self-driving cars.

9. After discussions and negotiations, on May 25, 2013, Soniser entered into a Sensor
Hardware Supply Agreement (SHSA) with Retrofit under which Retrofit would
supply the sensor equipment to Soniser. On the same day, Soniser entered into Sensor
Software Services Agreement (SSSA) with Reprogramming under which
Reprogramming would provide the software required to be used in the sensors that
Retrofit would supply. Both the SHSA as well as the SSSA explicitly provided that
the hardware or software, as the case may be, were being provided by the Retrofit and
Reprogramming respectively, to Soniser so that Soniser may in turn provide the entire
package in the performance of its obligations to Doobler India under the Supply
Agreement. In terms of payments under the SHSA and SSSA, they were structured
such that Soniser would pay over to Retrofit and Reprogramming in the aggregate the
price it receives from Doobler India under the Supply Agreement, but after retaining
what it termed in the SHSA and SSA as a commission of 10%. To illustrate the
arrangement, if one sensor sold by Soniser to Doobler India under the Supply

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Contract is priced at Rs. 5,000, then Soniser will pay Rs. 4,500 to Retrofit and
Reprogramming in the aggregate under the SHSA and SSSA, and Soniser will retain
the balance Rs. 500 as commission for itself.

10. For the initial year after the contractual arrangements were put in place, parties were
engaged in developing the sensor and ensuring that it met with the specifications
imposed by Doobler India. Although Soniser here appears to be some sort of middle
man, that is not to say that it did not contribute meaningfully to the project. Despite
all the hardware and software being manufactured and developed by Retrofit and
Reprogramming respectively, Soniser deployed a team of two engineers to the
Doobler India project in order to perform testing and quality control to ensure that
Doobler Indias technical specifications were met at all times. After all, Retrofit and
Reprogramming would provide their hardware and software based on the instructions
provided by Soniser, due to which Sonisers quality control efforts were quite critical
to the success of the project. While both Retrofit and Reprogramming provided
customary warranties and after-sales service on the hardware and software
respectively, those warranties were structured in such a way that they would be
provided to Soniser or to any other customer of Soniser to whom Soniser would sell
its sensors after packaging such hardware and software.

11. While the testing process was underway, in late 2013, Soniser suffered a minor
setback. In 2011, Soniser had issued corporate bonds worth Rs. 20 crores on a private
placement basis to Brill Bank AG, a German bank, which lent the money to Soniser
through its branch in Singapore. The proceeds from the issue of bonds was intended
towards funding Sonisers project regarding commercial space travel, into which
Soniser was conducting extensive research. However, that project had to be shelved
due to lack of future prospects. Consequently, by mid-2013, Soniser began defaulting
on its interest payments under the bonds to Brill Bank. The bank, obviously being
concerned, issued a legal notice addressed to Soniser on August 20, 2013. The legal
notice stated that due to the defaulted interest payments under the bond terms, the
accelerated repayment clause has been triggered, and hence Soniser is required to pay
a sum of Rs. 23.50 crores (principal together with interest). When this notice was
brought to the attention of Sonisers board, one of the directors, Mr. Chad Berry,
became livid. He did not recall such a bond issue ever being approved by the board.

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This was intriguing since the articles of association of Soniser specifically stated that
the company was not allowed to borrow monies exceeding Rs. 10 crores without a
unanimous resolution passed at a board of directors meeting of Soniser. He
confronted Mr. Soni about this, only to then realize that it was Mrs. Kamla Soni who
conducted all the negotiations with Brill Bank. Upon further investigation, Mr. Berry
found that the Sonis deliberately kept the bond issue under wraps from Mr. Berry, lest
he object to the transaction as it would substantially increase the financial risk for the
company. On behalf of South Bridge, Mr. Berry threatened legal action against the
Sonis, but in the meanwhile, he asked that Soniser reply to Brill Bank on the basis that
the bonds invalid as they were issued without the unanimous board approval of
Soniser, and that therefore any repayment obligations on the part of Soniser does not
exist. Soniser accordingly replied on August 31, 2013, to the solicitors of Brill Bank.

12. In response to Sonisers reply, the solicitors of Brill Bank wrote a letter dated
September 7, 2013, among other things, attaching a copy of a resolution passed by the
board of directors of Soniser, and that too unanimously. It contained the signatures of
all three directors, including Mr. Berry. To his dismay, Mr. Berry discovered that the
Sonis had forged his signature and handed over the copy of the resolution to Brill
Bank. Although Brill Bank had conducted a fair amount of due diligence on Soniser
and had the documentation reviewed by its solicitors, it did not discover any
irregularities. However, in its negotiations with Mrs. Soni, it had found it somewhat
odd that she was unaware of some of the details regarding the functioning of the
company, and did not also provide some of the financial information pertaining to the
company. Nevertheless, it decided to proceed with the transaction as its account
managers had derived the requisite comfort from a compliance perspective. On
hindsight, however, it became clear that Brill Bank was the victim of an orchestrated
act of fraud that was perpetrated by the Sonis to obtain monies from Brill Bank over
any possible objection by Mr. Berry.

13. Upon this shocking discovery, Brill Bank was left with no option but to file a civil
suit for recovery before the City Civil Court, Bengaluru. It filed for recovery of
amounts due to it under the bonds along with overdue interest of a total sum of Rs.
23.50 crores. It also sought a Mareva injunction in respect of the sums (representing
the advance from Doobler India) that Soniser held in its bank account with Iki Bank at

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its M.G. Road, Bengaluru branch. Soniser, under the insistence of Mr. Berry, sought a
dismissal of the civil suit on the ground that Soniser had not validly entered into the
bond issuance, and hence the terms were not binding on it. Consequently, it had no
payment obligations under the same. In any event, Soniser also contested the request
for a Mareva injunction on the ground that the monies lying in the account with Iki
Bank did not belong to Soniser as it was being held on behalf of Retrofit and
Reprogramming, and that the beneficial interest in those monies belong to those
entities. At the first instance, after hearing on all counts, the City Civil Court,
Bengaluru dismissed the suit against Soniser. Against, this Brill Bank preferred an
appeal before the Karnataka High Court.

14. Separately, on January 18, 2015, Promenade Fabricators Limited, the suppliers of
certain metal parts to be used in products manufactured by Soniser, obtained a decree
from a civil court in Odisha against Soniser for a sum of Rs. 8 crores. This is because
Soniser had defaulted on payments due to it under supply arrangements. Promenade
has been unable to obtain a recovery on its judgment, and hence initiated proceedings
against Soniser as well as Soniser Futuristics seeking a garnishee order in respect of
the monies held in Soniser Futuristics bank account with Iki Bank at its M.G. Road,
Bengaluru branch. Both Soniser and Soniser Futuristics resisted any move to garnish
those funds on the ground similar to that adopted in the suit brought by Brill Bank
against Soniser, i.e. that the monies lying in the account with Iki Bank did not belong
to Soniser as it was being held on behalf of Retrofit and Reprogramming, and that the
beneficial interest in those monies belong to those entities. The outcome of this suit
was similar to that of the suit brought by Brill Bank. The City Civil Court, Bengaluru
dismissed the garnishee proceedings against Soniser Futuristics. Against, this
Promenade preferred an appeal before the Karnataka High Court.

15. While the financial problems pertaining to Soniser were gradually escalating, they
were not insurmountable. Mr. Soni was looking at the Debla car project as well as
Sonisers long-term Supply Agreement with Doobler India to bring the company out
of the woods. As Mr. Soni was attempting to sort out the financial affairs of Soniser,
tragedy struck. On the evening of June 15, 2015, Mr. Soni was test driving a
prototype of the Debla, in order to check the quality, reaction time and other
functionalities of the sensor that it was developing for Doobler India. It was shortly

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after dark, and Mr. Soni was testing the functionalities as they operated during night
driving. He had a hectic day, and was considerably tired, but he had no choice as the
testing had to be done at night. He had initially considered taking one of his engineers
along, but decided that he might as well test the car on his way home instead. He was
alone in the car, which was performing impeccably on the roads of Bengaluru. After a
while, though, he was overcome by his weariness, and left the car on autopilot while
his mind wandered off to the numerous problems the company was facing, and
occasionally nodding off as well. During one such extended lapses of concentration
on the part of Mr. Soni, the Debla test car entered a one-way from the wrong side, and
was going against the traffic. That, by itself, would not have been disastrous as the
sensors would take over to avoid any collisions or accidents. However, that was not to
be. It was travelling at high speed and encountered the lights of an oncoming car from
the opposite direction (being the proper one for that one-way street) and towards the
Debla. There was a head-on collision at a fairly high speed, and Mr. Soni as well as
the driver of the other car suffered fatal injuries.

16. After investigation, it was found that the sensor had malfunctioned. The sensor did
not interact effectively with the map, which resulted in its entry into the one-way
street in the wrong direction. Moreover, the sensor mistook the headlights of the car
travelling towards it to be the lights of two motorcycles and instead attempted to
travel in between the two. Instead of avoiding the car altogether, the sensor guided the
Debla to dissect what it believed were two motorcycles, which then resulted in the
collision.

17. Quite naturally, Mrs. Kamla Soni and Ms. Mia Soni were distraught. Mr. Berry
became frantic with this development. Not only did South Bridges investee company
lose its key managerial personnel, but this would effectively lead to questions
regarding the continuity of the relationship between Soniser and Doobler India, going
forward. The Debla Incident, as it became known, captured media attention the
world over, raising significant doubts about the reliability of self-driving cars.
Doobler, Inc.s share price plummeted on the back of this news.

18. Mr. Berry decided to investigate the problems with the sensors. He interviewed the
team of two engineers of Soniser who were deployed on the Debla project. One of
them, Mr. Prabhakar Karla, opened up during his conversation with Mr. Berry. He

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mentioned that the sensor suffers from an inherent defect. This was detected during
the testing and quality control operations carried out by Soniser. The problem was that
the sensors accuracy gets affected when there is a high level of air pollution. The
sensor works perfectly when the Air Quality Index (AQI) reading is 200 or below.
But, once the AQI exceeds 200, certain operational aspects of the sensor become
inaccurate. Mr. Karla had raised this issue with Mr. Soni a couple of days before the
fateful accident, but Mr. Soni mentioned that he would try to resolve the issue through
further testing which would take about a week or so, but unfortunately he did not
survive that period. He specifically requested Mr. Karla not to mention this issue to
anyone, not even Mrs. Soni, or any of the personnel of Doobler India, or the suppliers
in the form of Retrofit and Reprogramming. Accordingly, Mr. Karla kept it hush, until
after the accident occurred. It subsequently transpires that had the information been
shared with Reprogramming, the issue could have been addressed with some simple
tweaks to the software. Alas, on that fateful night, the AQI reading in Bangalore
displayed 225.

19. Soniser became the subject matter of yet another set of legal actions. A joint civil suit
was immediately filed against it before the City Civil Court, Bengaluru. One of the
plaintiffs to the suit was Mrs. Parvathi Puttappa, the widow of Mr. Puttappa, who was
in the car involved in the collision with the Debla. Mr. Puttappa was a driver of a taxi
offering services to customer through the taxi hailing app of Kober. At the time the
accident occurred, he was rushing to pick up a passenger whose booking he had just
accepted. Although he was keen on reaching his passenger on time, or even as early
as possible, it was found that he was driving with the speed limit for that road. The
second set of parties to the suit was the family of Mr. Kailash Soni, being Mrs. Kamla
Soni and Ms. Mia Soni. In this joint suit, the plaintiffs sought damages from Soniser
for wrongful death caused to the two deceased persons. In addition, the plaintiffs also
sought a Mareva injunction in respect of the sums (representing the advance from
Doobler India) that Soniser held in its bank account with Iki Bank at its M.G. Road,
Bengaluru branch. This they did to ensure that if their claims are successful, they will
indeed be able to make recoveries from Soniser. However, Soniser vehemently
contested the existence on any liability whatsoever to the plaintiffs. In any event, it
also contested the request for a Mareva injunction on the ground that the monies lying
in the account with Iki Bank did not belong to Soniser as it was being held on behalf

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of Retrofit and Reprogramming, and that the beneficial interest in those monies
belong to those entities. At the first instance, after hearing on all counts, the City Civil
Court, Bengaluru dismissed the suit against Soniser. Against this, the original
plaintiffs preferred an appeal before the Karnataka High Court.

20. In the meanwhile, it transpires that the monies lying the segregated bank accounts of
Soniser and Soniser Futuristics respectively with Iki Bank at its M.G. Road,
Bengaluru branch have been lying untouched. Earlier, Mr. Soni had been advised by
his lawyers, oddly enough, that he should not transfer the funds out of that account
given the existence of several legal actions. In any event, Mr. Soni was the only
authorised signatory for the operation of those bank accounts, and in his absence the
monies cannot be dealt with unless the procedure for alteration of authorised
signatories is carried out by both Soniser and Soniser Futuristics.

21. Now, all of the appeals referred to above are being taken up for hearing on a
combined basis.

*****

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