Polity & Governance

The Vivad Se Vishwas II (Contractual Disputes) scheme

Table of Contents

Context
In order to settle the pending contractual disputes of government and government undertakings, the finance ministry has launched the ‘Vivad se Vishwas II – (Contractual Disputes)’ scheme.
  • The last date for submission of claims is October 31, 2023.
Background
  • The finance minister had announced the scheme, termed ‘Vivad se Vishwas II — (Contractual Disputes)’ Union Budget 2023-24.
  • The Department of Expenditure had indicated the guidelines for its operation in an earlier order issued in May 2023.
About the Scheme:
  • Objective: The Vivad Se Vishwas II (Contractual Disputes) scheme is aimed at clearing the backlog of litigation, freeing lock-up funds, and improving the ease of doing business.
  • Under the scheme, contractors would be offered settlement amounts depending on the status of a dispute.
  • The scheme will apply to all domestic contractual disputes where one of the parties is either the Government of India or an organisation working under its control.
  • Apart from Ministries and Government departments, the scheme would apply to autonomous bodies, public sector banks and enterprises and all organisations, like metro rail corporations, where the Government of India has a 50 per cent stake.
  • Under the scheme, it would be mandatory for Government departments to accept the settlement where the claim amount is 500 crore or less.
  • To be eligible for settlement under the scheme, the ministry has laid out two conditions —
    • For Arbitral award passed on or before January 31, 2023– the settlement amount offered is up to 65 per cent of the net amount awarded.
    • For Court award passed on or before April 30, 2023- The settlement amount offered to the contractor will be up to 85 per cent of the net amount awarded/ upheld by the court.
  • Applicability: The scheme shall be applicable to all kinds of procurement, including procurement of goods, services and works.
    • It is also applicable to all ‘earning contracts’ (i.e. contracts where government receives money in exchange for goods, services, rights, etc.) as well as contracts under Public Private Partnership (PPP) arrangements.
  • Government e-Marketplace (GeM) has developed a dedicated web-page for implementation of this scheme.
  • Eligible claims shall be processed only through GeM.
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