Resolution:
For the Siebel Java Client (adapter) and Siebel Server to communicate correctly, the Codepage of the Siebel server and the client MUST be same. The client code page could be altered by setting the system property 'file.encoding' to the proper Codepage required. Refer to the attached 'Codepage Mappings.doc' for the mappings between Java Codepage and Siebel Codepage.
The adapter uses 'ISO8859-1' as the default codepage to connect to Siebel Server. The parameter can be changed in the .tra file as per the requirement.