New Delhi - Well-heeled businessmen, corporate honchos, celebrities dining by candlelight - that is the usual night at Mumbai's Taj hotel, which is as much a symbol of India's economic prowess and its pockets of affluence as the city in which it has stood for more than a hundred years.

But early on Thursday, fire spewed out of the dome-shaped roof of the building after gunshots and grenade blasts rent the air as a group of heavily armed terrorists stormed the building and fired indiscriminately, killing guests and hotel staff.

"I was having dinner with some of my colleagues when two masked men barged into the restaurant," NN Krishnadas a member of India's Parliament was quoted as saying by the IANS news agency. "They fired indiscriminately. I saw three people being shot. The terrorists left the room soon after that."

"The hotel staff rushed us into another room after the terrorists moved out of the restaurant," he said. "We stayed there through the night. In the morning, the commandos rescued us."

Krishnadas was among the luckier guests at the Taj. Others rescued include a prominent French scientist, a top executive of a multinational firm and one of India's leading businessmen.

Some of the guests told television channels that as they exited the hotel in the early hours of Thursday, they received calls from hotel security asking them to switch off their lights and remain in their rooms.

"It plunged into darkness soon, and I locked myself up in a toilet," said one unidentified woman who was later rescued by firefighters through her hotel window.

Another said she had seen a body lying in the corridor outside her room.

A British national said the terrorists were asking people whether they had British or US passports, adding that he escaped because he did not reveal his nationality.

"The terrorists were not more than 20 to 25 years of age," the British national was quoted as saying. "They were dressed casually in jeans and T-shirts but were very aggressive in their demeanour. They kept screaming that they wanted anyone with a British or American passport."

"There were 15 of us," he said. "Two of the terrorists, while screaming constantly, took us up the stairs to the 18th floor. Luckily for us, the room was full of smoke, and two of us escaped from the stairs."

"Another three escaped after us, but I have no idea about the others," he said.

An elite force of commandos helped by the Mumbai police and army and navy personnel were engaged in an operation to rescue the remaining guests.

Some members of the hotel's top management were also believed to be in the hotel.

Several members of the staff stood looking numb and in shock outside the historic hotel that overlooks Mumbai's main landmark, the Gateway of India on the edge of the Arabian Sea.

According to folklore, Parsi industrialist Jamshetji Nusserwanji Tata, founder of India's now global Tata Group, built the hotel after he was refused entry to a now-defunct but then famous hotel that did not admit non-European guests.

The Taj, which opened in 1903, cost the then-princely sum of a quarter of a million dollars. Tata, the legend goes, bought many of the hotel's furnishings himself, including the latest European gizmos like soda and ice-making machines, elevators and an electric generator. It was one of the first buildings in Mumbai to have electricity.

Today, the Taj is indisputably India's most famous hotel and one of the most luxurious.

The staff are used to pandering to the rich and famous - ranging over the years from British Queen Elizabeth II, Elvis Presley, John Lennon, Prince Charles, former US president Bill Clinton to Jacqueline Kennedy Onassis - not hostage-taking gunmen.

But like Mumbai, the Taj has seen acts of terrorism in the past. A bomb went off in a car parked opposite the heritage site during serial bombings in 1993. In 2003, terrorists set of bombs near India Gate, a few metres from hotel. (dpa)