Wipro lawsuit says former CFO Jatin Dalal breached non-compete clause by joining Cognizant, seeks Rs 25 crore in damages

Jatin Dalal, CFO, Cognizant

Wipro has accused its former Chief Financial Officer (CFO), Jatin Dalal, of violating the non-compete clause in his employment contract in a recent lawsuit. The clause stipulates that Dalal should not join any other rival company for a period of 12 months from the date of his resignation.

The IT services major had filed a lawsuit against Dalal in relation to this in the Bengaluru civil court on November 28.

Wipro also seeks Dalal to pay damages of Rs 25.15 crore along with 18 percent interest per annum till the date of payment, according to the lawsuit copy sourced by Moneycontrol.

“As per the Agreements, the Defendant is liable to recompense the Plaintiff the total number of RSU granted multiplied by the share price prevailing on the date of the award OR the calculated sum equivalent to the gross remuneration earned by the Defendant during the last 12 (twelve) months of service (as applicable). However, without prejudice and in good faith the Plaintiff has restricted its claim, which is calculated as INR 25,15,52,875/- (Rupees Twenty Five Crores Fifteen Lakhs Fifty Two Thousand Eight Hundred and Seventy-five) along with interest calculated at 18% (eighteen per cent) per annum until the date of payment,” the lawsuit said.

Wipro notified the exchanges of Dalal’s resignation in September, following which he was announced to have joined rival Cognizant as the CFO. His last date of work at Wipro was on November 30.

Dalal, too, has submitted his application as a countermove, seeking the court to refer the matter to arbitration. Both parties have presented their arguments to the court, and the next hearing has been scheduled for January 3.

Dalal is a Wipro veteran with over 21 years with company and has served as the CFO since 2015.

In his new role at Cognizant, he will take over from Jan Siegmund, who plans to retire in early 2024. Dalal will report to the company's CEO Ravi Kumar S.

His responsibilities will include overseeing various financial functions globally, such as financial planning and analysis, accounting and controllership, tax, treasury, internal audit, corporate development, investor relations, and enterprise risk management.

As Wipro’s complaint mentioned, Dalal had signed a declaration in his Cognizant offer letter that implies any legal implication from previous employer will not be Cognizant’s responsibility.

“I hereby represent and warrant to cognizant that: (I) I am entering into this agreement voluntarily and that the performance of my duties and responsibilities hereunder will not violate any agreement between me and any other person, firm, organization, Or other entity, (II) I am not bound by the terms of any agreement with any previous employer or other party to refrain from competing, directly or indirectly, with the business of such previous employer or other party, in any case, that would be violated by my entering into this agreement and/or providing services to Cognizant pursuant to the terms hereof, and (III) I have read, understand and accept the above offer of employment and agree to the terms and condition set forth above,” the declaration seen by Moneycontrol said.

This move by Wipro could jeopardise Dalal’s new role at Cognizant.

Meanwhile, Wipro has seen nearly 10 top level exits in 2023 alone, amidst the company’s CEO Thierry Delaporte struggling to turnaround its business in a challenging demand environment.

Wipro has also filed a complaint against another former senior executive in a US court for joining Cognizant after allegedly breaching non-compete clause in his employment contract. The executive was Wipro’s former senior vice president (SVP) and head of healthcare and medical devices for the Americas, Mohd Haque.

The company accused Haque of possessing seven files with confidential information, which was sent from his personal Gmail account as flagged by its IT team. Wipro claimed that some other files too were uploaded and sent outside the company to his personal email account.

Cognizant under radar

While the poaching row among top IT companies have intensified in 2023, Infosys too has accused Cognizant of unethical poaching tactics.

Moneycontrol had exclusively reported on December 27 that Infosys had sent a written communication to deter Cognizant after a few of its senior leaders departed to join the firm.

"Non-compete clauses are not enforceable but this communication to Cognizant was more of a deterrent," one of the sources had said.