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Cycle manufacturing company V Distributor

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

This dispute occurred between a cycle manufacturing company based out of Kolkata and a distributor based in Uttar Pradesh. The Claimant, in this case, the manufacturer, supplied cycles to the distributor, who is the respondent. The dealer was a fairly new entrant into the business and had approached the company to supply him with cycles and had asked for a 45 day credit period for payments to which the manufacturer had agreed to reluctantly. While the first consignment was small and was paid for within the stipulated time, a large subsequent order was placed with a total invoice of Rs. 1,82,000/-. This invoice became overdue, and there was no payment made despite repeated reminders from the claimant.

The Issue/Dispute/Argument/Claim/Discourse/Disagreement/Scenario

The respondent being a new player in the industry, had taken stock from multiple companies, and the larger ones had denied him credit. In his enthusiasm, the respondent had overestimated the demand and blocked all his liquidity in stock. While he had the intention to continue and try to salvage the business, his inability to pay was the reason he could not honour his commitment.

The Resolution

The negotiator studied the communications and looked at all documents, and found the claimant's side to be justified. Through the rounds of discussions that ensued, the negotiator understood the respondent's predicament and the fact that though the respondent intended to pay, his over-exposure to the stocks held was what caused the hindrance. In discussion with the claimant, the negotiator then offered that the respondent, at his cost, return 50% of the stocks he held so that the claimant could reroute the same to other possible distributors. The same was agreed upon, and the parties entered a settlement.

The Settlement Agreement

The parties agreed that while the respondent would return 50% of the goods to the claimant and deliver it at his own cost to a location of the claimant’s choosing, the remaining 50%, amounting to Rs. 2,82,531/- to be paid by a bank transfer on or before the end of December 2021.

The Inference

At times, understanding the root cause of a problem and offering a win-win solution can help both parties to a dispute.