Vivad Se Vishwas-2 Scheme

In News

• The Ministry of Finance has circulated the draft scheme for a one-time settlement of contractual disputes in which an arbitral award is under challenge called Vivad se Vishwas 2.
  • Arbitration is a mechanism to resolve disputes between parties without having to initiate a case in court.

Need

• To settle long-pending litigation in cases where an arbitration order has been challenged in any Indian court.
  • The Union government is aiming to resolve about 500 cases, involving an estimated Rs 1 trillion of funds.
  • Government held entities such as Oil and Natural Gas Corporation (ONGC) and National Highways Authority of India (NHAI) have many disputes with private contractors.
• Such cases are not only holding back fresh investment but are also reducing the ease of doing business with the government.

Vivad Se Vishwas Scheme-2

• Aim: To promote ease of doing business and will cover disputes up to 30 September 2022.
• On whom Scheme will apply: The Scheme will apply to disputes where one of the parties is either the Government of India or its bodies like public sector banks, public sector financial institutions, central public sector enterprises, Union territories, National Capital Territory of Delhi. 
  • It will also cover all organisations where the central government has a shareholding of 50% like Metro Corporation. 
  • Disputes, where claims are raised against procuring entities along with some other party like the State Government or private party will not be eligible under the scheme. 
  • Central Public Sector Enterprises (CPSEs) are proposed to be eligible to submit their claims under the scheme.
• Disputes covered: The Scheme is proposed to cover only domestic arbitration and not international arbitration.
  • Settlement of disputed tax, disputed interests, disputed penalty or disputed fees in relation to an assessment or reassessment order on payment of 100% of the disputed tax and 25% of the disputed penalty or interest or fee.
• Opting out of the scheme: Bodies can opt out of the Scheme at their discretion with approval of the Board of Directors.
• Implementation: The scheme will be implemented through Government e-Marketplace (GeM), which shall provide an online functionality for the same.
•  Significance: The scheme will boost developer and investor confidence, and will free up financial resources locked in disputes.

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