grub-install with --removable flag broken in ubuntu 24.04

[Magesh GV]

Ubuntu Version: 24.04
Grub2-common: 2.12-1ubuntu7

Use Case/Scenario:

Create a bootable disk image.

Commands:
sudo qemu-nbd --connect=/dev/nbd0 <disk image file that was created>
sudo mount /dev/nbd0p3 /tmp/boot/
sudo mount /dev/nbd0p2 /tmp/efi/
sudo grub-install --target=x86_64-efi --efi-directory=/tmp/efi/ --boot-directory=/tmp/boot/ --modules="ext2 fat part_gpt xzio squash4" --removable --compress=xz

Write menuentries to /tmp/boot/grub/grub.cfg

What Happens:
System boots into grub prompt. Grub does not load /EFI/BOOT/grub.cfg automatically.

Manual Recovery on every boot:
Run this command when boot drops to grub shell: source $fw_path/grub.cfg

grub-install without --removable option works fine, but in my understanding --removable option is required for some older EFI systems at least.

This works fine when the same grub-install with --removable flag is run on ubuntu 22.04 system.