Bridging Intent and Action: The Case for a Time-Bound Settlement Scheme in Long-Pending Government Litigation

Admin

The Supreme Court has consistently encouraged the resolution of pending disputes through mediation, amicable settlements, and alternative dispute resolution (#ADR) mechanisms. The overarching objective is clear: to reduce the crippling burden of litigation and ensure expeditious access to justice.

However, a pertinent question arises: why do government departments and public authorities often fail to initiate meaningful settlements, despite prolonged litigation that consumes substantial public time and resources?

If the genuine objective is to clear the judicial backlog and bring finality to disputes lingering for years, the government should consider formulating a clear, transparent, and time-bound Settlement Policy for Old and Legacy Cases.

A Structured Framework for Resolution

Under such a policy, a structured settlement mechanism would be provided based on the nature of the dispute, the merits of the claim, financial implications, government interests, and the likelihood and cost of continued litigation. Rather than applying a blanket rule, a graded settlement framework can be adopted where the competent authority determines the appropriate percentage after a rigorous assessment.

As a broad policy guideline, settlements could ordinarily range from 10% to 80% of the assessed admissible or disputed claim amount, adjusted according to the risk and strength of the respective cases:

  • 10%–25%: Where the government holds a substantially stronger case and the claimant’s entitlement appears limited.
  • 25%–50%: Where the dispute involves material questions of fact, legal interpretation, or quantum, leaving the outcome uncertain.
  • 50%–65%: Where there is substantial litigation risk or significant uncertainty regarding the ultimate judicial determination.
  • 65%–80%: Where the claimant has a comparatively strong case, and continued litigation exposes the government to heavy liability for principal, interest, and costs.
  • Above 80% (or outside prescribed bands): Permitted only in exceptional circumstances, supported by specific recorded reasons and approval from a higher competent authority.

Crucially, this percentage should apply only after determining the Settlement Base Amount—the sum legitimately or potentially payable after thoroughly examining contracts, documentary evidence, previous payments, counterclaims, and audit observations. Furthermore, the framework must explicitly state that no claimant has a vested right to demand a settlement at any particular percentage. Every decision must remain subject to strict scrutiny and be backed by reasoned orders.

Strategic Objectives of the Policy

A well-defined institutional mechanism, equipped with delegated financial powers and clear timelines, can accomplish several vital goals:

  • Drastically reduce long-pending litigation across courts, tribunals, and arbitral forums.
  • Lower litigation expenses incurred by both the government and private litigants.
  • Save valuable judicial time and state resources.
  • Enhance administrative efficiency within government departments.
  • Facilitate the expeditious resolution of longstanding contractual claims and payments.
  • Ensure the early release of legitimately payable funds to vendors and contractors.
  • Mitigate contingent financial liabilities stemming from mounting interest, legal fees, and enforcement proceedings.

Moving Beyond Mere Encouragement

Merely issuing judicial directions or administrative circulars encouraging mediation is insufficient. Public authorities require a defined institutional mechanism supported by accountability, appropriate safeguards, and transparent approval processes. This ensures that legitimate resolutions protect public interest without granting undue benefits to either party.

Ultimately, the goal is not to offer arbitrary discounts on state liabilities, but to establish a transparent, risk-adjusted mechanism. By moving from advisory mediation to a structured, time-bound settlement scheme, the government can successfully convert judicial intent into measurable reductions in legacy litigation, bringing lawful and financially prudent closure to protracted disputes.