Delhi Govt Cracks Down on Arbitration Loopholes: ₹1 Cr+ Audits Ordered
The Delhi government has launched a comprehensive audit of all arbitration cases exceeding ₹1 crore settled over the past two decades. The move, announced on July 29, 2025, aims to scrutinise financial losses and ensure greater transparency in government contracts.
This sweeping audit follows concerns regarding potential irregularities in past arbitration proceedings. The government is determined to plug loopholes and recover any misappropriated funds.
A significant change is the exclusion of arbitration clauses from new government contracts. Contractors will now be required to directly approach the courts for dispute resolution.
Further, the government has introduced a new rule prohibiting payments to contractors before all legal avenues are exhausted and the Law Department grants its approval. This measure is intended to strengthen financial accountability.
This decisive action by the Delhi government signals a renewed commitment to fiscal responsibility and transparency. The impact will be keenly observed across other states, potentially influencing contract management practices nationwide and setting a precedent for better financial governance.
