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Chemical Manufacturer V Distributor

Date of Claim raised: 06/07/2022
Date of Conciliation: 14/07/2022
Date of Settlement: 14/07/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

The case of disagreement is between a Chemical Manufacturer as the Claimant based in Indore, Madhya Pradesh, and a Distributor as the respondent based in Rajasthan. The dispute was regarding an outstanding amount that had accrued as a result of short payments made over a period of a few years against orders delivered. While this was not debated on over a period of time, it became a cause of concern when an audit objection was raised at the board meeting of the claimant's company. The matter was asked to be closed urgently, and the sales and accounts team were deemed responsible for the same.

The Issue

Since the business relationship was a very old one and the orders and supplies were very regular, the sales team was happy to overlook the accumulation of short payments made against invoices made over a period of time. When approached by the company’s representatives, the Respondent was reluctant to accept the claims and also pay them all at once. Fearing the situation and following the CFO’s orders, the case was handed over to PrivateCourt for settlement.

The Process

The Mediator painstakingly inspected every invoice, compared it to receipts, and established the validity of the claim. While initiating a discussion with the respondent, the mediator explained the loss that this delay was creating for the claimant. The mediator also urged the respondent to consider the human angle, the blame that was now being laid on the sales staff of the claimant's company, and the adverse effects it had on them. The respondent agreed to communicate with the management of the claimant and take responsibility for the mishap; he also agreed to pay the dues within the next 3 months.

The Settlement Agreement

The Respondent agreed to settle the entire outstanding amount of Rs. 3,15,400/- on or before three months from the date of settlement, i.e. on or before the end of October 2022

The Inference

Clear explanations of an issue and its impact on all stakeholders are a must in negotiations.