Mumbai, June 14: The tussle between the Ambani brothers intensified today with the Anil group threatening to claim costs and damages from Reliance Industries if it undertook any legal action that could affect the potential deal that Reliance Communications (R-Com) is pursuing with South African telecom giant MTN.

Refusing to recognise the right of first refusal being cited by Reliance Industries, sources in R-Com today said there was no question of taking note of “any alleged rights” on RIL’s part and that talks with MTN would continue.

“If RIL chooses to take any legal action the same will be vigorously defended by R-Com and it would claim cost and damages from RIL.”

The battle between the two Ambani brothers flared up after RIL wrote to MTN and the Anil Dhirubhai Ambani Group (ADAG), copies of which were sent to the bankers, cautioning that the proposed deal would tantamount to breach of RIL’s first right of refusal to acquire a controlling stake in R-Com.

The deal is estimated to create a combined entity worth 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, the ADAG 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 there was no change in R-Com’s stand from what was stated yesterday, company sources said, “the use of threatening and coercive language by RIL 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 informing R-Com reflects its ulterior and mala fide motives.”

Terming RIL’s threats as “false bogey of litigation and damages,” the R-Com sources expressed surprise that without knowing the nature of a possible transaction between R-Com and MTN, how could RIL jump to the conclusion that it would be covered by the alleged agreement of January 12, 2006.

In a June 12 letter to MTN and its adviser banks, the Mukesh-led RIL said it held the first right of refusal in case of a stake sale in the four companies of the Anil Dhirubhai Ambani Group (ADAG).

These four companies — Reliance Communications, Reliance Energy Ventures, Reliance Natural Resources and Reliance Capital Ventures — were formed as a result of the split in the Reliance group.

Reliance informed MTN and its bankers that it would initiate legal proceedings against R-Com to enforce its rights and it would also make MTN a party to the court case.

It warned MTN that any pact of the kind being contemplated between the South African company and the Anil Ambani group would result in MTN breaching the agreement between the two bothers and would entitle RIL to claim “exemplary damages against MTN”.

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.

The letter sparked a war between the Ambani brothers with the Anil 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, R-Com 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 sources said the agreement for effecting the family settlement was held “unfair and unjust” by Bombay High Court later that year.