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HomeLawVivad se Vishwas II (contractual disputes): Is cure better than prevention?

Vivad se Vishwas II (contractual disputes): Is cure better than prevention?

Contractors can submit their claim through Government e-Marketplace (GeM). The process will thereafter proceed in the following manner:

Step 1 – The contractor, on the portal, will have to list out the eligible disputes that it wants to settle.

Step 2 – The procuring entity shall verify the claim amounts and evaluate the settlement amount under the scheme and offer the same to the contractor within two weeks of receipt of the claim.

Step 3 – The contractor shall have strict limit of 30 days to accept the offer made by the procuring entity and the time limit cannot be changed. The procuring entity may amend or withdraw the offer before the same is accepted by the contractor. Once the offer is accepted by the contractor, both parties shall receive an automatically generated acknowledgement email from the portal.

Step 4 – The contractor, after accepting the offer, will have 45 days (or longer if permitted by the procuring entity) from the date of the acknowledgment email to file an application for withdrawal of the case before the court. Once the contractor uploads proof of withdrawal being permitted by the court, if applicable, then a settlement agreement as prescribed under the scheme would be signed between the parties and amounts would be paid to the contractor. The Scheme provides that a settlement agreement shall have the same effect as a settlement agreement signed after conciliation under the Arbitration Act. However, with the introduction of The Mediation Act, 2023, this would mean a mediated settlement agreement under The Mediation Act.

In case the procuring entity has to withdraw the case, it may file an application for withdrawal within 45 days and execute the settlement agreement within 30 days thereafter without waiting for formal permission from the court. The settlement amount shall be paid by the contractor/procuring entity within 30 days of the execution of the settlement agreement. The stamp duty payable on the settlement agreement will always be paid by the contractor. This provision may appear to be onerous, however considering that the process ensures speedy recovery of amounts, such payment is a reasonable bargain.

Step 5 Should the contractor not accept the offer, the ongoing litigation shall continue between the parties. The scheme provides that any reduction of the claim amount by the parties during the settlement process will not be quoted in any future litigation, making the whole process without prejudice.

Source: Barandbench

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