The Finance Ministry on Wednesday released a draft for quick settlement of contractual disputes to promote ease of doing business, named Vivad se Viswas-II. The draft proposes settling disputes having only financial claims against the procuring entities and the receiving party will be paid after haircut. Also, it will cover only domestic arbitration.

The scheme which was proposed in the budget is a one time settlement scheme. The government has acknowledged that special efforts are required to clear the backlog of old disputes and litigation. Such cases are not only holding back the fresh investment, but are also reducing the ease of doing business with the government.

Pendency level

The scheme proposes a graded settlement terms depending on pendency level of the dispute. In matters where the court has passed award in favour of the contractor, settlement amount will be 80 per cent. Similarly, in case of arbitral award passed, 60 per cent of the award amount is proposed to be given. In case of on-going litigation, 20-30 per cent of net claim will be settlement amount.

According to the draft, only disputes involving above entities where the claim for proceedings (either to Court or for Arbitration or Conciliation) were submitted by the contractor on or before September 30, 2022 and Arbitral Tribunal/ Committee for Conciliation etc. for the specific case has been already notified by the procuring entity shall be eligible for settlement through this scheme. “Disputes having only financial claims against the procuring entities will be settled through this scheme,” it said.

Eligibility

The Scheme will be applicable to all the 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. It will be implemented through the 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 says the scheme will apply to disputes where one of the parties is either the Central government itself or all autonomous bodies of the Government of India, public sector banks and public sector financial institutions, all Central Public Sector Enterprises (CPSEs), Union Territories, National Capital Territory of Delhi and all agencies/ undertakings thereof and organisations like metro corporations, where Government of India has shareholding of 50 per cent. “However, these bodies can opt out of the scheme at their discretion, with approval of the Board of Directors,” it said.

The draft clarified that 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. The scheme will be applicable to all contractors/ suppliers who wish to participate. In case CPSEs etc. are the contractors/ suppliers in a particular contract, they are also eligible to submit their claims under the scheme

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