Revised Process For Resolving Contractual Disputes In Power Ministry Projects

Representational image. Credit: Canva

The Ministry of Power has introduced some important changes to the process of resolving contractual disputes in projects overseen by CPSUs (Central Public Sector Undertakings) and Statutory Bodies under the Ministry’s administrative control. These changes come in the form of a corrigendum to an earlier official memorandum issued on 29th December 2027.


One of the main adjustments involves the formation of a Conciliation Committee of independent Experts (CCIE) to handle these disputes. Here are the key modifications:


Dispute Avoidance Mechanism: In the case of a dispute arising during contract execution, the parties involved are expected to first attempt resolution through a Dispute Avoidance Mechanism. This typically involves an independent engineer. If this initial step doesn’t lead to a resolution, the parties can then take the matter to the Conciliation Committee.


Conciliation Process: The conciliation process will now fall under Part III of the Arbitration and Conciliation Act, 1996. The Conciliation Committee will work to mediate and settle the dispute between the parties. If successful, a written settlement agreement will be signed, and it will be binding on the parties, following the rules of the Arbitration and Conciliation Act.

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Option for Arbitration: If the conciliation process fails to resolve the dispute at the Conciliation Committee level, the parties can then withdraw from conciliation and initiate arbitration proceedings or follow the legal process through courts.

Disputes Pending in Arbitration or Courts: In cases where disputes are already before arbitration tribunals or the courts, both the developer and contractor must agree to explore conciliation through the Conciliation Committee of independent Experts. If both parties agree to this, the Committee will take up the case, and a successful conciliation will lead to a binding settlement agreement. However, if conciliation is unsuccessful, parties can still resume arbitration proceedings or pursue other legal remedies.

These changes will be effective immediately, and they have been put in place to streamline and improve the resolution of contractual disputes in power ministry projects. The goal is to provide an efficient mechanism for addressing issues and avoiding prolonged legal battles.

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