Ministry of Power amends Dispute Resolution Mechanism for CPSUs and Statutory Bodies

The Ministry of Power (MoP) has introduced amendments to its Office Memorandum (OM) dated 29.12.2027. This OM pertains to the resolution of contractual disputes in projects implemented by Central Public Sector Undertakings (CPSUs) and Statutory Bodies under the administrative control of MoP. These amendments were introduced on 18th October, 2023 and are effective from that same date.

These changes aim to enhance the effectiveness of the Conciliation Committee of Independent Experts (CCIE) mechanism. The key modifications to the CCIE mechanism are as follows:

1. Modification of Para 6:
   • In the previous OM dated 29.12.2027, Para 6 outlined the sequence of dispute resolution steps. It mandated that parties involved in contractual disputes should first utilize the Dispute Avoidance Mechanism through Independent Engineers. If this mechanism failed, the parties could then refer the matter to the Conciliation Committee. However, the previous OM stated that once the conciliation mechanism was exercised, the option of arbitration would not be available. This clause has now been removed, allowing parties to pursue arbitration if the conciliation process proves unsuccessful. Successful conciliation proceedings will result in a binding settlement agreement under Section 73 of the Arbitration and Conciliation Act, 1996.
2. Modification of Para 9:
   • This amendment pertains to cases in which disputes are already pending before Arbitration Tribunals or Courts. Previously, parties needed to agree to explore conciliation through the CCIE only if they intended to withdraw from arbitration proceedings. The OM now stipulates that both the developer and contractor must explore conciliation possibilities through the CCIE. If an agreement is reached, a reference will be made to the Conciliation Committee. The Committee will proceed to examine such references, and if the conciliation process is successful, the parties will sign a written settlement agreement, which will be binding. The amended clause now allows parties to resume arbitration proceedings or take recourse to other legal remedies in the event that conciliation proves unsuccessful.