In a bid to effectively address and resolve lingering contractual disputes involving government institutions, the Ministry of Finance recently launched the “Vivad se Vishwas II” scheme. Initially announced in the 2023-24 Union Budget by the Union Finance Minister, the scheme is aimed at ameliorating the ease of conducting business with the government and stimulating further investments within the country.
Understanding the Vivad Se Vishwas-II Scheme
Designed as a voluntary settlement scheme, the Vivad Se Vishwas-II initiative is purpose-built to deal with contractual disputes that pertain to government agencies. More specifically, it contends with cases where an Arbitral Award, which conclusively settles an arbitral proceeding, is being legally challenged in court.
Key Aspects of the Scheme
The scheme introduces standardised terms and provides graded settlement choices based on the degree of backlog in dispute resolution. By doing so, it intends to expedite and streamline the resolution of these disputes. The scheme covers all disagreements involving central government agencies, autonomous bodies, public sector banks, and financial establishments, as well as central public sector corporations.
Geographical Coverage and Exemptions
Union territories, including the National Capital Territory of Delhi and their affiliated agencies, are also within the scope of the scheme. However, some organizations, such as metro corporations, where the central government has a 50% stake, may elect not to participate in the scheme, contingent upon obtaining board approvals.
Implementation Process
The “Vivad se Vishwas II” scheme will be administrated through online functionality facilitated by the Government e-Marketplace (GeM) portal, enhancing accessibility and ease of use for those involved.
Calculating the Settlement Amount
In legal cases involving court awards, the settlement amount offered to the contractor will be up to 85% of the total amount awarded or ratified by the court. In situations involving arbitral awards, the same cut-off will be “up to” 65% of the net amount.
Comparison with Previous Scheme
It’s worth noting that this is not the first foray by the Ministry of Finance into dispute resolution schemes. Prior to this, it had introduced “Vivad se Vishwas I – Relief to MSMEs”, a scheme aimed at providing relief to Micro, Small and Medium Enterprises (MSMEs) during the Covid-19 pandemic period.
Last Modified: February 22, 2024