The finance ministry on February 8 came out with a draft scheme for settlement of pending disputes related to government contracts. Under the Vivad se Vishwas II (Contractual Disputes) scheme, contractors would be offered settlement amounts depending on the status of a dispute.

In cases of disputes where court or arbitral order have been passed, the settlement amount would be 80 per cent or 60 per cent of the amount awarded by the court or the arbitral tribunal.

In respect of  cases with  ongoing litigation for disputes arising out of contracts in which physical activity has been stopped or contracts terminated, the settlement amount would be 30 percent of the net claim amount. For ongoing litigation where physical activity in the disputed contract is ongoing, the settlement amount would be 20 percent of the net claim amount -- claims by the contractors minus counter-claim by the procuring entity. In cases where the total claim amount exceeds Rs 500 crore, the procuring entities will have an option not to accept the settlement request of the contractor, as per the draft scheme.

However, the reason would have to be recorded in the file by the procuring entities and has to be approved by the secretary of the concerned ministry/department or the CEO in case of a public sector enterprise.

"The scheme shall apply only for cases involving domestic arbitration and cases under international arbitration are not eligible to be settled under this scheme," the finance ministry said. The scheme will be implemented through the Government eMarketplace (GeM), which shall provide an online functionality for the same. Stakeholders, including government departments, organisations, contractors and public can submit their suggestions on the draft scheme by March 8.

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