Wipro's case against former CFO Jatin Dalal goes to arbitration: What is the case, what happens next and other details

After a stint of 21 years at Wipro, Dalal resigned as the CFO in September and served his last day until November 30, following which he joined global Cognizant on December 1. Wipro considers Cognizant as one of its competitors.

The arbitration will be conducted by a sole arbitrator and the place of arbitration will be in Bengaluru.

Dalal's employment contract states that "all the agreements (except the agreement dated 27/05/2015) contain identical arbitration clauses, which is indicative of the continuous, manifest intention of the parties to the dispute to submit all disputes arising out of or in connection with the agreements to arbitration," showed his employment agreement with Wipro.

Dalal has filed an application asking the court to refer the matter to arbitration. He says his contracts with Wipro allow for arbitration. His reply notice also states that Wipro is not entitled to damages on the mere apprehension of confidential information being divulged.

In a lawsuit filed on November 28, Wipro claimed damages of Rs 25.15 crore along with an annual interest payout at the rate of 18% per annum from September 29, from Dalal for violating the non-compete clause in his employment contract.

The company has also asked the court to restrain Dalal from disclosing confidential information, and soliciting its customers, vendors and employees, and has said it reserves the right to claim additional damages at a later date. Wipro's Rs 25 crore claim is based on the value of RSUs (restricted stock units) and PSUs (performance share units) granted to Dalal since he took on the CFO role in 2015. The company says in the court filing that every one of the grants came with the condition that for a period of 12 months after his last date of employment, Dalal could not directly or indirectly engage with a competitor, could not solicit a Wipro customer to move the existing business to another party, and could not solicit a Wipro employee to be associated with a competitor, supplier or customer. The RSU and PSU agreements, it says, had also listed out 10 of Wipro's competitors, and the list included Cognizant.

Wipro's court filing also says Dalal gave an undertaking to Cognizant - which is publicly available as a filing on the US SEC - which said, "...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....."

The Arbitration and Conciliation Act mandates that an award has to be passed within one year from the date of constitution of the arbitral tribunal. But the Act provides for the parties to agree to extend the period of the proceedings by six months and thereafter approach the court for extension by showing sufficient cause.