Vodafone, which has already locked horns with its new partner in a mobile phone joint venture in India, is now under fire from a lobby group taking legal action to halt the deal, a report from the Evening Standard said.
The mobile giant last month agreed to buy Hong Kong operator Hutchison's 67% stake in the company for $11 billion, the report said.
The Evening Standard report said India-based Telecom Watchdog, a non-government organization, has filed a petition with the High Court in New Delhi alleging a foreign shareholding in the company, Hutchison Essar, breaches Indian government regulations.
Essar has 33% of the equity in the firm and some 22% of that is held by an Essar company registered abroad. Telecom Watchdog argues that if Vodafone's proposed 67% is added to the 22% foreign component of the Essar stake, it breaches the government's 74% cap on foreign holdings in Indian telecoms companies, the report said.A Hutchison spokeswoman said it complies fully with the rules. She said there were other Indian shareholders besides Essar, but declined to give a breakdown of its 67% interest in Hutchison Essar, the report said.