105) Moreover, since the MSEB was still committed to buying 90% of the plant's output and covering the risk of currency fluctuations, the revised agreement actually increased the state's financial exposure.
110) Unsurprisingly, the MSEB failed to make the October 2000 capacity payment to DPC and partially defaulted on four capacity payments between October 2000 and January 2001, which totaled approximately $49 billion.
the MSEB was financially incapable of meeting its payment obligation under the PPA and proposed another renegotiation of the project and financing documents, seeking, among other things,  a restructuring of the tariff (de- linking it from the dollar/rupee exchange rate),  separating the LNG facility and selling LNG on the spot market,  canceling the planned escrow arrangements,  an increase in the term of the project debt, and  enhanced financial support from the GOM and the GOI.
On January 25, 2001, the DPC exercised the GOM Guaranty and demanded payment for amounts due from the MSEB under the PPA.
122) Furthermore, the central government stated that the GOI Guaranty was not unconditional and that "there has been no determination by any court or tribunal that the sum of money payable to DPC by MSEB under the PPA is validly due.
Ultimately, the MSEB paid the February and March 2001 invoices "under protest," and it made the April 2001 payment with a stipulated condition that the payment was "subject to resolution of the pending disputes.
On May 23, 2001, the MSEB declared its rescission of the PPA via letter to DPC, alleging that the DPC had engaged in misrepresentations and other wrongful actions.
Additionally, on May 29, 2001, MSEB informed DPC that it would permanently cease to purchase power from the Dabhol project.
Following MSEB's petition, MERC issued an interim order dated May 29, 2001, declaring its authorization to adjudicate the dispute between MSEB and DPC.
140) Lastly, the MERC Order enjoined the DPC from attempting to recover funds owed by MSEB through the Escrow Agreement.
146) Subsequently, on March 5, 2002, the Bombay High Court issued an oral ruling that "MERC had exclusive jurisdiction over the disputes with the MSEB and that DPC would have to resolve all disputes there.
Similarly, in early September 2001, the MSEB applied to the Bombay High Court for an injunction to prevent payment of the Canara Bank Letter of Credit.