Mumbai: The Supreme Court has allowed a petition filed by the Tata Group seeking arbitration to resolve its two-year-old dispute with AV Birla Group firm Grasim Industries over the sale of its stake in telecom firm Idea Cellular.

The apex court also appointed a three-member arbitration panel comprising former Chief Justice AS Anand and two retired judges - Justice Arun Kumar and Justice PK Balasubramanyan.

The Tatas, in their plea seeking arbitration on the dispute, alleged that the Birla Group had violated the shareholders' agreement.

The dispute dates back to 2006 when the Tata Group was holding 48.14 per cent stake in Idea Cellular. Tatas were running another mobile venture – Tata Teleservices – and Birlas claimed that the former was not interested in the growth of Idea Cellular and sought government intervention in getting the Tatas to exit from Idea Cellular.

The Birla Group justifies its decision saying that as per the shareholders' agreement the founders were permitted to undertake independent mobile telephony business in new telecom service areas only if Idea was not in a position to launch such new business and if another JV was not possible.

Birlas in fact blame Tatas for violating the clause when the latter migrated from fixed line services to mobile services in 2003 by paying the licence fees.

The Tatas, however, had to exit Idea Cellular as the government rules did not allow a company to hold more than 10 per cent stake in two different telecom companies offering services in the same area.

The Aditya Birla Group acquired the entire Tata Group stake in Idea Cellular for Rs4,406 crore.

But, before selling its stake in Idea Cellular, the Tatas served two termination notices to the Birla Group citing violation of the shareholder agreement. Tatas also took the Birlas to court claiming that the latter had violated the shareholders' agreement by disclosing sensitive information relating to Idea Cellular on the AV Birla Group website.

Tata Industries also served notice on the Birla Group for applying for a telecom licence for offering mobile services in Mumbai.

According to the Tatas, the Birla Group should have applied for new licences through Idea Cellular, and in case it wanted a licence of its own, it should have taken approval from the Tatas, as per the shareholder agreement between the two companies.

The Tatas have claimed that as per the shareholder agreement, they can buy out Birlas' stake in Idea Cellular for the alleged violation. If the arbitration is settled in Tata Group's favour, it will have the right to buy out Birla's stake in Idea Cellular.