Upholds Delhi High Court order; wants Finnish firm to settle tax dispute first

In a setback to Nokia’s plans, the Supreme Court on Friday dismissed the company’s plea seeking permission to transfer its plant in Sriperumbudur, near Chennai, to Microsoft. The ruling also leaves a question mark over the future of the plant’s 8,000 employees and the 24,000 people it employs indirectly.

Nokia had filed the appeal after the Delhi High Court asked it to waive all rights to challenge the final order with regard to its tax dispute with the Government. The Court had also asked Nokia to deposit ₹2,250 crore in an escrow account and give an undertaking that it would meet any future tax liability.

The Finnish company had signed an agreement to transfer all of its global assets to Microsoft as part of a $7.4 billion deal signed last year. If the tax issue is not resolved soon, the Chennai facility will not be transferred.

If such a scenario arises, Nokia has said that it will use the unit as a contract manufacturing facility for a one-year period. It is not clear what will happen thereafter. The company has already shifted part of the manufacturing from Chennai to other countries to cushion the impact.

Nokia disappointed

A Nokia spokesperson said the company is disappointed by the apex court’s decision and it strongly believes its offer to the tax department is fair, allowing employees and assets to transfer to Microsoft while providing the necessary financial guarantees.

Employees at the Nokia plant in Sriperumbudur said they were disappointed with the Supreme Court ruling. Nokia India Thozhilalar Sangam, an independent union, has made itself a party in the ongoing case.

“We were hopeful of becoming a part of Microsoft. But today’s ruling has put a big question mark on our future,” said union leader Soundararajan, who is also the General Secretary of the Centre of Indian Trade Unions, Tamil Nadu.

New chief executive

Reuters reported that Rajeev Suri, the head of Nokia’s telecom network equipment division, is likely to become the Finnish group’s next chief executive following the sale of its handset business to Microsoft.

(This article was published on March 14, 2014)
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