CPSEs Current Affairs

Cabinet approves strengthening commercial disputes resolution mechanism of CPSEs

Union Cabinet has approved strengthening commercial disputes resolution mechanism of Central Public Sector Enterprises (CPSEs) inter se and also between CPSEs and other Government Departments and Organizations. The Cabinet decision is based on recommendations of Committee of Secretaries (CoS).

Key Facts

The new strengthened mechanism puts in place institutionalized mechanism within Government for speedy resolution of commercial disputes of CPSEs without matter being referred to the Courts of law. It consists of new two-tier mechanism to resolve commercial disputes between CPSEs outside Courts of law.

It replaces existing Permanent Machinery of Arbitration (PMA) mechanism and excludes disputes concerning Railways, Income Tax, Custom and Excise Departments from its ambit. It will promote equity through mutual and collective efforts to resolve commercial disputes thereby reducing number of litigations regarding commercial disputes in Court of Law and also avoid wastage of public money.

New two-tier mechanism

First level (tier): Such commercial disputes will be referred to a committee comprising secretaries of the administrative ministries to which the disputing parties belong and Law Secretary. The financial advisors of two ministries concerned will represent issues related to dispute in question before the committee.

In case the two disputing parties belong to same ministry, then committee will comprise secretary of administrative ministries concerned, Law Secretary and Secretary, Department of Public Enterprises. In such case, the matter will be represented by financial advisor and one joint secretary of that ministry. For the prompt disposal of disputes, 3 months’ time schedule at this level has been prescribed.

Second level (tier): In case dispute remains unresolved, even after consideration by above Committee in first tier, it will be referred to Cabinet Secretary, whose decision will be final and binding on all concerned.

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Cabinet approves closure of Burn Standard Company Limited

The Union Cabinet has approved closure of Central Public Sector Enterprise (CPSE) Burn Standard Company Ltd (BSCL) under Ministry of Railways. This decision was taken in view of continuous poor physical and financial performance of company for more than decade despite financial assistance and other support from government and low probability of its revival in future.

Key Facts

The closure of company will save public funds, which are currently being used for loss making BSCL and can be used for other developmental work. Central Government will provide one-time grant of Rs. 417.10 crore towards severance package and for clearing current liabilities of BSCL. In addition, outstanding loan of Rs. 35 crore given to BSCL by Ministry of Railways will be written off.  The severance package will benefit 508 employees of BSCL from Voluntary Retirement Scheme (VRS).

Burn Standard Company Ltd (BSCL)

BSCL was incorporated in 1976 following nationalization and amalgamation of Burn and Company and Indian Standard Wagon Company Limited in 1987 under Department of Heavy Industries (DHI). The company was engaged in manufacturing and repair of wagons and production of steel.

It was referred to Board of Industrial and Financial Reconstruction (BIFR) in 1994 and was declared sick in 1995. The company continues to be sick company since then. Its administrative control was transferred from DHI to Ministry of Railways in 2010 as approved by then Cabinet Committee on Economic Affairs (CCEA).

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