Government kicks off contractual dispute settlement scheme

August 2, 2023 

Contractors and suppliers to government and its undertakings can file claims by October 31

The Centre on August 2 launched a settlement scheme for contractual disputes with vendors or suppliers to government and its undertakings, setting an October 31 deadline for firms to submit their claims for consideration.

Finance Minister Nirmala Sitharaman had announced the scheme, termed ‘Vivad se Vishwas II — (Contractual Disputes)’ in this year’s Union Budget and the Department of Expenditure had indicated the guidelines for its operation in an earlier order issued in late May.

“To settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardised terms will be introduced. This will be done offering graded settlement terms depending on pendency level of the disputes,” Ms. Sitharaman had said in the Budget.

For disputes to be considered for settlement, an arbitral award should have been secured by the aggrieved party by January 31, 2023, with the cut-off date set at April 30 in case of Court orders.

“The scheme will apply to all domestic contractual disputes where one of the parties is either the Government of India or an organisation working under its control,” the Finance Ministry said in a statement.

For cases involving Court awards, the settlement amount offered to the contractor will be up to 85% of the net amount awarded or upheld by the court, while the same threshold will be “up to” 65% of the net amount in case of arbitral awards.

“The Government e-Marketplace (GeM) has developed a dedicated web-page for implementation of this scheme and eligible claims shall be processed only through GeM,” the Ministry said, adding that Ministry of Railways’ contractors can register their claims on the Indian Railways E-Procurement System.

[The Hindu]