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Digital Marketing Service Company V. Tech startup

Date of Claim raised:15/01/2022
Date of Conciliation: 22/01/2022
Date of Settlement: 21/02/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

The dispute was between a technology company providing Digital Marketing services and a Tech startup in the e-learning arena. The tech startup (Respondent) hired the technology company (Claimant) for providing digital marketing services. The digital marketing company was to provide end-to-end marketing solutions, including SEO/SEM services, website content management, and lead generation. Both parties being based out of Bangalore, many meetings were held in person and, at times, sparsely documented. Payments for lead generation services were to be made in advance, but other marketing activities needed to be billed every month. While the respondent made payments for the lead generation activity, invoices raised for the other marketing activities were partially paid. On being approached, the argument given was that they needed to see the impact of the activities over a period of time to decide the effectiveness.

The Issue

The bone of contention was that the cost of marketing, which was borne by the claimant, had to be settled by the respondent in 30-day cycles as it would help the activity to be continued. The delay in payment not only meant that the respondent lost money but also meant that the activities could not be continued, and the online properties that were developed started losing their positioning. While the respondent kept paying for the lead generation activity and was satisfied with the results thereof.

The Process

The negotiator established the claims after an in-depth review of the evidence and documentation submitted by both parties. These included email communications, WhatsApp chats, invoice records, minuted meeting records, etc. Once the claim was established, the Negotiator then had a detailed discussion with the respondent on how the nonpayment was affecting not only the claimant but also the activities that were being conducted online for his business as well. The respondent was also informed that the nonpayment of dues would result in the claimant forfeiting the amount paid towards lead generation activity, and that would also compound the troubles for the respondent. An amicable settlement needed to be reached for the outstanding amount of Rs. 10,50,000/, and the same was agreed by the respondent.

Terms of Settlement

The Respondent agreed to pay the settled amount of Rs. 10,50,000/- to the Claimant as per the below-mentioned schedule:

  • The first payment, amounting to Rs. 4,00,000/-on or before 07/03/2022.
  • The second payment, amounting to Rs. 2,25,000/-on or before 07/04/2022.
  • The third payment, amounting to Rs. 2,25,000/-on or before 01/05/2022.
  • The fourth payment, amounting to Rs. 2,00,000/-on or before 31/05/2022.
The Inference

The Negotiator's ability to explain the lose-lose scenario to the respondent brought about a quick resolution and also ensured continuity of business for both parties.