whatsanavaya,
a-law and mu-law are not bearer capability options, these are companding modes. avaya switches support two bearer capability modes: 3.1-khz and speech, changed on ds1 board screen. so this denial event should indicate that remote side of isdn link doesn't want to accept call with specified bearer capability. but that's theory. in real world, i've found that many telecom equipment deny calls with some abstract cause values, not really related to the denial reason. for example, cisco routers just love to send this cause value over ip trunk if there's something they don't like in call setup. and then you wonder what they mean. :/
describe your setup in more detail, please. where these events go from?