MSEB sources told The Financial Express that if the payment is not made before April 7, the last day since invocation of counter-guarantee, it fears that the DPC may go in for an arbitration.

"We strongly feel that the Centre should not pay the December bill until DPC clears the rebate of Rs 401 crore. However, if the Centre feels that the non-payment will lead to DPC going in for an international arbitration, then the state government should bail us out and provide an immediate assistance of Rs 102 crore," these sources added.

MSEB had last week paid Rs 114 crore towards the February power purchase bill in protest against DPC's non-payment of rebate of Rs 401 crore.

Simultaneously, MSEB has served another notice to the DPC for the default of 400 per cent (equivalent to Rs 408 crore) in the supply of power on February 13.

MSEB's appeal to the state government has come in the wake of the Union law ministry's opinion sought by the finance ministry that the Centre need not have to pay the December bill to the DPC through the state government's RBI account. The Union law ministry had upheld the stand taken by the MSEB that the payment of December 2000 bill should not be paid until the DPC makes the payment of Rs 401 crore towards rebate, following its failure to make available necessary demand within the stipulated period on January 28.

MSEB had pleaded that the DPC had defaulted on January 28 and was liable to pay the rebate of Rs 401 crore. MSEB had suggested that the December bill can be adjusted against the rebate amount. However, the DPC had flatly rejected the MSEB's offer and taken up the matter at the disputes resolution panel. Mantralaya sources said that the energy department, which has forwarded the MSEB's opinion to the Centre, awaits reply from the latter.