Public Sector Undertakings (PSUs) and Government Departments- Scope Of Mediation And Suggestions

Mediation is a powerful tool in the hands of a mediator who by means of structured negotiations facilitates the process of an amicable settlement between two antagonistic parties. The beauty of this process lies in the fact that while two parties may be at logger heads at the beginning, by the end of it, they believe that they are the ones who negotiated the outcome of the process which is beneficial to all. The voluntary and confidential nature of mediation offers parties the confidence to bring out their inner most fears, apprehensions and desires to the table and bring about a change in a relaxed and amicable way. The “participant-centric” approach of the mediation process enables the parties to retain for themselves the right to decide the terms of settlement unlike in litigation or arbitration where they are subjected to comply with the final word of the court.

In India, a very large number of litigation is either instituted by or against the Government, its corporations, subsidiaries and instrumentalities. Such litigations not only add to the burden of the courts but also on the exchequer. As a consequence thereof, the expenditure incurred in facilitating such litigation adds to the cost of products manufactured by such public sector undertakings and therefore, the cost of products soars high and the profit dips. The capital output ratio is, therefore, directly affected because of mounting expenses required to be incurred by the public sector undertakings on litigation. Litigation and delays in hearing of cases have also contributed to a great extent leading to a time–over-run and cost-over–run of the projects as also to the low profile of profitability. The money in the coffers of the exchequer is the main source to meet the expenditure required to be incurred on the litigation by and against the public sector undertakings. It is nothing but wastage of precious ex- chequer’s funds collected through the hard-earned money of the public.[1]

What may also be of extreme relevance that projects that are of national importance get stalled on account intervention of the courts in the form of “ stay orders.” Imagine a simple situation where there is a contract between a government and a contractor to construct a road within a period of 3 months but there occurs a difference of opinion as regards pricing between the parties and one of them approaches the court and obtains a “stay order” of the very agreement of building the road. Such a situation is not only detrimental to the parties to the dispute but also the public at large. It is not difficult to comprehend how long would it take for such a litigation to come to its finality. So, for all the years that the litigation is pending, the road doesn’t get constructed, the parties continue to fight before court for years, hard earned money gets spent as litigating expenses and in the end, the public desirous of using that road is at a complete loss.

Not only are these litigations tedious for the Government and its instrumentalities, it is also a cumbersome process for the normal litigant, who being a small player (in comparison to the Government) has to wait endlessly for a litigation to conclude. It is very common to come across various litigations that are instituted, over tenders, auctions and bidding process issued by the government. So, issues which can be resolved at the outset by just giving just a little nudge to both the parties, are stretched for years and considerable time, money and energy is wasted in the interim.

The need of the hour therefore is to have a mechanism which not only is cost effective but also time effective and works towards reinforcing business relations. Mediation offers an escape route for parties who are willing to tread the path of negotiation and integrative bargaining instead of wasting time energy and money in litigation. Imagine, if at the start of the difference, the government and the contractor would have mediated their difference in numbers with the help of a Mediator, the road would have been built, both parties would have been more cordial to each other and who knows, maybe they would have built many more roads together.Be a mediator 1


What is also comforting is the sense of confidentiality that the parties have during a mediation process. Where the governments litigate, much information which is classified and confidential in nature may have to be disclosed, which can prove disastrous for government autonomy if it comes out in the open. Here, role of a mediator assumes much importance as it not only provides for complete confidentiality but in some instances also protects parties against loss of face before the public at large. This aspect would be very relevant especially where ministries and governments are involved in disputes inter se. The favorable and hostility free environment that is offered by a Mediator becomes an additional reason for parties to work towards an honest solution.

Last but not the least, mediation offers the parties a sense of finality. The intent of a Mediator is always to facilitate the parties in burying the hatchet, finding solutions and fortifying relations. This necessarily encourages governments and litigants to curb the “pro-litigation” tendency and lean towards conducive and collaborative communication.

To conclude, the speedy, economical and flexible nature of mediation should be increasingly resorted to so as to save valuable time, money and promote building relations. This is not only in the interest of the Government and parties but also a true embodiment of the letter and spirit of Our Constitution.

As, has been quoted by William Sloane Coffin Jr.:

We must be governed by the force of law, not by the law of force.”

[1] Law Commission Of India, 126th Report On Government and Public Sector Undertaking, Litigating Policy and Strategies.


Ruchi Kohli is certified to be a mediator by Indian Institute of Corporate Affairs under the aegis of Ministry of Corporate Affairs – Government of India. She a third generation lawyer, her grandfather, Late Mr. R.L. Kohli was a top notch leading senior criminal lawyer who gave 72 glorious years and enriched the legal profession with numerous landmark cases. The legacy is continued by her father Mr. R.C Kohli who is practicing exclusively in Supreme Court of India.

Ms. Kohli started her practice in the year 2001. She is the founder member and has played a key role in the establishment of the firm. She is highly respected for her articulate drafting skills and systematic and aggressive approach in the courtroom. She was declared as an “Advocate on Record” in the year 2007. Her forte lies in litigation in the Supreme Court, where over the years, she has been regularly appearing and arguing matters. She is also the standing council for the State of Rajasthan and has been representing many reputed public and private companies and statutory corporations in litigation matters before various forums.

For more information on the 40 hours training program on commercial mediation and negotiation by IICA, Ministry of Corporate Affairs, visit or email us at


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