Now govt depts, PSUs can't move court against each other over commercial disputes

The government today put in place a new mechanism to settle commercial disputes between government departments and Public Sector Undertakings where the Cabinet Secretary will have the last word, and barred them from approaching courts to settle such matters.

However, disputes concerning the Railways, Income Tax, Customs and Excise departments have been kept out of ambit of the new mechanism.

"The Union Cabinet approved the strengthening of the mechanism for resolution of commercial disputes of central public sector enterprises inter se and also between CPSEs and other government departments/organizations. The decision will put in place an institutionalised mechanism within the government for speedy resolution of commercial disputes of CPSEs without the matter being referred to the courts of law," an official statement said here.

Now, a new two-tier mechanism will be put in place of the existing permanent machinery of arbitration mechanism to resolve commercial disputes between CPSEs, and CPSEs and government departments outside courts.

At the first level, such commercial disputes will be referred to a committee comprising secretaries of the administrative ministries to which the disputing parties belong and the Law Secretary.

The financial advisors of the two ministries concerned will represent the issues related to the dispute in question before the committee.

In case the two disputing parties belong to the same ministry, the committee will comprise secretary of the administrative ministries concerned, the Law Secretary and Secretary, Department of Public Enterprises.

In such a case, the matter would be represented by the financial advisor and one joint secretary of that ministry.

At the second level, in case the dispute remains unresolved, it will be referred to the Cabinet Secretary, whose decision will be "final and binding on all".

For the faster disposal of disputes, a timeline of three months at the first level has been prescribed.

"It will reduce court cases. At times even courts have questioned government departments settling disputes through litigation," Law Minister Ravi Shankar Prasad told reporters at the Cabinet briefing.