Piaggio also filed a petition with the Company Law Board on May 28 against the Singhanias under Sections 397, 398, and 402 of the Companies Act, 1956. These sections relate to allegations of company mismanagement. The petition has also sought removal of the board of directors. The case came up for hearing on Tuesday and the CLB reserved its judgement.

LML managing director Deepak Singhania confirmed that he had received a fax from Piaggio to this effect. "As per legal requirements, we have forwarded copies of this letter to all stock exchanges,'' Singhania said.

However, he said the legal implications of the move were being studied at present and it was not known whether Piaggio would withdraw its case from the ICC. "We are actively pursuing the ICC case."

Piaggio BV,Piaggio, and CSPA together hold 23.6 per cent stake in the scooter-manufacturing joint venture. The Singhania family also controls 23.6 per cent stake in the venture. The remaining is in the hands of the public and financial institutions.

Sources said that it was yet to be decided at what price would the Piaggio shares in LML be sold to the Singhanias.

Matters had soured between the two equal partners in LML following the demise of Piaggio group head Giovanni Agnelli in 1998. The Singhanias had then sought to buy out Piaggio's stake citing Giovanni's death as a triggering event.

Meanwhile, irked by the ongoing tiff with its equal partner, Piaggio is now also planning to go it alone in India and set up a wholly-owned subsidiary for producing its range of two-wheelers, including the famed Gilera motorcycles.

The company would soon approach the government for formal approval for setting up the subsidiary. ``We are in the process of finalising the details of the venture, selecting the site and are workingout the other modalities,'' sources close to the company said.

The tiff and the resultant thumbing down of their motorcycle project in India has forced the company to take this extreme step of setting up a 100 per cent-owned venture here. ``We have a whole range of two-wheelers, including scooters, scooterettes and custom bikes, which would prove to be a success in India,'' the sources said.

``The entire project range in the company's stables is being studied to select the initial roll-outs for the Indian marketplace.''

On the equity base and investments planned for the new project, the sources said the details of the project were being worked out.