New Delhi: In a significant step toward strengthening fiscal discipline and legal accountability, the Delhi government has ordered a comprehensive audit of arbitration cases from the past two decades. The Public Works Department (PWD), Delhi Jal Board, and the Irrigation and Flood Control Department have been directed to submit detailed reports on all arbitration cases involving amounts exceeding ₹1 crore. This audit aims to assess the financial damage caused to the government due to legal disputes, particularly those where decisions went against the administration. The review will help determine how public funds were spent or lost and identify the individuals or decisions responsible for such outcomes. Each department has been asked to provide case-by-case, year-wise data, including the total number of such cases, summaries of rulings that went against the government, the amounts paid or lost, and whether any appeals were filed before making payments. The move comes amid repeated legal defeats for the government, especially in civil works and infrastructure-related disputes, which have led to massive payouts to contractors. To curb this trend, the government has issued clear instructions that no payment shall be made in any arbitration case until all legal options are exhausted and formal approval is obtained from the Law Department.

As part of a broader reform, the PWD has eliminated the arbitration clause from all new contracts. From now on, contractors seeking to resolve disputes must go directly to court. This measure is expected to make the process more transparent and reduce the frequency of inflated or unsubstantiated claims by contractors. The government believes that removing the arbitration option will discourage opportunistic claims and promote greater legal and financial discipline. Explaining the change, the PWD minister said that government funds must be treated as public funds and spent with responsibility. For years, departments have settled disputes through arbitration without putting up legal resistance, often resulting in unjustified payments.

He emphasized that such practices will no longer be tolerated. Every arbitration case from the past 20 years is now under review to identify accountability and prevent recurrence. All future disputes, he added, will be taken to court, eliminating any scope for easy financial gains through arbitration. The government expects these reforms to reduce the risk of baseless claims, ensure stricter legal preparedness, and encourage both departments and contractors to approach their roles more seriously. Through this 20-year review and restructuring effort, the Delhi government is working to bring long-overdue changes to its contracting system, with the aim of preventing financial losses and restoring public trust in the governance process.