Saturday, March 4 2006 13:10 Hrs (IST) - World Time -

New Delhi: The spat between the partners of telecom giant Idea turned murkier, with Birlas debunking the claims of Tatas that as a group they are not promoters and dubbing their termination notice as illegal and malafide'.

In the midst of the fight between the two oldest corporate houses, Department of Telecom has been sent somepapers, including the Articles of Association of IDEA, which describes the founders as 'the AT&T Wireless group, the AV Birla group and the Tata group.'

These three groups were "represented pursuant to Section 4 of the shareholders agreement, through AT&T, Grasim and Tata Industries, the Article of Associations said.

Earlier, Tatas had criticised Birlas for making allegations against them and said that the reference to 'Tata Group is misconceived and ill conceived" as none of the licences given to Idea recognised the concept of any 'group'.

Tatas at the same time served a termination notice on February 27 on Birlas for breach of the shareholders agreement and said that they would start buying out Birlas within 90 days.

Responding to it, the Birlas said the notice was 'wrongful, illegal, malafide and designed to take advantage of your own wrongs' and warned Tatas against any attempt to transfer, directly or indirectly, shares of the group to any third party.

Birlas have also sought DoT's intervention to direct Tatas to reduce their stake in Idea cellular below 10 per cent or 'nil' and that such reduction should be done with prior permission of the Department to ensure compliance with the licence terms and conditions.

DoT is understood to have sought shareholding pattern in Idea Cellular from the company and also the Tata Group and has directed both of them to reply by March 7.

Spokespersons of neither Tatas nor Birla group could be contacted for comments on the notice and its reply.

However, Tata group officials explained that the reference to the Group was only as a nomenclature for denoting the companies that held the equity in a venture and it was a generally accepted practice. But it did not mean that group was given a licence or was a promoter as a shareholder in a venture, they added.

However, sources in the know said that the Articles of Association says that the Tata group means Tata Industries, TELCO, TISCO, and Tata Chemicals and each affiliate of TIL to which shares of the equity capital have been issued and transferred from time to time on or after the date of theshareholders' agreement.

This meaning for Tata Group Shareholders has been given in the Section 4.03 (b) of the shareholders agreement, they pointed out.

Meanwhile, in their reply to Tata's notice of February 27, Birla's flagship company Grasim said that the group company Aditya Birla Nuvo Limited had not committed any breach of the SHA (Share Holders Agreement) and there was no occasion to conduct any valuation exercise.

It termed as 'malafide and mischievous' the demand from Tatas for appointment of audiotrs for valuation of Birla Group holding in Idea, as a process for buying them out at a 'default price'.

In a point-by-point reply to the issues raised by Tatas, Birlas said there was no breach of SHA by ABNL in disclosing the information to its investors, provided by Idea itself.