The production of Hera Pheri 3 has been thrown into disarray following Paresh Rawal's departure from the project. Rawal, known for his portrayal of Baburao, has not only surprised fans but has also instigated a legal dispute with co-star and producer Akshay Kumar.

Rawal's decision to leave the film, reportedly due to creative dissatisfaction and a desire for fresh character development, led to a Rs 25 crore lawsuit from Kumar's production house, Cape of Good Films. The lawsuit alleges breach of contract and unprofessional conduct, citing financial and scheduling setbacks caused by Rawal's exit. In response, Rawal returned his signing amount of Rs 11 lakh, along with 15% annual interest, asserting the legitimacy of his departure. His legal representative, Ameet Naik, has addressed the notice, with Rawal expressing hope that the matter will soon be resolved. Rawal tweeted, "My lawyer, Ameet Naik, has sent an appropriate response regarding my rightful termination and exit. Once they read my response, all issues will be laid to rest."

Director Priyadarshan revealed that Akshay Kumar was emotionally affected by Rawal's departure, stating that Rawal did not communicate his decision to the team. Priyadarshan mentioned that contracts were signed and a scene was shot with Suniel Shetty, Akshay Kumar, and Paresh Rawal, along with an IPL teaser. According to Priyadarshan, Kumar acquired the franchise’s rights after they unanimously agreed to do 'Hera Pheri 3'.