Vinayak,
I might be stating the obvious here but using GPL licensed software and making changes and using them internally (like within a company) is okay. Google, Yahoo, Amazon and other companies does this and this is not a violation of the GNU GPL license. Also providing a hosted service such as hardened FTP server space (with patches whose source code is not available) also does not fall under the purview of the GNU GPL license. It is perfectly legal to do that.
This is not the case, they are using GPLed software, building interface on top of it and closing THE ENTIRE RESULT, including the file system.
They are using some kind of MD5 hash to encrypt the file system (again using custom hash within ext3), I tried mounting the file system partition by making the drive as secondary drive, still mount doesnt know how to mount the partition.
However if the company is (re-) distributing the binaries then they must provide access to the source code. This access can be in different ways such as via a source code cd, webserver or FTP server within reasonable amount of time since distributing the binary. If they do not do this then they are in violation.
No source code pal, they dont entertain such questions ! :) They have been doing this since past 5-6 years. During that time, gpl-violations wasnt all that pro-active and wasnt proven in any court of law.
You can report violations to license-violation@gpl-violations.org. As far as I know, Harald Welte (of netfilter fame) works on it part-time so there might be a delay in the reply initially. Also I am not sure if you are planning to sue them, whether GPL-violations might be able to monetraily help and that too in India.
But do go ahead and report this violation. For all you know it might be precedent setting in India.
Thanks & Regards, Mitul Limbani, Founder & CEO, Enterux Solutions, The Enterprise Linux Company (TM), www.enterux.com