- The Bombay High Court barred Mumbai Pune Expressway Ltd from recovering Rs 110 crore from IRB MP Expressway
- The dispute arose from a 2020 Covid lockdown toll collection halt and a compensation agreement
- IRB accepted compensation by adjusting losses against interest on the concession fee in April 2020
The Bombay High Court has restrained Mumbai Pune Expressway Ltd from recovering about Rs 110 crore from IRB MP Expressway and barred the encashment of bank guarantees linked to the dispute.
The case stems from a 2020 arrangement after toll collections were halted for 25 days during the first Covid lockdown. Facing a revenue hit, IRB invoked force majeure, prompting discussions between the parties. In April 2020, the operator offered compensation by allowing IRB to adjust losses against interest payable on the upfront concession fee.
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IRB accepted the proposal in writing and the adjustment was subsequently built into financial closure and payment calculations.
The dispute surfaced years later after the expressway operator cited audit observations to argue that the compensation was excessive and not contractually permissible. It sought to claw back about Rs 71 crore with interest and warned of invoking performance guarantees to recover the amount.
Justice Gauri Godse held that the exchange of letters in April 2020 constituted a binding agreement that had already been acted upon. The court noted that the operator had acknowledged receipt of payments after factoring in the adjustment and could not reverse that position after a significant lapse of time.
While reiterating that courts are generally reluctant to restrain invocation of unconditional bank guarantees, the judge said an exception applied in this case. Allowing recovery of an amount already settled would result in irretrievable injustice to IRB, the court said in granting interim relief.
The court also clarified that audit observations cited by the operator are internal in nature and their binding effect will be examined at trial. For now, the recovery effort and any move to invoke guarantees will remain stayed pending final adjudication.
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