Mumbai: The Ruias of the Essar Group have sold around 17 per cent equity shares in BPL Mobile to a Mauritius firm, to raise about $80 million, amidst an ongoing arbitration with UK-based Vodafone Plc.

BPL Mobile has raised about $80 million through a stake sale to a Mauritius-based company, owned by an international institutional fund investing in emerging markets, the company said in a statement.

The proceeds have been used for BPL Mobile's expansion in Mumbai and its stake in Loop Telecom, which is a majority-owned subsidiary of BPL Mobile, the release said.

Loop Mobile recently got a pan-India mobile licence and paid a licence fee of Rs1,400 crore.

The sale comes after an arbitration panel restrained Essar group from going ahead with any stake sale in Loop Telecom. BPL, however, claimed ''This capital issuance was not in violation of the operative interim order of arbitrators.''

An arbitration panel on 5 September had ordered the Essar Group to freeze the sale of any shares in BPL Mobile Communications and its subsidiary Loop Telecom, pending the arbitration outcome.

The order has come as a blessing for Vodafone, which bought a controlling stake in Hutchison-Essar, which controls BPL. Loop holds 21 mobile phone network licences.

Vodafone bought a controlling stake of 67 per cent in Huchison Essar last year from Hong Kong's Huchison for $11 billion. The Ruias of the Essar group retained a 33-per cent stake in the JV, which was renamed Vodafone Essar.

Following the deal, Vodafone got involved in a dispute between Hutchison and Essar over the ownership of BPL Mobile Communications. The Essar group blamed Hutchison for missing a deadline for getting regulatory approval for buying out BPL Mobile as part of an earlier agreement. The matter was subsequently taken up by the arbitration panel.

Vodafone now alleges that Essar had altered the share structure of the Mumbai service provider in violation of a 2006 agreement.

Vodafone also alleged that an entity called Gypsy Rover invested around Rs45 crore in BPL Mobile's equity shares in two tranches. These transactions took place at Rs195 per share, the first on 28 February 2008, and then on 13 March 2008.

Meanwhile, sources said Essar has sought an out-of-court settlement several times, a request that Vodafone has repeatedly refused.

The dispute dates back to 2006 when Hutchison was to buy the BPL Mobile from the Ruias for $400 million and merge it with Hutchison-Essar.

But Hutchison was unable to get government approvals for the merger on time and the Ruias and their associates argued the deal was off – a position that Hutchison did not accept. The two partners decided to resolve the dispute through arbitration.