Wipro challenged former CFO Dalal's arbitration request

Bengaluru: Wipro Ltd had opposed its former chief financial officer Jatin Dalal's request for arbitration regarding an alleged non compete clause violation and sought to have the matter resolved in a city court. However, the court, led by justice K. Doddegowda, should be settled through arbitration, as stipulated in most of the agreements between the parties.

“[I]n case where there is arbitration clause in agreement, it is obligatory for the court to refer the parties to arbitration in terms of their arbitration agreement and nothing remains to be decided in the original action if such an obligation is made except to refer the dispute to an Arbitrator," said the order dated 3 January, which was made available on Friday.

Wipro, according to the full order reviewed by Mint, had asserted that the arbitration clause in their agreement with Dalal was flawed. The company argued that the clauses indicated a preference for resolving disputes in Bengaluru courts rather than through arbitration. However, justice Doddegowda's ruling dismissed this claim, stating that all but one agreement included an arbitration resolution clause.

The case will now be handled under the Arbitration and Conciliation (Amendment) Act, 2015, with both parties agreeing to appoint a sole arbitrator in Bengaluru. Arbitration is a legal dispute resolution process that involves an impartial third party resolving a dispute within a pre defined time between the aggrieved parties without having to go to court.

The dispute stems from Dalal's resignation from Wipro, announced on 21 September 2023, with 30 November being his last day at the company. Shortly after, Cognizant declared that Dalal would join them as CFO in December. Before completing his term at Wipro, the company filed a complaint alleging that Dalal breached his employment contract, which included a clause preventing him from joining competitors for up to a year.

Wipro, claiming a breach of contract, is seeking 25.1 crore in damages from Dalal, who earned 8.9 crore in the year ended March 2023. The specifics of Dalal's departure and the commencement of the arbitration proceedings, including the choice of arbitrator, remain unclear at this time. An email sent to Wipro seeking comment went unanswered.

Calls and text messages to Dalal also remained unanswered. This legal tussle highlights the complexity of employment contracts and non compete clauses, especially in the highly competitive IT sector. Wipro has not shared the reason behind Dalal’s exit. But chief executive Thierry Delaporte told Mint in an interview on 21 September that the former CFO wanted to “progress" and “do something different".

Nonetheless, Mint learned that Dalal’s departure was in the works since the beginning of last year, as he was unhappy with the CEO’s leadership style. Dalal, 49, joined Wipro in 2002 and took over as the CFO in 2015, and continued in the position until he decided to move out last year. Dalal is among the ranked senior vice president and above to have moved out of Wipro since Delaporte took over as chief executive officer in July 2020.

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