Vivad se Vishwas-II: Govt aims to settle 500 cases involving about Rs 1 trn

The Budget has proposed the Vivad se Vishwas-2 scheme to settle long-pending litigation in cases where an arbitration order has been challenged in any Indian court

The Central government is aiming to resolve about 500 cases, involving an estimated Rs 1 trillion, under the new voluntary settlement scheme, which has been proposed to bring an end to its contractual disputes with private parties, according to officials.

The Budget this year has proposed the Vivad se Vishwas-2 scheme to settle long-pending litigation in cases where an arbitration order has been challenged in any Indian court.
 

Government-held entities such as Oil and Natural Gas Corporation (ONGC) and National Highways Authority of India (NHAI) have many disputes with private contractors.
 

“The government will be soon putting out a draft scheme, seeking comments from all stakeholders. After getting the relevant feedback and comments, the final terms of the settlement scheme will be introduced,” a senior government official told Business Standard.
 

According to him, an initial estimate shows in about 500 cases the arbitration award has been contested in court. The locked value in these cases is significant, he said. The settlement scheme intends to offer resolution and reduce litigation, he added.
 

“The terms of the scheme might put a minimum threshold of the disputed amount for taking it,” another official privy to the plan said.
 

The claims raised by private contractors in disputes in highway projects undertaken by the NHAI were estimated at around Rs 88,000 crore and the NHAI’s counterclaims are worth about Rs 39,221 crore, according to a parliamentary standing committee report released in March last year.
 

ONGC’s claims on contractors as regards its own operations stood at about Rs 17,000 crore, according to the oil firm’s Annual Report last year.
 

As for those related to its joint operations, the claims stood at Rs 1,069 crore.
 

“Two major advantages of the current scheme are (a) boosting developer and investor confidence and (b) freeing up financial resources locked in disputes. However, over the medium term, the infra sector particularly needs a framework for contract renegotiations that can minimise disputes,” said Arindam Guha, leader (government and public services), Deloitte India.
 

The scheme is likely to offer a settlement mechanism by which the government entity and the private one can settle the matter by signing standardised terms. This will be done by offering graded settlement terms, depending on the pendency level of the dispute, one of the officials cited above said.
 

Typically, such contracts state both parties have agreed to withdraw all court cases pertaining to the contract.
 

Notably, each contract has a clause that enables both parties to move to an arbitrator in the case of disputes, which are usually monetary in nature.
 

Arbitration is a mechanism to resolve disputes between parties without having to initiate a case in court.
 

An arbitrator (mediator) is appointed to adjudicate the dispute and the judgment is legally enforceable.
 

In 2020, the government announced the first version of Vivad se Vishwas to reduce legal disputes related to income tax.
 

Around 150,000 cases were resolved with the recovery of about 54 per cent of the amount under litigation. The scheme started on March 17, 2020, and closed on March 31, 2021.