Vivad Se Vishwas II Scheme: A Contractual Disputes Solution

The government launched the Vivad se Vishwas II scheme for settling contractual disputes involving the government and government undertakings.

Key Points of the Vivad Se Vishwas II Scheme

• The scheme was announced in the Union Budget 2023-24.
• It aims to settle government and government undertakings’ contractual disputes wherein arbitral awards are challenged in courts.
• The Vivad Se Vishwas I scheme was announced under Union Budget 2020 to reduce ongoing legal disputes under direct taxation.
• Around 150,000 cases were resolved with the recovery of about 54 per cent of the amount under litigation.
• The scheme was started in March 2020, and closed on March 31, 2021.
• The central government is aiming to resolve approximately 500 cases, involving an estimated Rs 1 trillion, under this new voluntary settlement scheme, according to officials

What Are Contractual Disputes?

• Contractual disputes are disagreements or conflicts that arise between parties involved in a contractual agreement.
• These disputes occur when one or more parties believe that the terms, conditions, or obligations outlined in the contract have been violated, misunderstood, or not properly fulfilled.

Features of the Vivad Se Vishwas II Scheme

• The deadline for submitting claims under the scheme is 31 October 2023.
• The scheme will apply to all domestic contractual disputes where one of the parties is either the Government of India or an organisation operating under its control.
• The one-time settlement scheme will cover cases where the court order was passed by 30 April 2023, and the arbitral order was given by 30 January 2023.
• Under the scheme, for court orders passed on or before 30 April 2023, the settlement amount offered to the contractor will be up to 85 per cent of the net amount awarded or upheld by the court.
• For arbitral orders passed on or before 1 January 2023, the settlement amount offered is up to 65 per cent of the net amount awarded

Which Cases Are Covered?

• Government-held entities such as the Oil and Natural Gas Corporation (ONGC) and the National Highways Authority of India (NHAI) have numerous disputes with private contractors.
• The scheme will be applicable to all kinds of procurement, including the procurement of goods, services, and works.
• The scheme is also applicable to all ‘earning contracts’ (i.e., contracts where the government receives money in exchange for goods, services, rights, etc.) as well as contracts under Public Private Partnership (PPP) arrangements

Coverage of Vivad Se Vishwas II Scheme

• The scheme will cover all disputes with Central government agencies, including autonomous bodies, public sector banks and financial institutions, central public sector firms, union territories, and the National Capital Territory of Delhi, along with their respective agencies.
• However, organizations such as metro corporations, where the Centre holds a 50% stake, can choose to opt out of the scheme at their discretion, provided they secure board approvals.

How Does the Scheme Work?

• Eligible claims will be processed only through the government e-marketplace.
• A specialized webpage has been set up by the government e-marketplace (GeM) solely for the implementation of the scheme, ensuring that only eligible claims will be processed through it.
• This approach aims to streamline the settlement process and expedite resolution.
• To settle contractual disputes of government and government undertakings, wherein an arbitral award is under challenge in a court, a voluntary settlement scheme with standardised terms will be introduced.
• This will be done by offering graded settlement terms depending on the pendency level of the disputes.
• For contractors dealing with non-GeM contracts of the ministry of railways, they may register their claims on the IREPS platform

Why Vivad Se Vishwas II Matters

The Vivad Se Vishwas II scheme provides a comprehensive and voluntary settlement solution to the long-standing contractual disputes between private contractors and government entities. With an estimated Rs 1 trillion in disputes set for resolution, this scheme aims to reduce litigation, encourage a smoother working relationship between the government and private contractors, and boost economic growth by facilitating timely settlements.

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