Motorola Inc money transfer restrained by Mumbai court

They had together invested $70 million for a five per cent stake in the Iridium LLC and a further Rs 126.09 crore in the Iridium gateway at Pune. This was India’s largest foreign investment. VSNL had also invested Rs 50 crore in the gateway. Iridium LLC itself was an ambitious global satellite communication project promoted by Motorola Inc, which envisaged a constellation of 66 artificial satellites girdling the globe to provide seamless communication anywhere on earth through a single telephone number.

Unfortunately, it didn’t work quite that way. The Iridium phone, when it was finally launched, was not the dream that was sold to the world but an embarrassing shoebox-sized instrument, which did not receive signals in any closed building and was far too expensive to find ready buyers.

The project failed. Iridium LLC went bankrupt and the Indian institutions, like many of Iridium’s promoters around the world accused Motorola of fraud and inducement to invest through false claims and suppression of material facts. They have also alleged that although the project went bankrupt, Motorola emerged as the sole beneficiary. It has already pocketed a hefty $6.5 billion (approximately Rs 19,500 crore) from Iridium LLC for equipment supply and other services, while its own investment was a mere $315 million.

The institutions, through Iridium India then filed a criminal complaint against Motorola at Pune. Motorola had then questioned the jurisdiction of the Indian courts in trying this matter. The present suit filed by the Indian institutions in the Mumbai High Court follows the Motorola action.

The institutions had pleaded that pending the final disposal of the suit, Motorola be restrained through a court injunction from removing from India, assigning, transferring, discounting, securitising, or otherwise encumbering any assets or properties in India and amounts payable or receivable by Motorola from any entity. They has specifically asked that this should include a sum of $120 million and Rs 377 crore that is receivable by Motorola from BPL Mobile Cellular, under consent terms that BPL had filed with Motorola earlier this year. The institutions have asked that Motorola should pay them $250 million for losses and punitive damages. Motorola also has a small counter-claim of $6.9 million against Iridium India Telecom.

When this newspaper had reported the earlier criminal complaint, Motorola had maintained, ‘the legal complaint filed by the former Iridium gateway company is without merit and is wholly disingenuous in its claims’. Scott Wyman, Motorola’s spokesperson had then told us ‘the people (read institutions) who invested in Iridium LLC were very sophisticated investors’ who ‘knew full well they were investing in a new, bold innovative technology and space communications program’. This time, when contacted Motorola’s chief of Indian operations Pramod Saxena said that he was unaware of the order and would only be able to respond when he had seen it.