Delhi govt sets up panel to assess losses from arbitration awards over two decades

The panel’s mandate is to collect details of arbitration cases decided against the government, assess the payments made, and evaluate the financial losses incurred

Delhi chief minister Rekha Gupta has set up a high-level committee to review all arbitration awards of ₹1 crore and above passed by the public works department (PWD) and the irrigation & flood control (I&FC) department over the last 20 years, the chief minister’s office (CMO) said on Wednesday.

Chief minister Rekha Gupta (above) said the review seeks to measure the extent of losses from legal disputes and to ensure transparency regarding the use of public funds over the past two decades. (HT Photo)

The panel will be chaired by the additional chief secretary (ACS) and will include the Comptroller and Auditor General (CAG) as member, Gupta said. Its mandate is to collect details of arbitration cases decided against the government, assess the payments made, and evaluate the financial losses incurred.

“Arbitration awards have repeatedly imposed heavy economic losses on the government. The committee will compile year-wise and award-wise data, including the number of arbitration matters, the share of cases decided against the government, and the payments made. It will also evaluate the financial burden caused by these decisions. The directorate of audit will deploy additional audit teams based on the complexity or volume of cases, as recommended by the committee,” the CM said.

Gupta added that the review seeks to measure the extent of losses from legal disputes and to ensure transparency regarding the use of public funds over the past two decades.

Gupta said the government has asked the Anti-Corruption Branch to investigate alleged irregularities and delays in the construction of the Barapullah Phase-3 Corridor, a project originally due for completion in October 2017 but repeatedly stalled and eventually taken to arbitration. An award of ₹120 crore was passed in favour of the contractor. When the payment was withheld, the contractor moved the high court, which in May 2023 ordered the PWD to pay ₹175 crore, officials from the CMO said.

Gupta said several such cases had come to light during the previous government’s tenure, prompting her administration to form the review panel. “To prevent similar financial irregularities in future development projects, the government has also decided to remove arbitration clauses from contract terms. Any disputes between departments and contractors will now be resolved exclusively through the courts,” she said.