NEW DELHI, March 14 India's Supreme Court on
Friday ordered Nokia to give a 35 billion rupee
($572.5 million) guarantee before it transfers one of its
biggest handset plants to Microsoft Corp.
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,
IBM and Royal Dutch Shell are among foreign
groups contesting local tax claims.
Nokia, which is selling its mobile phones business to
Microsoft in a 5.4 billion euro ($7.5 billion) deal, previously
agreed to set aside 22.5 billion rupees in an escrow account
while it fights the Indian 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.