The world’s richest — and possibly most fractious — brothers are poised to go head to head in the mother of all libel battles.

Anil Ambani, the world’s sixth-richest man with a fortune of £23 billion, is suing his estranged elder sibling Mukesh, the fifth-wealthiest with £23.5 billion, for 100 billion rupees (£1.2 billion).

According to court documents, Anil alleges that Mukesh damaged his reputation by falsely suggesting in an interview with The New York Times that his younger sibling ran a network of private spies that “collects data about the vulnerabilities of the powerful”. The defamation charge marks a new low in the famously poor relationship that exists between two of India’s most powerful men. Between them, they account for 5 per cent of the country’s GDP but, in recent years, their disagreements have coloured everything from their domestic arrangements to matters of national importance.

Tales of their squabbles abound in Bombay: they each own a share of a building in their home city, but are said to use separate lifts to avoid meeting each other.

The Indian Government was forced to intervene this week to ensure that an important portion of the country’s gas supplies — the ownership of which the brothers are fighting over — continued to flow.

Exasperated by the frequency of their court appearances, a judge asked the brothers recently to ask their mother, Kokilaben — the only person who has been able to mediate between the pair — to help to mend their differences.

However, those close to Anil have said that he had no option other than to take his brother to court over the spy allegation. “The article starts out by comparing Mukesh Ambani to Mahatma Gandhi and then, suddenly, you have these outrageous remarks,” a source close to Anil said. “It’s impossible for Anil not to seek proper redress.”

The New York Times and two Indian newspapers that republished the article have also been named as defendants in a petition filed at the Bombay High Court.

Spokesmen for both brothers refused to comment.

News of the dispute will dismay much of India’s business community. Investors have long feared that the Ambanis’ rivalry risks damaging the country’s economic prospects. “These guys are the country’s oligarchs. They bear massive responsibilities. A lot of investors are fed up,” one Bombay banker said.

The pair fell out after the death in 2002 of their father, Dhirubhai Ambani, who rose from rags to riches by creating Reliance, a sprawling industrial empire. In 2005 the company was split between the brothers in a deal hammered out by their mother. Since then dealings between them have continued to worsen.

Those who know both brothers doubt if the latest libel case will bring either satisfaction. “There is only one person who can make the two see sense,” said a mutual acquaintance. “They both only listen to their mother.”

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