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Cycle Manufacturing Company V. Cycle Distributor

Date of Claim raised:15/08/2021
Date of Conciliation: 14/09/2021
Date of Settlement: 20/09/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary:

This is a dispute between a cycle manufacturing company and a distributor. The claimant here is the manufacturer who regularly supplied bicycles to the distributor> The agreed terms of sale involved a 90-day credit period for batches of supplies. The payments were made almost on time every time till the manufacturer started supplying battery-operated bicycles, which came along with a one-year warranty. The first batch of cycles that was supplied was to be sold to customers, and many of them were returned for malfunctioning defects. Due to the high number of returns, which were only from this particular dealer, the manufacturer took time to service his warranties, leaving the distributor to have some trouble managing his customers.

The Issue

The contention between the parties was that the distributor was complaining about the quality of the goods supplied; hence, his loss of face with his customers, and the manufacturer contended that they were the only distributor in the country facing these issues. Bicycles worth Rs. 2,33,582/- had been supplied in this batch, and they were not paid for over a period of almost 120 days. The negotiations had reached a dead end, and PrivateCourt was engaged to Mediate.

The Process

The mediator, in this case, had to assess the reason for the mass complaints from this specific dealer; he also had to compare the same with the data of other dealers. The negotiator then had to assess the reason for the anomaly, for which he analysed the delivery process to the end customer. What came up was there was a bit of assembling required that was handled by the staff of the distributor.

The negotiator then put the technical staff from the manufacturer's end and compared the assembling process understanding of the distributor's staff. What came out was that the person who was trained initially by the manufacturer had left the distributor, and the assembly done by the new staff was barely optimal, and this caused the burning out of the motor coil on the bicycle. Once this was ascertained and explained to the distributor, he consented to pay off the outstanding invoices. However, since he had faced a lot of refunds to customers, he requested a longer deferred payment option, which the claimant was ready to accept.

The Settlement Term

The following terms were agreed upon:

    The Respondent to pay 11 equal instalments of Rs. 20,000/-, on or before 20th October 2021 till 20th August 2022. The 12th instalment of Rs. 13,582/-, on or before 20th September 2022.
The Inference

At times, processes not being followed are a reason for loss on either side, and arguments on financial matters often overlook these reasons. Trained negotiators tend to look at the cause of such damages and rectify them, as in this case.