Bombay High Court Stays Recovery of Rs 110 Crore From IRB MP Expressway

The Bombay High Court has restrained Mumbai Pune Expressway Ltd from recovering approximately Rs 110 crore from IRB MP Expressway and also barred the encashment of related bank guarantees, in a significant interim relief order in a contractual dispute arising from the Covid-19 period. The court’s decision comes amid a long-standing disagreement over compensation adjustments linked to toll revenue losses during the nationwide lockdown.

The dispute dates back to March–April 2020, when toll operations were suspended for nearly 25 days during the first wave of Covid-19. The shutdown resulted in substantial revenue losses for the concessionaire, prompting IRB MP Expressway to invoke force majeure provisions under its contract. This led to discussions between the two parties regarding financial relief and compensation mechanisms.

As part of the resolution process, IRB proposed an arrangement in April 2020 that allowed it to offset losses against interest payable on the upfront concession fee. The proposal was accepted in writing and later incorporated into financial closure and payment calculations, with both parties proceeding on the basis of the agreed adjustment at the time.

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The dispute resurfaced years later after Mumbai Pune Expressway Ltd relied on audit observations to argue that the compensation mechanism exceeded contractual limits and was not permissible under the agreement. The operator subsequently sought recovery of around Rs 71 crore, along with interest, and indicated the possibility of invoking performance guarantees to recover the amount.

Justice Gauri Godse observed that the exchange of correspondence in April 2020 constituted a binding agreement that had already been implemented by both sides. The court noted that payments had been adjusted and acknowledged, and held that attempting to reverse the arrangement after several years would cause “irretrievable injustice” to IRB MP Expressway. While courts are generally hesitant to interfere with unconditional bank guarantees, the judge held that this case warranted an exception at the interim stage.

The court further stated that audit objections cited by the expressway operator are internal in nature and their legal validity would be examined during the final trial. Until then, the recovery proceedings and any attempt to encash bank guarantees will remain stayed, preserving the status quo in the dispute between the two infrastructure entities.

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