Last week Infosys, India’s second largest IT services firm, lost its long-standing arbitration case over the fat severance contract with its former CFO Rajiv Bansal. And it was a lack of evidence that reportedly caused the firm to lose the battle.
Infosys lost arbitration case against former CFO due to lack of data deletion evidence
People privy to the proceedings told The Economic Times that Infosys could not provide enough evidence to substantiate that Bansal had deleted data from his company laptop. Data deletion was reportedly one of the reasons cited by the firm to back its decision to withhold a chunk of Bansal’s dues. This led to the arbitrator dismissing its claim of breach of agreement.
“Their [Infosys’] main defence was breach of the agreement committed by Rajiv [Bansal] and because the data in his laptop was deleted. The arbitrator has negated all those contentions saying there is no such breach. It has categorically been held that Rajiv has not breached the agreement and there is nothing to show he himself deleted any data. And there cannot be a breach of the severance agreement,” said a source. “Infosys also had a counterclaim, [that] they suffered damages because information was not given back to them. That was a laughable defence. It was not pursued very seriously, and got rejected.”
Infosys, during the tenure of former CEO Vishal Sikka, had agreed to pay Bansal a severance package of Rs 17.38 crore, or 24 months of salary, at the time of his exit in December 2015. But, in April 2017, the company had suspended payments after handing out Rs 5 crore of the promised amount after the “excessive” contract became a bone of contention in the governance battle that Infosys founder NR Narayana Murthy waged against the company’s board. While Murthy called it a ‘hush money’, former board member and the company’s Chief Financial Officer TV Mohandas Pai had asked the board to explain the package in detail. In response, Bansal had invoked his rights to take Infosys to arbitration proceedings to contest the halting of the promised payout.
Arbitrator RV Raveendran, a former Supreme Court judge, ordered the Bengaluru-headquartered firm to pay Bansal the remaining severance of Rs 12.17 crore with interest last week. The daily added that Bansal was represented by Indus Law, while Nishit Desai Associates defended Infosys before the arbitrator.
“It is extremely meticulously drafted award looking into all the possible aspects…the arbitrator has looked through the evidence in its entirety, relevant documents and relevant pleadings, contentions of all the parties and whatever defence was taken by Infosys he has considered all of them and negated them by sound reasoning both in terms of law and factual reason,” another person aware of the arbitrator’s decision told the daily.
Citing legal experts, the report added that in claims of data deletion, lack of evidence usually proves a deal-breaker. “If there is not enough evidence, the claim of data deletion falls flat. And the relief sought in that case are likely to be rejected. From a legal perspective, if data belonging to a company was deleted in an unauthorised way is an issue that comes under the IT Act,” Salman Waris, managing partner, TechLegis Advocates and Solicitors, told the daily.
Meanwhile, Bansal is taking no chances in his victory. Last Tuesday, after the arbitral tribunal’s award, he filed a caveat in a civil court against Infosys. A representative of Indus Law told PTI that the move was to safeguard Bansal’s interest and prevent any ex-parte order without hearing him in any forthcoming suit or proceedings. Infosys reportedly said it would take legal advice for further action on the tribunal’s order.
The caveat remains in force for 90 days and if during that duration no case is filed by the opposite party, the caveator has to again file a fresh one