Maytas Subhash vs Ircon International Limited & Anr.

$~16
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
% Date of Decision: November 5 , 2026
# CNR No. DLHC010507912026
+ W.P.(C) 15607/2024
MAYTAS SUBHASH .....Petitioner
Through: Mr. Kirtiman Singh, Sr. Adv.
with Mr. Siddhant Jaiswal &
Mr. Ritwik, Adv.
versus
IRCON INTERNATIONAL LIMITED
& ANR. .....Respondents
Through: Mr. Abhay Kr. Tayal, Adv. for
R-2/NOIDA.
Counsel through VC,
appearance not given for R-1.
CORAM:
HON'BLE MR. JUSTICE AMIT MAHAJAN
AMIT MAHAJAN, J. (Oral)
1. By the present petition, the petitioner essentially seeks issuance
of a direction to Respondent No. 1 to settle the claim of the petitioner
in accordance with the Vivad se Vishwas II (Contractual Disputes)
Scheme dated 29.05.2023 in respect of the arbitral award dated
06.06.2016.
2. Briefly stated, a tender was floated by Respondent No. 1 on
behalf of Noida/Respondent No. 2 for construction of all road works
for the expressway between Noida and Greater Noida (excluding the
Asphalt works package from KM 15+000 to 17+500). The contract
was awarded to the petitioner pursuant to the letter of acceptance
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

dated 11.01.2001. Further, on 31.05.2001, an agreement was executed
between the petitioner and Respondent No. 1 on behalf of Respondent
No. 2 for the said construction.
3. Thereafter, disputes arose between the parties and Respondent
No. 2 vide office order dated 03.05.2013 appointed the Sole
Arbitrator. Thereafter, by award dated 06.06.2016, the learned
Arbitrator directed Respondent No. 1 to pay a sum of ₹9,44,09,629/-
to the petitioner with interest @12% per annum from the date of
award until the date of payment. All counterclaims of Respondent No.
1 were rejected. The respondents challenged the award under Section
34 of the Arbitration and Conciliation Act, 1996 before the Competent
Court at Gautam Budh Nagar, Uttar Pradesh. The said challenge under
Section 34 of the Arbitration and Conciliation Act, 1996 was however
returned by the Court for lack of jurisdiction.
4. The petitioner, on the other hand, instituted execution
proceedings before this Court vide OMP (ENF) COMM 37/2021 and
this Court vide order dated 12.05.2021 directed Respondent No. 1 to
deposit a sum of ₹15,37,55,780/- with the Registrar General of this
Court. The said amount was duly deposited.
5. By order dated 07.08.2024, this Court permitted the release of
the deposited amount to the petitioner subject to the petitioner
furnishing an irrevocable and unconditional bank guarantee for the
amount deposited. Since the petitioner failed to provide the security,
vide order dated 24.10.2024, the execution proceedings were closed
with liberty to the petitioner to revive the same after the petition under
Section 34 of the Arbitration and Conciliation Act, 1996 was decided.
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

6. In the meantime, the Ministry of Finance issued an Office
Memorandum dated 29.05.2023 introducing the Vivad se Vishwas II
(Contractual Disputes) Scheme as a one-time settlement mechanism
for pending contractual disputes. The Petitioner, on 27.10.2023,
uploaded its claim for settlement at ₹8,21,15,653.75, that is, 65% of
the net amount payable under the award. The record reflects that
Respondent No. 1, vide multiple communications addressed to
Respondent No. 2, acknowledged its obligation to accept the claim,
however, vide, communication dated 23.08.2024, Respondent No. 1
rejected the claim of the petitioner observing the following :
“ You will appreciate that the VSV-II Scheme is applicable to a
central government entity and under Para 22 of the OM No.
F.1/7/2022-PPD Dated 29.05.2023 (VSV-II Scheme), fund for the
settlement of disputes was to be provided by the Public Authority,
in your case Noida Authority. Although the Scheme has authorized
the Procuring Entity (in your case IRCON) to accept the settlement
proposal of a contractor, but since the Noida Authority is an entity
of state government, we cannot proceed to accept your proposal
until and unless the Noida Authority accords its permission to
settle your dispute under the Scheme .”
7. Aggrieved by the same, the petitioner has preferred the present
petition.
8. The learned Senior counsel for the petitioner submits that the
Scheme is applicable to all Central Public Sector Enterprises as
“procuring entities” and Respondent No. 1 being a procuring entity
was liable to accept the claim of the petitioner. He submits that all the
requisite criteria stipulated under the Scheme are met by the
petitioner. He submits that in accordance with paragraph 18 of the
scheme, in all cases where the claim amount is less than ₹500 crores,
the procuring entity is liable to accept the claim if the claim is
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

otherwise in compliance with the guidelines.
9. He submits that in terms of paragraph 22 of the Scheme, only
the procuring authority is competent to accept the settlement where a
public authority used a procuring entity to make procurement on its
behalf. He submits that paragraph 22 of the Scheme does not
otherwise vest any veto on the public authority to not accept the
settlement.
10. He submits that the reason given by Respondent No. 1 to reject
the petitioner’s claim is erroneous since the scheme does not
contemplate that only when the procuring entity as well as the public
authority are central government organisations would the scheme be
applicable. He submits that paragraph 4 of the Scheme only looks at
whether the procuring entity is covered or not and paragraph 22 of the
scheme employs the phrase “public authority” without limiting it to
Central Bodies. He consequently submits that Respondent No. 1 was
bound to accept the petitioner’s claim.
11. On the other hand, the learned counsel for Respondent No. 1
submits that in terms of Clause 22 of the Scheme, the fund for
settlement of the disputes is to be provided by Respondent No. 2 being
the Public Authority and in the absence of permission by Respondent
No.2, Respondent No.1 cannot proceed to accept the proposal.
12. In this regard, the learned counsel for Respondent No. 2
submits that as per paragraph 4, the scheme applies strictly to
contractual disputes where one of the parties is the Government of
India, its ministries/Departments, autonomous bodies of the
government of India, Public Sector Banks, Central Public Sector
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

Enterprises, or Union Territories without legislature. He submits that
Respondent No. 2 is an instrumentality of State Government of Uttar
Pradesh, and not the Central Government. It is argued that since the
Noida authority is admittedly an organisation under the State of Uttar
Pradesh, the Central Scheme is fundamentally inapplicable. He
submits that even otherwise, the arbitral award has been challenged
under Section 34 of the Arbitration and Conciliation Act, 1996 and the
same is pending consideration before the Hon’ble High Court of
Allahabad. He consequently submits that no relief can be granted to
the petitioner.
13. Having taken note of the rival contentions of the parties and
minutely traversed the record, this Court is of the opinion that the
stance taken by the respondents cannot be countenanced. Before this
Court adverts to pen down its reasons, it is firstly expedient to
understand the rationale behind the scheme and sift the relevant
provisions of the Scheme.
14. Firstly, it bears relevance to note that the Vivad se Vishwas II
(Contractual Disputes) Scheme was introduced as a one-time
settlement scheme to effectively settle pending disputes. While the
scheme was introduced, it was noted that statistically, in cases where
the arbitration award was challenged, a large majority of those were
decided in the favour of the contractor. It was noted that in such cases,
the amount became payable with interest at a rate far higher than the
government’s cost of funds. Consequently, considering the financial
losses that the challenge to the award entailed, the scheme was
introduced as a one-time settlement measure to settle the disputes
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

involving government undertakings and other organizations to clear
that backlog of pending litigations arising out of the said disputes
provided that the claimant is prepared to accept an amount lesser than
the amount awarded in terms of the scheme.
15. In that respect, paragraph 4 of the Scheme expressly provides
that the scheme would be applicable to contractual disputes where one
of the parties is either the Government of India and/or certain other
authorities. Paragraph 4 reads as under:
a) to all Autonomous Bodies of the Government of India;
b) to public sector banks and public sector financial institutions;
c) to all Central Public Sector Enterprises;
d) to Union Territories without legislature and all agencies/
undertakings thereof; and
e) to all organisations, like Metro Rail Corporations, where
Government of India has shareholding of 50% ;however, these
organisations can opt out of the scheme at their discretion, with
approval of the Board of Directors.
The above mentioned organisations shall hereinafter be referred to
as “procuring entities.” The other party in dispute with the
procuring entity shall be referred to as contractor(s) hereinafter.
16. In the present case, Respondent No. 1 undisputedly falls within
the category of Central Public Sector Enterprise and is a procuring
entity.
17. Paragraph 7 of the Scheme further enumerates that the Scheme
would be applicable only to those contractors who wish to participate
in the scheme. The petitioner being a contractor, and opting to
participate in the scheme, the Scheme would be applicable to the
petitioner.
18. The eligibility condition is further stipulated under Clause 10(b)
of the Scheme which provides as follows:
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

19. In the present case, the arbitral award was passed on 06.06.2016
which is prior to the cut-off date prescribed as 31.01.2023. As
specified in paragraph 5 of the Scheme, the award is only for
monetary value. Further, as designated in paragraph 8 of the Scheme,
the case is one of domestic arbitration. In that regard, paragraphs 5
and 8 of the scheme stipulate as under:
“5. Disputes where the award by court/ Arbitral Tribunal (AT) is
only for monetary value will be eligible for settlement under this
scheme. In case the award stipulates specific performance of
contract (either fully or partially); such awards will not be eligible
for settlement through this scheme.
xxx
8. The scheme shall apply only for cases involving domestic
arbitration and cases under international arbitration are not
eligible to be settled under this scheme.”
20. Consequently, considering the willingness expressed by the
petitioner, the scheme is applicable on the petitioner as a contractor.
21. Much emphasis has been laid by the respondents to contend that
no relief can be granted to the petitioner considering that the scheme is
inapplicable on Respondent No. 2. It has been emphasised that the
scheme is central in nature, and Respondent No. 2 being an
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

instrumentality of State Government of Uttar Pradesh, and not the
Central Government, the scheme is inapplicable on Respondent No.2.
It has further been emphasised by Respondent No. 1 that in the
absence of permission by Respondent No.2, Respondent No.1 cannot
proceed to accept the proposal. The principal controversy that thus
persists revolves around the interpretation and applicability of the
Scheme on Respondent No. 2.
22. In that regard, reference may be had to Paragraph 22 of the
Scheme which provides as follows:
“22. It may be possible that a Public Authority may have used a
procuring entity to make procurement on their behalf. For
example, a University (public authority in this case) gets a project
executed through Central Public Works Department (procuring
entity in this case). In such a case:
i. The procuring entity shall be the competent authority to accept
the settlement under the scheme including the cases where the
award amount is more than Rs. 500 cr (refer paras 18 to 20 above)
ii. Budget for meeting the settlement agreement shall be provided
by the public authority which got the project executed through
procuring entity.
iii. The public authority and the procuring entity may also be the
same in some cases.”
23. Firstly, insofar as the contention of Respondent No. 1 that in the
dearth of consent from Respondent No.2, Respondent No. 1 cannot
proceed to accept the proposal is concerned, the same, in the opinion
of this Court stems from a fundamental misreading of paragraph 22 of
the Scheme. A plain reading of the paragraph 22 (i) of the Scheme as
quoted supra, reveals that the procuring entity shall be the competent
authority to accept the settlement under the Scheme. The language
employed in the paragraph is mandatory and the same does not
contemplate the procuring authority sharing its decision-making
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

power with the public authority. The mandatory language thus
employed in paragraph 22(i) leaves no room for doubt that the
procuring entity would be the competent authority to accept
settlement, and it cannot abdicate the obligation entrusted to it under
paragraph 22(i) by referring the ultimate decision to Respondent No.
2. Paragraph 18 of the Scheme further provides that in cases where the
claim amount is ₹500 crore or less, procuring entities will have to
accept the claim. In the present case thus, the claim being below ₹500
crore, Respondent No. 1 as a procuring entity was bound to accept the
claim, and no consent as sought by Respondent No. 1 was mandated.
24. Secondly , a plain reading of paragraph 22 reveals that the
government, while formulating the scheme, consciously recognised
that the procurement undertaken by the government or a public
authority need not invariably be undertaken directly by that authority.
However, in such case where the procurement is undertaken by a
procuring authority on behalf of the public authority, then in
accordance with paragraph 22(ii) of the Scheme, the budget for
meeting the settlement agreement shall be provided by the public
authority. Here again, the use of the term “ shall ” assumes heightened
significance. In the present case as well, Respondent No. 2 being the
authority on whose behalf the procurement was made by Respondent
No.1, Respondent No. 2 being the public authority was bound to
provide the budget for the settlement.
25. Insofar as the contention of Respondent No. 2 that it was an
instrumentality of State Government of Uttar Pradesh, and not the
Central Government, and consequently the scheme is inapplicable on
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

Respondent No.2 is concerned, the same, in the opinion of this Court,
holds no water. As is apparent, paragraph 4 of the scheme identifies
the organisations which fall within the category of “procuring entities”
for the purposes of the scheme which includes Central Public Sector
Enterprises. The scheme making authority has thus identified the class
of organisations whose contractual disputes are brought within the
scheme. Paragraph 22, on the other hand, does not make a
qualification as to who the public authority may be. The terminology
of paragraph 22 of the Scheme does not restrict the expression “public
authority” to a Central Government department or a Central
Government organisation. Had the intention been to restrict the
operation of paragraph 22 only to cases where both entities are Central
Government organisations, an express qualification to that effect
would have been incorporated which is absent in the scheme.
26. The distinction is sought to be made on the ground that
Respondent No. 2 is a statutory public authority and falls under the
instrumentality of the State Government of Uttar Pradesh and not
Central Government. It is not in dispute that Respondent No. 2 is in
fact a public authority. In the opinion of this Court, once a
procurement is done by any public authority (which may not be an
instrumentality of the Central Government) through a Central Public
Sector Enterprise as enumerated in paragraph 4 of the Scheme, then
the scheme in effect is made applicable to such public authority.
27. The reason for this is plain. Respondent No. 2, even though an
instrumentality of the State Government, consciously elected to
undertake the procurement for the project through Respondent No. 1,
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

undisputedly a Central Public Sector Enterprise expressly recognised
under paragraph 4 of the Scheme. Having voluntarily adopted such an
arrangement and availed the services of a Central procuring entity,
Respondent No. 2 cannot selectively disassociate itself from the policy
framework and instructions governing Respondent No. 1 in its
capacity as the procuring entity, especially when the very dispute in
question has arisen out of the procurement so undertaken. By
choosing to route the procurement through a Central Government
agency, Respondent No. 2 necessarily subjected the arrangement in
respect of matters governed by the applicable policy to the framework
prescribed for such procurement.
28. Consequently, once Respondent No. 2 (though not an
instrumentality of the Central Government) elected to route the
procurement through a Central Government agency, it also inherited
rather registered itself to the circulars and schemes that may be
applicable in respect of such procurement. Respondent No. 2 thus
cannot approbate and reprobate by availing the institutional and
administrative arrangement with Respondent No.1 on the one hand,
while repudiating the consequences of the scheme specifically
contemplated under Clause 22 on the other hand. Having availed the
benefit of the procurement through a Central Public Sector Enterprise,
Respondent No. 2 cannot now contend that the settlement mechanism
governing that procuring entity is wholly inapplicable merely because
Respondent No. 2 itself is a State statutory authority. To countenance
the contention raised by Respondent No. 2 would render the whole
purpose of Clause 22 of the scheme as otiose.
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Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21

29. In the considered opinion of this Court thus, since the present
contract was executed by Respondent No. 1 (procuring entity as per
paragraph 4 of the Scheme) on behalf of Respondent No. 2
(undisputedly, a public authority), the scheme is applicable on
Respondent No. 2 who shall provide the budget for meeting the
settlement in terms of paragraph 22(ii) of the scheme.
30. Furthermore, though emphasised, even the pendency of a
challenge under Section 34 of the Arbitration and Conciliation Act,
1996 cannot act as an embargo for the implementation of the scheme
as paragraph 10(b) of the Scheme specifically provides that the case
may or may not be under challenge/appeal before a Court and
provides the settlement amount in such cases.
31. In the light of the aforesaid discussion, the rejection of the
claim made by Respondent No. 1 is unsustainable and is hereby set
aside.
32. Consequently, Respondent No. 1 is directed to execute the
settlement in terms of the scheme dated 29.05.2023.
33. The present petition stands allowed in the aforesaid terms.
AMIT MAHAJAN, J
NOVEMBER 5, 2026
“SK”
Signature Not Verified
W.P.(C) 15607/2024 Page 12 of 12
Signed By:HARMINDER
KAUR
Signing Date:14.11.2026
22:46:21