Vivad se Vishwas-II scheme looks to settle financial disputes only

Centre notifies the scheme; disputes with states govts, another pvt firm not covered

Companies or entities in domestic contractual disputes with the central government and associated bodies only can seek to settle pending matters under the ‘Vivad se Vishwas II’ scheme, if no state government or any other private firm is party to the case, or if the dispute pertains to pending financial claims, and not any performance claims.

These are some of the conditions put in the draft scheme for one-time settlement under the Vivad se Vishwas II, put in the public domain by the Finance Ministry on Wednesday. Public comments and suggestions on the scheme are invited until March 8.

The scheme was first announced by Finance Minister Nirmala Sitharaman in her 2023 Union Budget speech. “To settle contractual disputes of the government and government undertakings, wherein the arbitral award is under challenge in a court, a voluntary settlement scheme with standardised terms will be introduced. This will be done by offering graded settlement terms depending on the pendency level of the dispute,” she said.

“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 ease of doing business. 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,” the draft scheme said.

The scheme would apply to disputes where one of the parties is either the Centre, its autonomous bodies, public sector banks, financial institutions and enterprises, Union Territories, including Delhi, and their agencies, and organisations where the Centre has a stake of 50 per cent, like metro rail corporations.

Only disputes involving the above entities where the claim for proceedings either to a court or for arbitration or Conciliation was submitted by the contractor on or before September 2022 shall be eligible for settlement through this scheme.

“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,” it stated.

The scheme proposes graded settlement terms depending on the pendency level of the dispute and it is proposed to cover only cases involving domestic arbitration and cases under international arbitration are not eligible to be settled under this scheme.

If a court order has been passed, 80 per cent of net amount awarded shall be settled, and if an arbitration tribunal has passed the order, the 60 per cent of the amount shall be settled including interest, the scheme stated. If the litigation is still ongoing, 30 per cent of the net claim amount shall be settled.

On Monday, The Finance Ministry notified a follow-up to ‘Vivad se Vishwas I’, asking departments and public sector units to refund securities deposited by micro, small and medium enterprises (MSMEs) during the Covid-19 pandemic.

Both the schemes shall be monitored through the Government e-Marketplace (GeM)

As reported earlier, the Centre is aiming to resolve about 500 cases, involving an estimated Rs 1 trillion, under Vivad se Vishwas II.

Extending olive branch: 

Pending claims can be settled against the following

• Central government
• Centre’s autonomous bodies
• Public sector banks and financial institutions
• Public sector enterprises
• Union territories, including NCT of Delhi, and their agencies
• Organisations where the Centre has a 50% stake, like metro rail

The offer

• 80% of net amount awarded if a court has passed an order
• 60% of the awarded amount, including interest, if there’s an arbitration tribunal order
• 30% of the net claim amount, if litigation is ongoing