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Cabinet approves mechanism to resolve inter-CPSE disputes

BY TIOL News Service

NEW DELHI, MAY 16, 2018: THE Union Cabinet today approved recommendations given by the Committee of Secretaries, to strengthen the existing mechanism for resolution of commercial disputes involving Central Public Sector Enterprises (CPSEs) as well as involving other departments and organizations within the Government. Such approval would lead to the putting in place of an institutionalized mechanism within the Government for speedy resolution of commercial disputes of CPSEs without the matter being referred to the Courts of law.

The measures include putting in place a two-tier mechanism, replacing the existing Permanent Machinery of Arbitration (PMA) mechanism to resolve commercial disputes (excluding disputes concerning the Railways, Income Tax, Custom & Excise Departments) between CPSEs inter se and CPSEs and Government Departments & Organizations, outside the Courts of law. At the First level (tier), such commercial disputes would be referred to a Committee comprising of Secretaries of the administrative Ministries or Departments to which the disputing CPSEs or Parties belong and Secretary-Deptt. of Legal Affairs. The Financial Advisors (FAs) of the two concerned administrative Ministries or Departments would represent the issues related to the dispute in question before the above Committee. In case the two disputing parties belong to the same Ministry or Department, the Committee would comprise Secretary of the administrative Ministry or Department concerned, Secretary-D/o Legal Affairs and Secretary-Department of Public Enterprises. In such a case, the matter may be represented before the Committee by the FA and one Joint Secretary of that Ministry/Department.

Further, in case of a dispute between CPSE and State Government's Department or Organization, the Committee would be comprised the Secretary of the Ministry/Department of the Union to which the CPSE belongs and Secretary-D/o Legal Affairs and a senior officer nominated by the Chief Secretary of the State concerned. In such a case, the matter may be represented before the Committee by concerned Principal Secretary of the State Government's Department or Organization.

Besides, at the Second level (tier), in case the dispute remains unresolved, even after consideration by the above Committee, the same would be referred to the Cabinet Secretary, whose decision will be final and binding on all concerned. For the prompt disposal of disputes, a time schedule of 3 months at the first level has been prescribed. The Department of Public Enterprises (DPE) will issue guidelines immediately to all CPSEs through their administrative Ministries/Departments and State Governments & UTs for compliance. The new mechanism would promote equity through mutual/collective efforts to resolve commercial disputes thereby reducing the number of litigations regarding commercial disputes in Court of Law and also avoid wastage of public money.


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