Govt launches Vivad se Vishwas-2 scheme to settle contractual disputes

The government on Wednesday launched the Vivad se Vishwas-2 scheme for settling contractual disputes involving the government and government undertakings. Announced in the Union Budget 2023-24, the scheme aims to resolve the government's contractual disputes with private parties, clear the backlog of litigation, and improve the ease of doing business.

The deadline for submitting claims under the scheme is 31 October 2023. The scheme will apply to all domestic contractual disputes where one of the parties is either the Government of India or an organisation operating under its control.

The central government is aiming to resolve approximately 500 cases, involving an estimated Rs 1 trillion, under this new voluntary settlement scheme, according to officials.

The one-time settlement scheme will cover cases where the court order was passed by 30 April 2023, and the arbitral order was given by 30 January 2023.

Under the scheme, for court orders passed on or before 30 April 2023, the settlement amount offered to the contractor will be up to 85 per cent of the net amount awarded or upheld by the court.

For arbitral orders passed on or before 1 January 2023, the settlement amount offered is up to 65 per cent of the net amount awarded.

Government-held entities such as the Oil and Natural Gas Corporation (ONGC) and the National Highways Authority of India (NHAI) have numerous disputes with private contractors.

Guidelines issued by the Department of Expenditure on 29 May stated that the scheme will be applicable to all kinds of procurement, including the procurement of goods, services, and works. “The scheme is also applicable to all 'earning contracts' (i.e., contracts where the government receives money in exchange for goods, services, rights, etc.) as well as contracts under Public Private Partnership (PPP) arrangements,” the Department of Expenditure said.

Eligible claims will be processed only through the government e-marketplace. While announcing the scheme during her budget speech, Finance Minister Nirmala Sitharaman said, “To settle contractual disputes of government and government undertakings, wherein an 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 disputes.”