A Greek shipping heir and a family from oil-rich Dubai refused today to bid on a glittering jewel collection that was once the property of the last nizam of Hydreabad, until the bidders receive, government assurances they will be allowed to take the gems from the country.

Their action forced the government to postpone the auction. Each bidder had put up a $25.4 million deposit that allowed them to see the jewels in a Bombay bank vault Wednesday and to bid on them.

The event has been billed here as the world's highest priced jewel auction, with the deposit serving as a minimum bid. But the auction became enmeshed in Indian preelection politics, as former foreign minister Atal Bihari Vajpayee, a member of the opposition Janata Party, called on the government to halt the sale on the grounds that the jewels are part of India's national treasure.

He was joined by the Bombay Diamond Merchants' Association and a former member of Parliament, Kanwar Lal Gupta, who yesterday lost legal bid to have the Indian Supreme Court stop the auction. The Supreme Court had ordered the auction, which was to take place in one of its courtrooms.

But just an hour before the auction was to start today, the government asked for a one-day delay so the Cabinet could take up the question of whether the jewels should be allowed to be taken from the country.

While the Supreme Court refused the government's request, it was enough to scare off the potential bidders -- Greek shipping heir Phillip Niarchos representing his father Stavros Niarchos, and Badaria Galadhara, who represents her husband, Dubai banker and real estate enterpreneur Abdul Wahab Galadhara. She may also be representing other friends and relatives from that oil rich sheikdom.

Before proceeding with the auction, the bidders demanded that Ram N. Malhotra -- a government Finance Ministry official who is running the sale as chairman of the trust that owns part of the nizam's jewel collection -- set government assurances that the buyer could take the gems from the country.

After consulting with high-court justices, Malhotra announced the Supreme Court will hold a special hearing at noon Friday to learn the government's position.

The auction could follow that hearing, but representatives of the two potential bidders indicated their clients are unlikely to stick around here much longer. Interest on the $25.4 million that each has deposited runs to about $8,000 a day, one pointed out.

The auction was advertised throughout the world as offering as a single purchase, 37 items of jewelry "that can be exported from India," since the archeological survey of India had ruled they were not national treasures.

The prize item in the collection -- the flawless, 184-carat Jacob's Diamond, which the late nizam kept wrapped in newspapers and used as a paperweight on his desk -- was barred from sale because it is considered part of India's national heritage.

Among the most beautiful items up for auction -- totaling only one-third of the gems in the trust, although most of the others will eventually be put up for sale -- is a wooden box studded with 22 emeralds weighing a total of 14 carats. Both Niarchos and Galadhara described that collection as "beautiful" and "magnificent."

But Galadhara said her personal favorite was a gold-and-diamond pendant with a 200-carat emerald drop "that I will wear if I get it."