Cognizant resolves Wipro lawsuit over CFO's alleged contract breach

10 Jul 2024 , 09:55 AM

Cognizant Technology Solutions Corporation announced a resolution on July 9 regarding a lawsuit filed by Wipro Ltd against its former Chief Financial Officer, Jatin Dalal.

The settlement, disclosed in a US Securities and Exchange Commission (SEC) filing dated July 2, 2024, involves Cognizant’s board approving a payment of $505,087. This sum covers the settlement and legal fees related to the dispute.

Wipro had initiated legal action, accusing Dalal of breaching non-compete and confidentiality agreements upon joining Cognizant. The lawsuit sought damages and injunctive relief. Both parties reached an agreement without admitting liability, with Cognizant’s payment intended to compensate Wipro for its claims and cover Dalal’s legal expenses.

Jatin Dalal expressed relief at resolving the matter, emphasizing his dedication to advancing Cognizant’s growth objectives and delivering value to stakeholders.

Wipro’s President and Chief Human Resource Officer, Saurabh Govil, acknowledged the settlement, highlighting the importance of safeguarding contractual rights.

At the time of writing on July 10, 2024 at 9:54 am shares of Wipro is currently trading at ₹539 which is a 0.25% surge than the previous close. Wipro stock has gained a total of 38% in the last one year, and 13% since the beginning of the year.

Additionally, Cognizant confirmed a similar resolution with Wipro concerning another former senior executive, Mohammad Haque, indicating broader efforts to settle disputes amicably.

In November of the previous year, Wipro had filed a lawsuit in Bengaluru’s Civil Court against Jatin Dalal, seeking compensation totaling ₹25,15,52,875 with 18% interest. The claim alleged Dalal violated contractual clauses after resigning from Wipro in September 2023.

The dispute centered on a non-compete clause, purportedly prohibiting Dalal from joining a competitor within one year of leaving Wipro. Failure to comply could involve compensating Wipro equivalent to the value of restricted stock units (RSUs) or his total remuneration from the previous 12 months.