Vodafone Group (VOD) was ordered by an Indian court to put up a deposit of 25 billion rupees ($554 million) while it challenges an Indian tax bill.
Vodafone, the world's largest mobile-phone company, has to set aside 25 billion rupees with the court within three weeks and submit bank guarantees for 85 billion rupees within eight weeks, Bloomberg News said.
Indian authorities are seeking 112 billion rupees of tax on Vodafone's purchase of Hutchison Whampoa's local mobile phone unit three years ago.
If the verdict goes against Vodafone, it could undermine India's appeal for foreign investors, said Paul Marsch, analyst at Berenberg Bank in London.
"There's a bigger issue regarding the clarity of the tax regime and the regulator regime that foreign companies operate under in the Indian market," Marsch told Bloomberg News before the announcement. "There's no precedent for this situation."
Vodafone agreed to put up the despots and bank guarantees. The company is "confident that there is no tax liability resulting from this transaction and all the tax and legal advice it has received remains consistent with this view."
If Vodafone wins the legal dispute, the court will return the deposit with interest.