Finmin releases draft of Vivad se Vishwas 2 for consultations

The move, announced in the budget last week, is aimed at promoting ease of doing business and will cover disputes up to 30 September 2022.

Finance minister Nirmala Sitharaman had announced in the budget that in order to settle contractual disputes involving the government and government undertakings, where an arbitral award is under legal challenge, a voluntary settlement scheme with standardized terms will be introduced.

This will be done by offering graded settlement terms depending on pendency level of the dispute, the finance minister had said. “Such cases are not only holding back fresh investment but are also reducing the ease of doing business with the government,” the finance ministry said on Wednesday.

The Scheme will apply to disputes where one of the parties is either the Government of India or its bodies like public sector banks, public sector financial institutions, central public sector enterprises, Union territories, National Capital Territory of Delhi. In addition, it will also cover all organisations where the central government has a shareholding of 50% like Metro Corporation. However, these bodies can opt out of the Scheme at their discretion with approval of the Board of Directors.

The scheme will only cover disputes where the claim for proceedings, either to Court or for Arbitration or Conciliation were submitted by the contractor on or before 30 September, 2022 and Arbitral Tribunal or Committee for Conciliation for the specific case has already been notified by the procuring entity.

However, disputes, where claims are raised against procuring entities along with some other party like the State Government or private party will not be eligible under the scheme. Besides, disputes having only financial claims against the procuring entities will be settled through this scheme.

Even CPSEs are proposed to be eligible to submit their claims under the scheme if they are the contractors/ suppliers in a particular contract,

The Scheme proposes a graded settlement terms depending on pendency level of the dispute.

The Scheme is proposed to cover only domestic arbitration ad not international arbitration.

The scheme will be implemented through Government e-Marketplace (GeM), which shall provide an online functionality for the same.