Vivad se Vishwas II: Transforming Government Contractual Dispute Resolution for Economic Growth

To address the contractual dispute and promote ease of doing business with the government, the Ministry of Finance has launched a groundbreaking initiative - "Vivad se Vishwas II."

Shivam 7 August 2023 3 min read

Contractual disputes have long been a challenge in government dealings, hindering efficiency and creating bottlenecks in the execution of projects and agreements. To address this issue and promote ease of doing business with the government, the Ministry of Finance has launched a groundbreaking initiative – “Vivad se Vishwas II.” This voluntary settlement scheme is specifically designed to resolve pending contractual disputes involving government agencies, providing a platform for efficient and prompt resolutions.

The Genesis of Vivad se Vishwas II

The inception of Vivad se Vishwas II can be traced back to the Union Budget 2023-24 when the Union Finance Minister recognized the pressing need to tackle long-standing contractual disputes that involved government entities. These disputes often stemmed from challenges to Arbitral Awards in courts, leading to delayed resolutions and administrative inefficiencies.

Objectives and Scope

The primary objective of the scheme is to create a conducive environment for resolving contractual disputes efficiently and swiftly. By doing so, it aims to boost investor confidence and attract fresh investments to foster economic growth in the country.

The scheme covers all contractual disputes involving Central government agencies, including autonomous bodies, public sector banks and financial institutions, central public sector firms, and union territories, including the National Capital Territory of Delhi. However, certain organizations like metro corporations, where the Centre holds a 50% stake, have the option to opt out with appropriate board approvals.

How the Scheme Works

Vivad se Vishwas II offers a structured approach to dispute resolution. The scheme will introduce standardized terms, and settlement options will be graded according to the level of the pending dispute. This allows parties involved to choose from various settlement amounts based on the type and timeline of the award.

For disputes involving Court awards, contractors will be offered settlement amounts up to 85% of the net amount awarded or upheld by the court (awarded up to April 30, 2023). The settlement amount offered for disputes involving arbitral orders passed up to Jan 31, 2023 will be limited to 65% of the net amount awarded. This incentivizes parties to consider the settlement, as it provides a fair and attractive resolution to the ongoing disputes.

Implementation and the Role of Government e-Marketplace (GeM)

The implementation of Vivad se Vishwas II will take place via an online platform integrated into the Government e-Marketplace (GeM) portal. By leveraging the GeM platform, the government aims to streamline the processing of claims and enable swift settlements. This digitized approach aligns with the government’s vision of creating a transparent and efficient governance structure.

Significance and Impact

The significance of Vivad se Vishwas II lies in its potential to transform the dispute resolution landscape in the government sector. By providing a standardized, graded settlement mechanism, it offers a fair and transparent approach that fosters trust and collaboration between the government and contractors. Timely resolution of disputes will further boost investor confidence and facilitate faster project implementation, positively impacting the ease of doing business in India.

Previous Initiatives: Vivad se Vishwas I

Vivad se Vishwas II builds upon the success of its predecessor, Vivad se Vishwas I, which was launched in Union Budget 2020-21 to reduce litigation indirect tax payments. Vivad se Vishwas I provided much-needed relief to Micro, Small, and Medium Enterprises (MSMEs) during the challenging COVID-19 period.

In Conclusion

Vivad se Vishwas II marks a crucial step towards fostering an environment of trust, transparency, and efficiency in government contractual dealings. By introducing a structured settlement framework, the scheme aims to resolve long-standing disputes, attract investments, and bolster economic growth. The implementation of the scheme through the GeM platform showcases the government’s commitment to digitization and streamlining processes for the benefit of all stakeholders. With Vivad se Vishwas II, India reaffirms its commitment to providing a conducive and investor-friendly business ecosystem.

Direct Link: Vivad se Vishwas II (Contractual Disputes) Pdf