India is a developing country with mixed economy where both individuals and the government can establish organization in commercial nature. There are many organizations which perform activities which are profit-oriented. No corporation wants to be involved in commercial dispute. Commercial conflicts may occur from a range of aspects, from breaches of contracts, breaches of intellectual property, or any number of other circumstances that contribute in the business customers and concerned parties having the opportunity for legal action. It is a common occurrence for many organisations to experience a wide variety of occurrences that can give rise to a commercial dispute. These kinds of disputes are inevitable in various departments of the governments also. This article discusses the laws that are present in the Indian legal system that provide a platform for intra-governmental issues to be addressed and method of resolving these issues.
Until 2018, intra-governmental organizations relied on the courts to resolve their issues. Later on, the government introduced a separate mechanism known as Administrative Mechanism for Resolution of CPSES Disputes (AMRCD) which settles the disputes between the parties. The prevailing Permanent Machinery of Arbitration (PMA) framework for resolving commercial disputes (with the exception of matters involving Railways, Income Tax, Customs & Excise Departments) between CPSEs inter se and CPSEs and Government Departments/Organizations, outside the Courts of Law, will be implemented by a new two-tier framework.
Such trade disputes shall be referred at the first level (tier) to a committee consisting of the representatives of the administrative ministries/departments to which the refuting CPSEs/parties correspond and the secretary-dept of Legal Affairs. The financial advisors (FAs) of the two administrative ministries/departments concerned shall present before the above-mentioned committee the problems related to the conflict in question. The Committee shall consist of the Secretary of the Administrative Ministry/Department concerned, the Secretary-General for Legal Affairs and the Secretary-General for Public Enterprises, if the two parties to the conflict adhere to the same Ministry/Department. In such a situation, the matter will be addressed by the FA and one joint secretary of that ministry/department before the Committee.
Furthermore, in the event of a conflict between the CPSE and the Department/Organization of the State Government, the Committee shall consist of the Secretary of the Ministry/Department of the Union to which the CPSE relates and the Secretary-General for Legal Affairs and the Senior Officer named by the Chief Secretary of the State concerned. In such a situation, the issue may be addressed before the Committee by the appropriate Principal Secretary of the Department/Organization of the State Government.
If the conflict remains unresolved at the second level (tier), even after examination by the Committee referred to above, the same shall be referred to the Cabinet Secretary, whose decision shall be final and binding on all involved. A timeline of 3 months at the first stage has been recommended for the effective dismissal of conflicts. The Department of Public Enterprises (DPE) will instantly provide compliance guidelines to all CPSEs through their administrative ministries/departments and state governments/UTs.
Through joint efforts to settle commercial disputes, the new structure would encourage justice, thus reducing the amount of commercial dispute litigation cases in the Court of Law and thus preventing waste of public funds.
On Wednesday, the Union Cabinet approved a mechanism to improve, through an institutionalised structure, the settlement of commercial disputes between central public sector enterprises (CPSEs). 'A new two-tier system for resolving trade dispute (excluding rail, I-T, customs and excise disputes) between inter-sector CPSEs and CPSEs and government departments, outside the courts of law, would be defined by the current permanent arbitration mechanism (PMA) mechanism,' the cabinet said.
Such commercial disputes shall, at the first stage, be assigned to a committee consisting of representatives of the ministries or departments to which the disputants belong, together with the secretary of the Legal Affairs. 'The financial advisors (FAs) of the two administrative ministries/departments concerned shall address the issues relating to the conflict at problem to the Committee referred to above the government stated. The Committee shall consist of the Secretary of the Administrative Ministry/Department concerned, the Secretary-General for Legal Affairs and the Secretary-General for Public Enterprises, if the two parties to the dispute belong to the same Ministry/Department.'
The pending cases in the court that are related to this system will be transferred to the related departments and will be dealt as per the regulations that are laid in the new mechanism and the parties are to be bound by the decision of the Sole Arbitrator. The parties will no longer be able to seek redressal from the court.
National Corporative development Corporation versus Commissioner of Income-tax Delhi-5.
National Co-operative Development Corporation, was introduced under the National Cooperative Development Corporation Act, 1962 which substantiates for the integration and management of a Corporation for the intention of planning and encouraging programmes for the manufacture, processing, marketing, storage, export and import of agricultural produce, crops, industrial goods, livestock, certain other merchandises and services on cooperative principles and for issues connected therewith or related thereto. Section 9 of the NCDC Act, which involves the advancement of loans or the granting of subsidies to State Governments for the funding of cooperative societies; the granting of loans and grants explicitly to cooperative societies at national scale and even to cooperative societies at national level; cooperative societies at the state level, the latter on the State Governments guarantee . The Corporation financing mechanism is laid down Out of the NCDC Act in Section 12 by way of grants and loans earned from the Union Government. Section 13 provides that the NCDC could grant loans and grants to various parties in order to help with their activities. The issue that arose between the parties was whether the interest collected by NCDC could be considered as ‘business income’ and whether that income is taxable.
In the abovementioned case, the Supreme Court stated that the Indian judicial system was reeling under docket explosion and the government has to take some action against it. It also suggested a separate framework for settlement of disputes that arise between various government organizations which would be useful in reducing the burden on the judiciary system of the nation. The court also suggest to appoint senior judges in a committee in order to have a better understanding of the issue. The court also stated the 126th aw Commission of India Report which discussed the importance of reducing the weightage on the judicial system of India and strengthening it by implementing alternative methods of settling disputes. The importance of time was debated and the dire need of dispensing faster and just verdicts was discussed. The implementation of mediation in the settlement of intra-government disputes was considered a better option rather than settling them in courts in order to make things easier and also maintain transparency among the parties.
In the final analysis, it is clear that the India is need of new laws that enable in dispensing speedy justice to everyone. The setting up of a separate forum to address intra government disputes is very helpful in sorting out the conflicts between the parties and have a peaceful solution of the dispute in a short period of time. This framework enables the parties to resolve their issues peacefully without having to incur major costs of the court. Moreover, the disputants find this method of resolution more comfortable in conveying their opinions to the panel since the setting of the settlement is less formal and ensures the privacy of the parties concerned. The legal system of India should research on this area even more to provide better suggestions in mediating the disputed partied. The government of India needs to look into the matter and provide platforms for legal analysts to debate on the methods of improving the quality of dispute resolution wherein it becomes to address the commercial issues that arise among various departments of the government.