Supreme Court rejects Nokia appeal over asset transfer to Microsoft

NEW DELHI Fri Mar 14, 2014 10:00pm IST

A Nokia mobile phone lies on a tablet computer showing logos of Microsoft, in this illustration picture taken in Frankfurt, November 18, 2013. REUTERS/Kai Pfaffenbach/Files

A Nokia mobile phone lies on a tablet computer showing logos of Microsoft, in this illustration picture taken in Frankfurt, November 18, 2013.

Credit: Reuters/Kai Pfaffenbach/Files

Related Topics

Stocks

   

NEW DELHI (Reuters) - The Supreme Court on Friday ordered Nokia (NOK1V.HE) to give a 35 billion rupee guarantee before it transfers one of its biggest handset plants to Microsoft Corp (MSFT.O).

The ruling upheld a lower court verdict over the plant in Chennai, which is the subject of a tax dispute, and had been challenged by the Finnish company.

Nokia's case is one of several high-profile tax disputes involving foreign companies in India. Vodafone Group (VOD.L), IBM (IBM.N) and Royal Dutch Shell (RDSa.L) are among foreign groups contesting local tax claims.

Nokia, which is selling its mobile phones business to Microsoft in a 5.4 billion euro deal, previously agreed to set aside 22.5 billion rupees in an escrow account while it fights the tax authority's claims in court.

But the Delhi High Court last month said that Nokia should also commit to paying an additional amount for any future tax claims and waive some of its rights to legal defence as a condition for transferring Indian assets to Microsoft.

The Microsoft deal, which will allow Nokia to shift its focus to network equipment, is expected to close by the end of this month and Nokia had been keen for a ruling before then.

Nokia said in a statement that it was disappointed by Friday's ruling and was considering its options.

If the plant is not allowed to be transferred, Nokia can run it as a contractor to Microsoft, but not for long, the Finnish company's lawyers have said in court hearings.

If Nokia chooses to shut down the Chennai plant, it would leave thousands out of work and Microsoft without a key manufacturing site. It could also mean that Nokia ends up with less money from the Microsoft deal.

The Chennai plant is one of Nokia's biggest phone-making factories and the company says it employs 8,000 people.

(Reporting by Suchitra Mohanty and Jussi Rosendahl; Writing by Devidutta Tripathy; Editing by Tom Heneghan and David Goodman)

FILED UNDER:
  • Most Popular
  • Most Shared

Pending Reform

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage