regular-article-logo Thursday, 28 September 2023

Govt to come out with discussion paper for settlement of contractual disputes

Scheme will cover disputes relating to government contracts currently under arbitration or litigation

Our Bureau New Delhi Published 08.02.23, 01:55 AM
Finance secretary T. V. Somanathan.

Finance secretary T. V. Somanathan. File picture

In a bid to free up thousands of crores of rupees locked up in litigation and arbitration, the government will come out with a discussion paper on a scheme detailing the percentage of the amount which could be paid for expeditious resolution of contractual disputes, finance secretary T. V. Somanathan said.

The department of expenditure under the finance ministry will seek stakeholder suggestions on the quantum of the percentage that could be offered for settling contractual disputes, besides other terms and conditions.


The scheme would cover disputes relating to government contracts currently under arbitration or litigation. Under the scheme, which would be voluntary, contractors can come forward for the resolution of disputes by accepting a specified percentage of the contract value.

The percentage would be notified separately and would be ‘’reasonable and fair’’ so that many people take it, Somanathan told PTI.

“...if they’re willing to accept that percentage, it (disputes) will be settled and the cases will be withdrawn by both sides so that the contractor gets a substantial amount”, he said.

Somanathan said the scheme would be clean and transparent so that no individual officer has any discretion about the settlement of disputes.

It will be up to the company to accept or reject the offer, he said, adding there will be no compulsion. “If they want to continue with litigation they can continue to litigate. If they would like to close the matter, take cash and move on, that option we are giving them under the scheme.”

The budget proposed a voluntary settlement scheme with standardised terms would be introduced for the settlement of disputes.

Spotlight on disputes with govt

■ The budget proposed a voluntary settlement scheme to end contractual disputes with the government quickly

■ A discussion paper will come out with a percentage amount which the government will pay to end the litigation or arbitration matter

■ The proposed scheme is to be voluntary. Contractors can accept an end to litigation and arbitration matters by accepting an upfront sum

■ Contractors can continue with the litigation with the government

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