The Union Cabinet, Chaired by Prime Minister Narendra Modi, has approved a new two-tier mechanism to strengthen commercial dispute resolution between Central Public Sector Enterprises (CPSEs) and also between CPSEs and other government departments, through an institutionalised framework. Once implemented, these entities will not have to approach court and the matter will be resolved within three months.
The new mechanism will replace the Permanent Machinery of Arbitration (PMA). It has a two-tier system, at the first level (tier), a committee comprising of secretaries of the relevant administrative and secretary department of legal affairs will look at the dispute. At the second level (tier), in case the dispute remains unresolved, it will 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 government has said that it would reduce the number of litigations regarding commercial disputes in Court of Law and also avoid wastage of public money.
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 will 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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