Three offshore lenders to the beleaguered Dabhol Power Company -- ABN Amro, Standard Chartered Bank and ANZ Bank -- are planning to take the UK's export credit agency, the Export Credit Guarantee Department, to court.

This follows the ECGD's decision not to honour a claim for political risk insurance filed by these three foreign banks for what they termed "expropriation" of DPC's assets by the domestic lenders' consortium led by the Industrial Development Bank of India. The three banks have a combined exposure of over $60 million to DPC.

The issue has ramifications for the Indian government. If the three banks win their case in London, under a bilateral agreement, ECGD can claim the amount from the Union government.

"ABN Amro, ANZ Bank and Stanchart Bank are actively considering litigation against ECGD on the political risk insurance issue. The litigation will be in London if the final decision is to go ahead with it," sources familiar with the development said.

The move by the three offshore banks comes even as the domestic lenders to DPC, in conjunction with the US Overseas Private Insurance Corporation, are keen on finding a buyer for the power project that has been lying idle since May 2001. Among others, the Reliance and Tata groups have shown interest in taking over the project.

DPC's assets are now in the possession of a court receiver for "care and preservation" following a case lodged in the Bombay high court by the domestic lenders' consortium.

The Indian banks and financial institutions had moved the court after the collapse of Enron Corp, the largest stakeholder in DPC.

This led to foreign banks, General Electric and Bechtel claiming political risk insurance on the ground that the assets "were expropriated."

The three banks' move to claim political risk insurance received a fillip after OPIC had honoured a similar claim of around $30 million filed by the Bank of America.

Further, in September 2003, General Electric and Bechtel, which hold a combined 20 per cent stake in DPC, too successfully claimed $30 million each as political risk insurance.