Why Wipro sued its former CFO Jatin Dalal: Five points from the lawsuit

The case was filed on November 28 and Jatin Dalal has also submitted his clarification and application to the court

In less than a week, Wipro made headlines for suing two of its former senior executives who recently joined Cognizant. The most shocking of the two was the lawsuit filed against the former chief financial officer (CFO) of the company Jatin Dalal, claiming that he breached the non-compete clause in his employment contract by joining a rival company in less than 12 months.

Consequently, in a permanent injunction petition filed against Dalal at Bengaluru’s city civil court, the IT services major is also seeking damages worth Rs 25.15 crore along with 18 percent interest per annum until the payment is done.

So what triggered these proceedings?

Here are five interesting facts from the lawsuit, which Moneycontrol accessed.

Dalal, who took over the CFO role at Wipro in 2015, has been one of the core decision makers and signatories on the company’s acquisitions, strategies and large deal negotiations of $100 million and above, making him privy to various sensitive information of how Wipro operates. Dalal was also on the investment committee of the $300-million strategic fund of Wipro Ventures, which invests in early and mid-staged startups.

1. Dalal, who took over the CFO role at Wipro in 2015, has been one of the core decision makers and signatories on the company’s acquisitions, strategies and large deal negotiations of $100 million and above, making him privy to various sensitive information of how Wipro operates. Dalal was also on the investment committee of the $300-million strategic fund of Wipro Ventures, which invests in early and mid-staged startups.
2. In the lawsuit, Wipro is particularly asking for a permanent injunction on Dalal being able to share any such company-sensitive details with Cognizant, a rival company where he will be joining as the CFO from December 1. Wipro even accused Cognizant of hiring Dalal to get access to confidential information for its business gains.
3. Wipro has disputed Dalal’s appointment at Cognizant by evoking a non-compete clause in his contract, which stipulates him to not join any other rival companies for 12 months since his last day of work at Wipro, which was on November 30.
4. At Cognizant, Dalal will be paid 5X of what he was earning in Wipro. His total targeted compensation annually will amount to Rs 43.34 crore, including base pay of Rs 6.25 crore and restrictive stock options (RSUs) worth Rs 15.42 crore among other components.
5. The basis of Wipro’s allegations also stands on the fact that Dalal had signed a declaration in Cognizant’s offer letter saying that he is not bound by the terms and agreements of any previous organisation and his duties at Cognizant won’t violate any other previous agreements. This violates the 12-month non-compete clause, according to Wipro.

The case was filed on November 28 and Dalal has also submitted his clarification and application to the court.

Both parties have been called for the next hearing scheduled on January 3.