How SP returns set of rows to an out variable

Stored procedures can use the cursor data type only for OUTPUT parameters. If the cursor data type is specified for a parameter, both the VARYING and OUTPUT parameters are required. If the VARYING keyword is specified for a parameter, the data type must be cursor and the OUTPUT keyword must be specified.

Note   The cursor data type cannot be bound to application variables through the database APIs such as OLE DB, ODBC, ADO , and DB-Library. Because OUTPUT parameters must be bound before an application can execute a stored procedure, stored procedures with cursor OUTPUT parameters cannot be called from the database APIs. These procedures can be called from Transact-SQL batches, stored procedures, or triggers only when the cursor OUTPUT variable is assigned to a Transact-SQL local cursor variable.