Delhi Govt Audits 20 Years of Costly Arbitration Cases to Enforce Fiscal Discipline

In a move to enforce fiscal discipline and legal accountability, the Delhi government has directed several key departments to submit detailed records of all arbitration cases involving claims above Rs 1 crore from the last 20 years. The audit, initiated on the direction of the Public Works Department (PWD) minister, 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 past two decades.

The departments have been instructed to provide year-wise and award-wise data covering 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, and the number of appeals filed before making payments. This comes amid concerns over repeated legal setbacks in infrastructure and civil works, many of which resulted in heavy payouts to private contractors.

Moreover, the government has also issued a binding directive that no payments shall be made in arbitration cases where the award is against it, unless all legal remedies have been exhausted and formal clearance is obtained from the law department. A major reform has also come from the PWD, where the arbitration clause has now been officially removed from all new contracts. Contractors will henceforth have to directly approach the courts in the event of disputes, making the process more rigorous and reducing the scope for opportunistic claims.