Wipro has filed a civil suit in Bengaluru’s civil court against its former CFO, Jatin Dalal, seeking Rs 25 crore ($3.4 million) for breach of contract. The company has also requested the court to prevent Dalal from divulging confidential information and soliciting Wipro’s clients, vendors, and employees. Additionally, Wipro reserves the right to claim further damages in the future.
Dalal left Wipro on November 30 and immediately joined Cognizant as its CFO. The crux of Wipro’s claim lies in the RSUs (restricted stock units) and PSUs (performance share units) granted to Dalal during his tenure as CFO. According to the court documents obtained by the Times of India, Wipro asserts that Dalal was bound by a 12-month non-compete agreement after leaving the company. This agreement prohibited him from engaging with a competitor, soliciting Wipro clients or employees, or associating with a competitor, supplier, or customer of Wipro.
Wipro also highlights that the RSU and PSU agreements explicitly listed Cognizant as one of Wipro’s competitors. However, Dalal provided an undertaking to Cognizant, available as a filing on the US Securities and Exchange Commission (SEC) website, stating that he was not bound by any previous agreement restricting his competition with his former employer. Wipro argues that this undertaking is false and that Dalal is still obligated to adhere to his agreements with Wipro.
In its court filing, Wipro alleges that Cognizant’s decision to appoint Dalal as its CFO, offering an annual compensation of $5.2 million, five times his Wipro salary, and a $300,000 sign-on bonus, substantiates their claim that Dalal possesses commercially sensitive and confidential information about Wipro. Wipro believes that Cognizant intends to leverage this information and compensate Dalal for the likely loss of RSUs and PSUs.
Wipro’s demand for Rs 25 crore in damages accounts for the value of the granted RSUs and PSUs. The company argues that Dalal’s breach of contract threatens Wipro’s business interests and requests the court to enforce the non-compete agreement and prevent further harm.
Dalal, on the other hand, has requested the court to refer the matter to arbitration, citing his contracts with Wipro, which allow for arbitration. He also asserts that Wipro is not entitled to damages merely based on the fear that confidential information may be disclosed.
The court is set to make a decision on January 3 regarding the referral of the dispute to arbitration, which would involve resolving the matter with an arbitrator rather than a judicial court.
The legal confrontation between Wipro and its former CFO highlights the importance of contractual obligations, non-compete agreements, and the protection of confidential information in the corporate world. As the case unfolds, the outcome will have implications not only for the individuals involved but also for the broader understanding of employee obligations and business ethics.
