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Cycle Manufacturer V Distributor

Date of Claim raised:18/09/2021
Date of Conciliation: 30/09/2021
Date of Settlement: 30/09/2021
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

This is a dispute between a cycle manufacturer and a distributor, both based in West Bengal. While the manufacturer (Claimant) and the Distributor (Respondent) have had a working business relationship for years and have had set credit patterns that were never disrupted, the post lockdown phase saw constant defaults in payments from the respondent with no new orders being placed. The total outstanding value of products had reached Rs. 2,43,995/- post which no further payments were being made.

The Issue

The distributor had faced major losses due to the lockdown during which he and his family had also been affected by the disease. Being a proprietary concern, they were finding it difficult to keep the business afloat and were mulling a windup. Though they did pay a part of the outstanding, post lockdown they were unable to continue making payments. The dispute got worse when the payments completely stopped for a quarter, and the claimant got worried about the receivables. PrivateCourt was approached for mediation at this phase.

The Process

The Mediator, post establishing the facts of the claim, approached the respondent for a discussion and what came to the fore was that they were reluctant to divulge their financial state to the claimant and were making promises to pay, which they could not honour. The mediator then informed the situation to the claimant, and considering the long and healthy relationship that they shared, the claimant agreed to a really lenient settlement, which might aid the respondent to stay in business.

The Settlement Agreement

The Respondent agreed to pay Rs. 5000/per month for 12 months beginning October 2021 and Rs. 10,000/- per month, subsequently, till the entire amount is paid off from October 2022.

The Inference

An active and empathetic approach to an issue can not only resolve disputes but also create healthy business relations and goodwill.