Cabinet approves strengthening the mechanism for resolution of commercial disputes of Central Public Sector Enterprises

The Union Cabinet Chaired by Prime Minister Shri Narendra Modi has has approved the strengthening of the mechanism for resolution of commercial disputes of Central Public Sector Enterprises (CPSEs) inter se and also between CPSEs and other Government Departments/Organizations. The Cabinet decision is based on recommendations of the Committee of Secretaries (CoS). The decision will put in place an institutionalized mechanism within the Government for speedy resolution of commercial disputes of CPSEs without the matter being referred to the Courts of law.

Details:

i. A new two-tier mechanism will be put in place of the existing Permanent Machinery of Arbitration (PMA) mechanism to resolve commercial disputes (excluding disputes concerning the Railways, Income Tax, Custom & Excise Departments) between CPSEs inter se and CPSEs and Government Departments/Organizations, outside the Courts of law.

ii. At the First level (tier), such commercial disputes will be referred to a Committee comprising of Secretaries of the administrative Ministries/Departments to which the disputing CPSEs/Parties belong and Secretary-Deptt. of Legal Affairs. The Financial Advisors (FAs) of the two concerned administrative Ministries/Departments will represent the issues related to the dispute in question before the above Committee. In case the two disputing parties belong to the same Ministry/Department, the Committee will comprise Secretary of the administrative Ministry/Department concerned, Secretary-D/o Legal Affairs and Secretary-Department of Public Enterprises. In such a case, the matter may be represented before the Committee by the FA and one Joint Secretary of that Ministry/Department.

Further, in case of a dispute between CPSE and State Government's Department/Organization, the Committee will be comprised the Secretary of the Ministry/Department of the Union to which the CPSE belongs and Secretary-D/o Legal Affairs and a senior officer nominated by the Chief Secretary of the State concerned. In such a case, the matter may be represented before the Committee by concerned Principal Secretary of the State Government's Department/ Organization.

iii. At the Second level (tier), in case the dispute remains unresolved, even after consideration by the above Committee, the same will be referred to the Cabinet Secretary, whose decision will be final and binding on all concerned.

iv. For the prompt disposal of disputes, a time schedule of 3 months at the first level has been prescribed.

Department of Public Enterprises (DPE) will issue guidelines immediately to all CPSEs through their administrative Ministries/Departments and State Governments/UTs for compliance.

The new mechanism will promote equity through mutual/collective efforts to resolve commercial disputes thereby reducing the number of litigations regarding commercial disputes in Court of Law and also avoid wastage of public money.

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