Directs the company to deposit at least Rs.2,250 cr in an escrow account
The Delhi High Court, on Thursday, allowed Nokia India’s plea for modification of its interim order, and permitted the company to sell its assets here to Microsoft International.
Modifying the interim order of September 26, a Division Bench of Justice Sanjiv Khanna and Justice Sanjeev Sachdeva said: “…we are inclined to modify our interim order dated September 26, 2013, in particular clause (1) and (3) thereof. We permit and allow sale of assets by Nokia India to Microsoft/Microsoft International subject to fulfilment of (certain conditions)…’’
In its interim order, the Court had asked Nokia India “not to surrender the lease hold rights or transfer the ownership rights in respect of any of the immovable asset or transfer the fixed asset to any third person.’’
It had further asked it “not to transfer, sell or alienate movable plant or machinery located in the immovable properties…’’
The Court had restrained the company from selling the assets on a plea by the Income Tax Department, which has accused it of defaulting on payment of tax amounting to about Rs.4,000 crore, minus interest and the penalty.
Nokia India is in the business of manufacture and sale of mobile phones. It has a factory in Chennai, employing about 8,000 persons. During 2005-12, it had a cumulative turnover of Rs.1.51 lakh crore, the Court order noted.
While modifying the interim order, the Court said that “Nokia India/Nokia Finland will deposit at least Rs.2,250 crore in an escrow account, details of which will be furnished to the respondents (Income Tax Department) within one month of the agreement with Microsoft/Microsoft International.
“The amount of deposit will go up or increase upon higher consideration being received from Microsoft/Microsoft International, as per the valuation report,’’ the Bench added.
“Nokia Finland will be bound by the statement that they shall be jointly liable and shall pay tax demand determined and payable with interest and penalty thereon…’’ the Bench said.
The Income Tax Department had in January conducted a survey at the Nokia’s Chennai’s office and noticed ‘significant defaults’.
Thereafter, the Department reopened the assessment for 2006-07 and 2007-08.
The Department submitted before the Court that it was compelled to issue provisional attachment order in light of the fact that Nokia India had remitted Rs.3,500 crore as dividend to Nokia Finland.