Billionaire Kumar Mangalam Birla on Wednesday stepped down as the chairman of Vodafone Idea Ltd. Birla -- who had in June offered to give away his holding in the joint venture with Britain's Vodafone to the government -- will cease to be a director and non-executive chairman of the company at the end of business hours on Wednesday, VIL said in a filing to the stock exchanges.

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After speaking to several sources across the board and even the legal experts, this reporter gathers that Birla stepped down from the Board of Vodafone idea for two primary reasons. First to protect his personal reputation and second to ring-fence the exposure that the other group entities may have and it's a large group, remember, with many listed entities.

The move, sources have told CNBC-T18, avoids the risk of any exposure that may come about in case Vodafone Idea gets into a default situation going forward and if there is any such dispute where any group entity can be dragged.

Birla chairs most of the Aditya Birla Group companies along with some of the global companies. Legal experts say that it's unlikely that cross-holding in the group companies will have any impact on the fundraising ability of individual companies because if Vodafone Idea defaults, the company's financial performance each of the companies taking money is in sound health and therefore, legally there could not be any liability nor could there be an impact is what has been clarified. Birla will be replaced by Himanshu Kapania (who was earlier managing director and CEO of Birla's Idea Cellular) as the new chairman of Vodafone Idea Ltd.

The Supreme Court, last month, had rejected petitions by telecom companies including Vodafone Idea and Bharti Airtel, for rectification of alleged errors in the calculation of adjusted gross revenue (AGR) related dues payable by them. The company lawyers had told the apex court that the firm is making a loss and can "go under" if the rectification is not allowed.

In an interesting development on Thursday evening, the government introduced a bill in the Lok Sabha to amend the Income Tax Act and do away with the controversial retrospective tax demands in the process. Now no retro tax will be applicable for indirect tax transfer of Indian assets made before May 28, 2012.

(Edited by : Abhishek Jha)