OCS Prelims-2021, GS-1: Answer Key - Download

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Voluntary Settlement Scheme

Syllabus- Government Policies and Interventions [GS Paper-2]

ContextThe Union Budget highlighted the seriousness of pendency in courts and the need for quick dispute resolution by announcing a “voluntary settlement scheme with standardised terms”.

Key Highlights 

  • The scheme was announced to amicably end commercial or contractual disputes concerning government undertakings in which arbitral awards are under challenge.
  • The announcement, which came under the head ‘Vivad se Vishwas II’, stated “to settle contractual disputes of government and government undertakings, wherein arbitral award is under challenge in a court, a voluntary settlement scheme with standardised terms will be introduced. 
  • It will be done by offering graded settlement terms depending on the pendency level of the dispute.
  • Perhaps recognising that the government is the country’s most prolific litigant, a measure is the setting up of a standard voluntary settlement scheme for government entities where an arbitral award is under challenge. 
  • Such settlements would give much needed relief to both the government entities and private organisations who would otherwise be mired in long drawn and costly litigations.
  • The announcement in the Budget comes on the basis of a Supreme Court observation that pendency concerning arbitration proceedings shows a very sorry state of affairs.


  • A Bench led by Justice M.R. Shah, in Chopra Fabricators and Manufacturers Ltd versus Bharat Pumps and Compressors Ltd, had raised the problem of how long-pending challenges to arbitral awards hurt the ease of doing business. 
  • It is also very unfortunate that even after a period of 30 years, the party in whose favour the award is passed is not in a position to enjoy the fruit of the litigation or award.
  • The court had stated that unless an arbitral award was not executed at the earliest, it would frustrate the purpose and object of the Arbitration Act as well as the Commercial Courts Act.
  • Also as per the new Commercial Courts Act, 2015 the commercial dispute is required to be decided and disposed of at the earliest and within the stipulated time provided under the Act, namely, one year.
  • Also a quick dispute resolution mechanism will go a long way in attracting foreign investors.
  • For furthering the trust-based governance, the government has introduced the Jan Vishwas Bill to amend 42 Central Acts.

 Jan Vishwas Bill 

  • The Jan Vishwas (Amendment of Provisions) Bill, 2022 promotes ease of doing business by decriminalising minor offences in 42 Acts administered by 19 ministries.
  • The Bill proposes to decriminalise many minor offences by replacing those with monetary penalties.
  • A unique feature of the proposal is a rise of 10% of the minimum amount of fine and penalty levied after the expiry of every three years once the bill becomes a law. 
  • It proposes amendments to the Acts such as
    • The Boilers Act.
    • The Aadhar Act, 2016.
    • the Legal Metrology Act, 2009, 2006.
    • Drugs and Cosmetics Act, 1940.
    • Public Debt Act, 1944. 
    • Pharmacy Act, 1948.
    • Cinematograph Act, 1952.
    • Copyright Act, 1957.
    • Patents Act, 1970.
    • Environment (Protection) Act, 1986.
    • Motor Vehicles Act, 1988.
    • Trade Marks Act, 1999.
    • Railways Act, 1989.
    • Information Technology Act, 2000.
    • Prevention of Money-laundering Act, 2002.
    • Food Safety and Standards Act, 2006.
    • Legal Metrology Act, 2009.
    • Factoring Regulation Act, 2011.
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