India’s supreme court asked Nokia to provide guarantee of 35 billion rupees ($572.5 million) in an escrow account before it is allowed to transfer its Chennai plant and other assets in the country to Microsoft reports Reuters. Back in September last year Microsoft agreed to buy 5.4 Billion Euros cash, 3.79 Billion for devices and services 1.65 Billion for the associated patents.
Last year officials raided Nokia’s manufacturing plant in Chennai, and found the company hadn’t paid enough taxes. In December 2013, Delhi High Court asked the company to deposit money into an escrow account and agree to guarantee any tax dues to enable transfer of the factory in Chennai. Nokia appealed over it saying the Delhi High Court had imposed new conditions, and these are not aligned with international treaties and practices.
Last month Nokia said the tax case will not affect its transaction between the company and Microsoft, that is expected to close by the end of March. The plant at Sriperumbudur manufactures most of the entry-level devices, including its Asha range. If this remains frozen by tax authorities, it cannot be immediately transferred to Microsoft.
Nokia can run it on contract to Microsoft, but not for long, lawyers have previously said in court hearings, Bloomberg. Nokia needs to make the payments or provide guarantee to transfer the plant and other assets to Microsoft.