In a strongly worded reply to RIL's threat to go legal against ADAG to enforce its first right of refusal, Anil-led Reliance Communications [Get Quote] said, "If RIL choses to take any legal action the same will be vigorously defended by RCom, and RCom would claim cost and damages from RIL."

The battle between the two richest Indians had flared up after RIL wrote to MTN and ADAG, copies of which were sent to the bankers, cautioning that the amalgamation deal through reverse swap would tantamount to breach of RIL's first right of refusal to acquire a controlling stake in RCom.  

Asked if South African major saw any legal hurdles in deal with RCom and if it was seeking legal opinion on RIL's claims, MTN Group's spokesperson Nozipho January-Bardill told PTI in an e-mailed reply, "I cannot comment on any of your questions. MTN's last SENS (regulatory) announcement remains as it is."

The deal is estimated to create a combined entity worth a size of about $70 billion and could have operating profits higher than RIL, India's biggest private sector firm.

Following up its strong criticism of RIL's communication, ADA group company wrote a letter to RIL, saying, "there is no question of taking note of any alleged rights on RIL's part...

Its (RIL's) claim is legally and factually untenable, baseless and misconceived, to be dismissed with contempt it deserves."

Though its spokesperson said that there was no change in RCom's stand from what was stated on Friday, the company sources said, "The use of threatening and coercive language by RIL, India's largest private company, with MTN, a globally respected telecom major, is very unfortunate."

They said "RIL's action in sending copies of the letter to a large number of banks and intermediaries without even first communicating with RCom reflects its ulterior and malafide motives."

Terming RIL's threats as "false bogey of litigation and damages," the RCom sources expressed surprise that without knowing of the nature of a possible transaction between RCom and MTN, how RIL has jumped to the conclusion that it would be covered by the alleged agreement of January 12, 2006.

In its letter to MTN, RIL had said that as per the said agreement it has "a right of first refusal in respect of transfer of shares of Reliance Communications Limited by the Reliance Anil Dhirubhai Ambani Group."

RIL told MTN that it has notified ADAG that it would adopt legal proceedings against them (ADAG) to enforce its rights in the Bombay High Court and would also add MTN as one of the defendants.

The copies of the letter were also sent to bankers and intermediaries in the negotiations such as Lombard Odier, Deutsche Bank, Merrill Lynch and Lazard Ltd.

RIL said that an agreement involving MTN's acquisition of ADAG's shareholding in Reliance Communications would result in MTN "procuring a breach of the agreement which will entitle Reliance Industries Limited to also make a claim of exemplary damages against MTN."

The letter spurted a war between the Ambani brothers with younger Anil's group late last night charging Mukesh-led RIL with attempting to sabotage its potential multi-billion dollar deal with MTN.

Asserting that the new combined entity would have operating profits of Rs 50,000 crore (Rs 500 billion), much higher than the Mukesh Ambani's group, RCOM official alleged that "RIL is seeking to disrupt the creation of one of the world's most valuable telecom combinations."

Claiming that RIL's communication to MTN was based on a 'unilateral' agreement of January 12, 2006 signed by RIL officials, ADAG said that the agreement for effecting the family settlement was held "unfair and unjust" by the Bombay High Court later that year.

RCom officials, however, exuded confidence that RIL's attempt would not delay the negotiations on the deal, that is believed to be in the region of over $70 billion where Anil Ambani could be chairman of the combined entity with single largest shareholding.

An MTN spokesperson also said that as far as MTN was concerned "nothing has changed" and the two groups were continuing the talks.

Under attack from Anil Ambani's camp, RIL said later that the "validity" of its agreement on Reliance Communication was never questioned.

"RIL in good faith notified both Anil D Ambani group and MTN (South African telecom giant) group of the stipulations contained in an agreement, the validity of which has never been questioned so far by ADAG," an RIL spokesperson said in a late night statement on Friday.