Lok Sabha Question No. 4630 (UNSTARRED), answered on 2025-08-21
Subject: Arbitration and Price Escalation Clause in CPWD Tenders
Ministry: HOUSING AND URBAN AFFAIRS
Asked by: Shri Anurag Singh Thakur

## GOVERNMENT OF INDIA

## MINISTRY OF HOUSING AND URBAN AFFAIRS LOK SABHA

## UNSTARRED QUESTION NO. 4630

TO BE ANSWERED ON AUGUST 21, 2025

## ARBITRATION AND PRICE ESCALATION CLAUSE IN CPWD TENDERS NO. 4630.  SHRI ANURAG SINGH THAKUR:

Will  the  Minister  of  HOUSING  AND  URBAN  AFFAIRS  be  pleased  to state:

- (a) whether omitting or capping price escalation/variation clauses are being implemented by CPWD  in the tenders issued by the Government and any study has been conducted on the reasons for such omission and if so, the details thereof;
- (b) whether the  Government includes  a  uniform  arbitration  clause  in accordance with the Arbitration Act in all its tender documents, if so, the details thereof and if not, the reasons therefor;
- (c) whether the Government proposes any measures to ensure arbitration in tender documents for expediting contractual dispute resolution in a time-bound manner and if so, the details thereof;
- (d) the  details  of  the  average  duration  between  invoice  submission and payment release for completed works by CPWD during 202325?
- (e) whether  the  Government  has  considered  prescribing  an  interest penalty  for  delayed  payments  to  contractors  similar  to  banks' penalty interest provision and if so, the proposed interest rate and implementation  mechanism  to  safeguard  contractors'  working capital; and
- (f) the  steps  taken/to  be  taken  to  align  procurement  policies  of  the Government with best practices to balance the rights and obligations of both contracting authorities and private bidders?

## ANSWER THE MINISTER OF STATE IN THE MINISTRY OF HOUSING AND URBAN AFFAIRS (SHRI TOKHAN SAHU)

(a): No.

(b):  Yes,  a  uniform  Arbitration  Clause  is  a  part  of  standard  tender document  i.e.  General  Conditions  of  Contract  (GCC)  of  CPWD.  As  per Clause 25 for 'Settlement of Disputes by Conciliation and Arbitration' of GCC, the Arbitration is conducted in accordance with the Arbitration and

Conciliation Act, 1996.

(c): Yes, as per Clause-25 of GCC of CPWD, Arbitration is conducted in accordance with the provisions of the Arbitration and Conciliation Act 1996.  As  per  the  Act,  Arbitral  Tribunal  shall  publish  award  within  a period of twelve months from the date of completion of pleadings.

(d): CPWD clears bills as per provision and time line provided in GCC on receipt of it from contractors with all relevant documents, measurements and analysis of rates and on availability of fund. However no such information has been maintained in CPWD.

## (e): Yes, following provision is already prescribed in GCC:

For  running  bills:  As  per  clause  7  of  General  Conditions  of  Contract (GCC) of CPWD, in case of delay in payment of intermediate bills after 45 days of submission of bill by the contractor, a simple interest @ 5% per annum is payable to the contractor from the date of expiry of prescribed time limit.

For final bills: As per clause 9 of GCC, if the final bill is submitted by the contractor  within  three  months  of  completion  of  work  or  within  one month of the date of final certificate of completion, whichever is earlier, and  payment  of  final  bill  is  made  by  the  Department  after  prescribed time limit of 3 months for payment to the contractor, a simple interest @ 5  %  per  annum  is  paid  to  the  contractor  from  the  date  of  expiry  of prescribed time limit, provided the final bill submitted by the contractor is found to be in order.

(f): Procurement Policies of CPWD in GCC and CPWD Works Manual are aligned with best practices to balance the rights and obligations of both (contracting  authorities  and  private  bidders),  however,  improvements/ modifications  in  policies  are  regularly  done  based  on  the  suggestions received from different Ministries/ Stakeholders.

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