Draft Scheme circulated to settle disputes related to govt contracts

The finance ministry on Wednesday circulated a draft scheme for settlement of pending disputes related to government contracts. Under the ‘Vivad se Vishwas II’ (contractual disputes) scheme, contractors will be offered settlement amounts depending on the status of a dispute. In cases of disputes where court or arbitral order has been passed, the settlement amount will be 80% or 60% of the amount awarded by the court or the arbitral tribunal.

With respect to cases of ongoing litigation for disputes arising out of contracts in which physical activity has been stopped or contracts terminated, the settlement amount would be 30% of the net claim amount.

For ongoing litigation where physical activity in the disputed contract is ongoing, the settlement amount would be 20% of the net claim amount — claims by the contractors minus counter-claim by the procuring entity.

In cases where the total claim amount exceeds ₹500 crore, the procuring entities will have an option not to accept the settlement request of the contractor, as per the draft scheme.

However, the reason will have to be recorded in the file by the procuring entities and has to be approved by the secretary of the concerned ministry/department or the CEO in case of a public sector enterprise.

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