Telenor's move came ahead of the deadline for August 31, before which the Centre must auction spectrum as required by the Supreme Court, whose ruling put the joint venture's future in jeopardy and created bad blood between the Delhi realtor and the Oslo-controlled telco.
Unitech is resisting the funds infusion and calls it Telenor's backdoor way to take control.
"Instead of a direct transfer an auction is being proposed to provide it a garb of legitimacy, knowing fully well that no new telco will value the assets before acquiring spectrum," Unitech said in a statement.
The two companies are currently fighting legal battle over the issue of corporate governance and infusion of funds in the company.
"The court-mandated cancellation of licences will destroy any value in the Uninor business," said a Telenor spokesperson. "We do not see why any shareholder should want this value destruction to happen when it is possible to conduct an open and transparent auction of Uninor's business while Uninor is still a going concern. An open auction will also remove any dispute around the real valuation of the Uninor business."
Telenor says it is ready for the spectrum auction "despite adverse circumstances" and infuse funds in the interest of employees, partners and customers.