Government launches Vivad se Vishwas 2.0 scheme for dispute settlement

The Department of Expenditure under the Ministry of Finance has launched Vivad se Vishwas 2 .0 also known as Contractual Disputes scheme to settle long-standing contractual disputes involving the government and government undertakings.

This initiative was announced during the Union Budget 2023-24 by the Union Finance Minister, Smt. Nirmala Sitharaman. The scheme aims to provide an effective and standardized mechanism for resolving contractual disputes, thereby reducing the burden on the legal system and fostering a more business-friendly environment.

An Insight into the Scheme

• The scheme was introduced in the Union Budget 2023-24 by Smt. Nirmala Sitharaman, the Union Finance Minister, with a strong emphasis on its significance in resolving contractual disputes involving the government and its undertakings.
• Its primary goal is to establish a voluntary settlement mechanism for parties entangled in disputes where arbitral awards are being contested in court.
• Through the use of graded settlement terms that correspond to the extent of pendency of the disputes, the scheme seeks to promote amicable resolutions.

Vivad se Vishwas II: Eligibility Criteria for Settlement under the Scheme

The settlement scheme will consider cases eligible if they meet the following criteria:

1. The status of the dispute must be determined by an award issued up to January 31, 2023, in an arbitral proceeding.
2. Alternatively, for cases resolved through court proceedings, the award must have been passed on or before April 30, 2023.

The scope of the scheme extends to all domestic contractual disputes where either the Government of India or organizations under its control are involved.

Vivad se Vishwas II: Settlement Amounts

The scheme offers attractive settlement amounts to incentivize contractors to opt for voluntary settlements. For Court Awards passed on or before 30th April 2023, the settlement amount offered to the Contractor can go up to 85% of the net amount awarded or upheld by the court. Similarly, for Arbitral Awards passed on or before 31st January 2023, the settlement amount offered can be up to 65% of the net amount awarded.

Benefits of Vivad se Vishwas II

The scheme holds several advantages for all stakeholders like:

Faster Resolution

By providing a structured and standardized settlement process, the scheme ensures faster resolution of pending contractual disputes, which otherwise could have lingered in courts for years.

Reduced Litigation Burden

The scheme aims to ease the burden on the legal system by encouraging parties to settle their disputes voluntarily, thereby reducing the workload of courts.

Business-Friendly Environment

The availability of a voluntary settlement mechanism fosters a more business-friendly environment, encouraging investment and growth in the country.

Financial Relief

Contractors will benefit from attractive settlement amounts, allowing them to recover a substantial portion of the net amount awarded or upheld by the court or arbitrator.

Vivad se Vishwas II: Accelerating Dispute Resolution with a Voluntary Settlement Mechanism

By offering a voluntary settlement mechanism with standardized terms, the government aims to expedite the resolution of pending contractual disputes involving government entities. The scheme provides an opportunity for contractors to receive favorable settlement amounts and alleviates the burden on the legal system. With the support of digital platforms like GeM and IREPS, the scheme promises transparency and efficiency throughout the claim processing journey.

Key takeaways for competitive examinations

• First Finance Minister of Independent India: R.K Shanmukham Chetty

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