Wipro and Ex-CFO Dalal Head to Court Over Non-Compete Clause

Wipro enters arbitration with ex-CFO Jatin Dalal, alleging his move to Cognizant breaches a non-compete clause. Wipro seeks 251.5 million rupees in damages, a permanent injunction on data sharing, and claims Dalal’s contract violations. Dalal argues non-compete clauses breach the Indian Contract Act and applies for arbitration per the signed agreements.

Wipro and Ex-CFO Dalal Head to Court Over Non-Compete Clause

Wipro and Former CFO Dalal, Head to Arbitration After Job Switch to Competitor

Bengaluru, India – Indian IT giant Wipro and its former chief financial officer, Jatin Dalal, are headed for a legal showdown through arbitration, following a Bengaluru court order. The dispute lies in Dalal’s move to rival company Cognizant, allegedly breaching a non-compete clause in his Wipro contract.

Here’s a breakdown of the situation:

Clash of Contracts:

  • Wipro’s Claim: The company claims Dalal violated a non-compete clause in his employment contract, which barred him from working with specific competitors for one year after leaving Wipro.
  • Dalal’s Defense: He argues that such clauses are invalid under Section 27 of the Indian Contract Act, which restricts unreasonable restraint of trade. Additionally, he invokes arbitration clauses in both his Wipro and Cognizant contracts as a preferred dispute resolution method.

The Money Matter:

  • Wipro Seeks Damages: Wipro has demanded a hefty sum of 251.5 million rupees (approximately $3.02 million) in damages from Dalal, along with interest and a permanent injunction barring him from sharing confidential information with Cognizant.

A Wider Trend:

  • Not the First Case: This is not the first such case for Wipro. In December 2023, they filed a similar complaint against another former executive, Mohd Haque, who joined Cognizant after leaving Wipro.
  • Talent Wars in IT: This legal battle reflects the intense competition for talent in the Indian IT sector, particularly high-level executives. Companies are using non-compete clauses to try and retain valuable employees and prevent them from sharing knowledge and strategies with competitors.

What’s Next?:

  • The Arbitration Path: The Bengaluru court has referred the case to arbitration, as per Dalal’s request. This means a neutral arbitrator will hear both sides’ arguments and make a binding decision.
  • Uncertain Outcome: The outcome of the arbitration is uncertain. While Indian courts have upheld non-compete clauses in certain cases, they have also ruled against them in others, emphasizing employee mobility and freedom to work.

This case is likely to be closely watched by both the IT industry and legal circles, as it could set a precedent for non-compete clauses in India. We will have to wait and see if the arbitrator finds in favor of Wipro’s financial claims and non-compete clause, or if Dalal successfully defends his right to move to a competitor.

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Source(s): Reuters

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