Polaris Software, based in the southern city of Madras, said chairman and chief executive Arun Jain was detained last Friday after a complaint by a client, Indonesia's Bank Artha Graha.

"Bank Artha Graha filed a report with the police station ... and on that basis the Indonesian police detained them," Polaris said in a statement without giving further details.

The Indian foreign ministry on Tuesday summoned the Indonesian ambassador to New Delhi and said it would "strongly" take up the case.

Indonesian police said they made the arrested after Bank Artha Graha filed a complaint over a business dispute valued at $1.3m.

Software dispute

Polaris was contracted to supply the Indonesian bank with software services by July 2003 but it allegedly failed to complete another software project for the bank due in September this year.

Mr Jain and another senior official were detained when they went to the Indonesian bank's office to investigate the termination of a contract.

Polaris, a financial services software firm, started as a subcontractor developing software for Citigroup's Indian operations, which is still one of its largest clients.

Citigroup will hold just over 47% of Polaris when it is merged with its Indian software unit, Orbitech Solutions.

Polaris said it had appointed executive director Govind Singhal as acting chief executive officer but shares still fell by more than 4% on the news.

"It's disturbing that our chairman and a senior executive have been subjected to humiliating treatment for a commercial dispute," Mr Singhal said.