3 Delhi govt depts asked to submit arbitration case data for audit

The Delhi Government has directed the Public Works Department (PWD), Water Department and Irrigation and Flood Control Department to submit detailed records of all arbitration cases involving claims over Rs 1 crore from the past 20 years. The move aims to assess financial losses sustained through legal disputes and enhance transparency in the settlement of claims involving public funds.

The departments have been instructed to provide year-wise and award-wise data, outlining the number of high-value arbitration cases, outcomes where the government lost, total payouts made, and whether legal appeals were filed prior to making payments. The audit comes in response to growing concern over repeated legal defeats in infrastructure-related disputes, which have cost the government significant sums in compensation to private contractors.

The government has also issued a strict directive that no payments shall be made in arbitration cases decided against the government unless all legal remedies have been exhausted and formal approval is obtained from the Law Department. This policy change is expected to halt premature settlements and encourage departments to pursue legal avenues more aggressively.

A key structural reform has also been introduced by the Public Works Department, which has officially removed the arbitration clause from all new contracts. Contractors will now be required to approach the courts directly in the event of a dispute, a move aimed at curbing opportunistic claims and ensuring disputes undergo stricter judicial scrutiny.

PWD Minister Parvesh Verma said, “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.”