The Finance Ministry on Monday said the scheme to settle pending disputes related to government contracts under the 'Vivad Se Vishwas II' will commence on July 15 and contractors will have time till October 31 to submit their claims.

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The Vivad se Vishwas II (Contractual Disputes) scheme was announced in 2023-24 Budget for settlement of pending disputes related to government contracts. Under the scheme, contractors would be offered settlement amounts depending on the status of a dispute.

As per the scheme announced by the Department of Expenditure, in cases of disputes where court or arbitral order has been passed, the settlement amount would be 85 percent or 65 percent of the amount awarded by the court or the arbitral tribunal respectively.

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In the draft scheme, the Expenditure Department had proposed that the settlement amount would be 80 percent in case of court orders and 60 percent in case of arbitral awards.

The expenditure department has improved the final scheme after receiving feedback from stakeholders. The scheme would commence from July 15, 2023, and claims can be submitted by October 31, 2023, said an Office memorandum of the DoE.

Apart from Ministries and Government departments, the scheme would apply to autonomous bodies, public sector banks and enterprises and all organisations, like metro rail corporations, where the Government of India has a 50 percent stake.

The scheme would cover cases where the court order has been passed till April 30, 2023, and arbitral award by January 30, 2023.

"The scheme shall be applicable to all kinds of procurement, including procurement of goods, services and works. The scheme is also applicable to all 'earning contracts' (i.e. contracts where government receives money in exchange for goods, services, rights, etc) as well as contracts under Public Private Partnership (PPP) arrangements," it said.

Under the scheme, it would be mandatory for Government departments to accept the settlement where the claim amount is Rs 500 crore or less.

In case the claim amount by the contractor exceeds Rs 500 crore, the procuring entities will have an option not to accept the settlement request.

The Vivad Se Vishwas II (Contractual Disputes) scheme is aimed at clearing the backlog of litigation, freeing lock-up funds, and improving the ease of doing business.

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