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Dispute settlement scheme

  • Published
    9th Feb, 2023
Context

The Government has proposed quick settlement of contractual disputes to promote ease of doing business as announced in Union Budget 2023-24.

Background
  • The Government has appreciated that special efforts are required to clear the backlog of old disputes and litigation.
  • Such cases are not only holding back fresh investment but are also reducing the ease of doing business with the Government.
  • Therefore, after due study of the past cases, the government intends to bring a one-time settlement scheme called “Vivad se Vishwas II (Contractual Disputes)” to effectively settle pending disputes.

About the scheme:
  • Aim: The scheme is aimed at bringing quick finality to certain contractual disputes in which the Government of India or its agencies is a litigant.
  • The salient features of the proposed scheme are as under:

The scheme will apply to disputes where one of the parties is either the Government of India or its following bodies:

    • All Autonomous Bodies of the Government of India;
    • Public sector banks and public sector financial institutions;
    • All Central Public Sector Enterprises;
    • Union Territories, National Capital Territory of Delhi and all agencies/ undertakings thereof; and
    • All organisations, where Central Government like Metro Corporations, where the Government of India has a shareholding of 50%; however, these bodies can opt out of the scheme at their discretion, with the approval of the Board of Directors.
  • Only disputes involving the above entities where the claims for proceedings (either to Court or for Arbitration or Conciliation) were submitted by the contractor.
  • Disputes, where claims are raised against procuring entities as above along with some other party (State Government or private party), shall not be eligible under the scheme.
  • Disputes having only financial claims against the procuring entities will be settled through this scheme.
  • The Scheme will be applicable to all contractors/ suppliers who wish to participate.
  • In case Central Public Sector Enterprises (CPSEs) etc. are the contractors/ suppliers in a particular contract, they are also eligible to submit their claims under the scheme.
  • The Scheme proposes graded settlement terms depending on the pendency level of the dispute.
  • It is proposed to cover only cases involving domestic arbitration and cases under international arbitration are not eligible to be settled under this scheme.
  • The scheme will be implemented through Government e-Marketplace (GeM), which shall provide an online functionality for the same.
  • The draft scheme document also provides a broad functionality that the GeM portal shall provide to implement the scheme.
  • The draft scheme also contains a draft settlement agreement between the litigating parties to bring finality to the contractual dispute settlement.
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