The Maharashtra State Electricity Board has joined hands with domestic lenders of Dabhol Power Company to seek the Bombay high court's permission to re-start the first phase of the power project.

MSEB is a party to a writ filed by the domestic lenders led by the Industrial Development Bank of India, which is slated to come up for hearing on Tuesday.

"The domestic lenders have obtained an injunction under which the assets of DPC have passed on to the hands of a court-appointed receiver. Consequently, the lenders are seeking the receiver's permission to re-start the project. Since MSEB will buy the power, it, too, is a party to the petition," sources familiar with the development said.

The Dabhol plant has been lying idle since mid-2001 after MSEB rescinded the power purchase agreement with DPC.

Later, faced with a 2,000 mw peak time power shortage, the Maharashtra government agreed in-principle for the off-take of 658 mw from DPC by MSEB at Rs 2.80 a unit.

Even if the court gives permission to the domestic lenders to re-start the project, the consent of foreign lenders will be needed as well.

Under the inter-creditors agreement, the foreign lenders can veto the re-start. They have already made it clear that they do not have any interest in continuing in the project and have demanded that they be repaid their exposure of $339 million.

A meeting between the domestic and foreign lenders at Singapore held last week failed to resolve the deadlock.