A front page of the News Corp publication on November 18 depicted Dr Ibrahim Abu Mohammed as the three "unwise" monkeys for his reaction to the attacks which killed more than 130 people.
A claim filed in the NSW Supreme Court on Friday alleges the publication in at least two articles had suggested, among other things, Dr Mohammed was an apologist for the attacks and deliberately refused to attend a post-attack vigil.
The Grand Mufti, the spiritual leader of Muslims in Australia, has called for the Telegraph to publish an apology and remove the articles from its website.
"News Corp's article carries several highly defamatory and completely false imputations concerning the Grand Mufti," the Australian National Imam's Council said in a statement.
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"News Corp's refusal to engage with the Grand Mufti is also disappointing to the significant Australian Muslim population that supports the Grand Mufti and allows his religious views to represent theirs.
"In the circumstances, the Grand Mufti has been left with no option but to commence civil proceedings against News Corp for damages arising from the publication of the article."
The council said that it hoped "inaccurate and damaging" reporting by News Corp would change.
In an initial statement following the attacks, Dr Mohammed said the focus in preventing further terror attacks should be on racism, Islamophobia, duplicitous foreign policies and military intervention.
He expressed condolences to families and friends of the victims and also warned against fear-mongering.
But several commentators, including senior federal government figures, claimed his statement did not amount to condemnation.
A day prior to the Telegraph articles, the Grand Mufti released a statement seeking to clarify that he condemned "all forms of terrorist violence".
"These criminals are committing crimes against humanity and sins against God," he said on November 17.
The two Telegraph stories, headlined "The Unwise Mufti" and "Even Hamas condemn the Paris attacks so why won't Australia's Grand Mufti Ibrahim Abu Mohammed?", both claimed Dr Mohammed had refused to condemn the Paris terror attacks.
A News Corp spokesman declined to comment.
