Delhi govt to review 20 years of arbitration cases exceeding Rs 1 crore
This comprehensive audit aims to assess the extent of financial losses arising from legal disputes and bring transparency to how public funds were spent or lost in the last two decades, said officials.
This comes a day after Chief Minister Rekha Gupta directed the Anti-Corruption Branch (ACB) to probe irreugularities in the construction of the Barapullah Phase III corridor and the arbitration case that arose due to delays.
Accusing the then AAP government of corruption, Gupta had highlighted that the project, scheduled for completion in October 2017, was repeatedly delayed and eventually ran into arbitration. 'The ruling favoured the contractor with an award of Rs 120 crore. When the payment was withheld, the company approached the High Court, which, in May 2023, ordered the PWD to pay Rs 175 crore, including interest and GST. The sum was subsequently paid during the tenure of then-PWD Minister Atishi,' read a statement from the CM's Office (CMO) issued on Monday.
The three departments, which manage roads and drains, have been asked to provide year-wise and award-wise data — including the total number of arbitration cases exceeding Rs 1 crore; cases decided against the government, along with brief descriptions; the amount paid or losses incurred in such cases; and the number of appeals filed before making payments.
'This audit comes amid mounting concerns over repeated legal setbacks in infrastructure and civil works, many of which have resulted in heavy payouts to private contractors,' said officials.
Earlier, PWD Minister Parvesh Sahib Singh had announced the removal of arbitration clauses from the department's new contract conditions. This means that any future disputes between the department and contractor will be settled exclusively in court.
'Public funds must be treated as sacred. For years, departments have settled claims through arbitration without exhausting legal options — this won't continue. We are auditing two decades of arbitration history to identify who was responsible and why legal battles were surrendered. Importantly, I have now removed the arbitration clause from PWD contracts. If there's a dispute, let it go to court. No easy money through arbitration anymore,' Singh said.
Officials said that this strategic shift is expected to act as a strong deterrent to frivolous claims and force all stakeholders — government and contractors alike — to approach project disputes with more seriousness and legal preparedness.
'With this 20-year review, the Delhi government aims to establish structural reforms in contract enforcement and legal strategy — preventing future financial haemorrhage and reinforcing public trust in governance,' said officials.
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