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Fabric Supplier V. Apparel Retailer

Claim raised date: 08/06/2021
Conciliation date: 23/06/2021
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

In a bustling commercial district of Mumbai, Maharashtra, India, a dispute arose between a leading manufacturer and supplier of cotton fabrics, referred to as the Claimant, and a wholesale supplier of men's stylish check cotton shirts and modern designer printed shirts, referred to as the Respondent. The cause of the dispute revolved around the nonpayment of a substantial amount of Rs. 5,55,765/- owed by the Respondent to the Claimant.

The Claimant, with a strong presence in the textile industry, had supplied cotton fabrics to the Respondent as per their agreement. However, despite the timely delivery of the fabrics, the Respondent failed to make the agreed payment, which led to strained relations between the parties. Numerous attempts to amicably resolve the matter were made but proved futile, prompting the Claimant to seek legal recourse.

Recognizing the need for a fair and efficient resolution, both parties agreed to approach PrivateCourt to mediate and facilitate a settlement between the disputing parties.

The Issue:

The dispute between the Claimant and the Respondent stemmed from the nonpayment of the disputed amount of Rs. 5,55,765/-. The Claimant, a prominent manufacturer and supplier of cotton fabrics, had entered into an agreement with the Respondent, a wholesale supplier of men's stylish check cotton shirts and modern designer printed shirts.

As per their agreement, the Claimant had diligently fulfilled its obligations by providing the agreed quantity of cotton fabrics to the Respondent. However, despite the completion of the delivery, the Respondent failed to honour their financial commitment, causing significant financial strain on the Claimant's business operations.

There were more reasons for the dispute:

Quality Discrepancies: The dispute between the Claimant and the Respondent arose, in part, due to quality discrepancies in the cotton fabrics supplied. The Respondent contended that the fabrics did not meet the agreed-upon quality standards, leading them to withhold payment. Conversely, the Claimant maintained that the fabrics were of satisfactory quality and adhered to the agreed specifications. The disparity in their perceptions regarding the quality of the fabrics played a significant role in the emergence of the dispute.

Delivery Delays: Another contributing factor to the dispute was the occurrence of delivery delays. The Respondent alleged that the Claimant failed to deliver the cotton fabrics within the stipulated timeframe, resulting in disruptions to their production or supply chain. Consequently, the Respondent argued that they were entitled to a reduction in the payment amount or to withhold payment altogether. Conversely, the Claimant contended that any delays were due to unforeseen circumstances or factors beyond their control, asserting their commitment to fulfilling the agreement. The issue of delivery delays further fueled the dispute between the parties.

Payment Terms Ambiguity: Ambiguity or misinterpretation of the payment terms outlined in the agreement contributed to the dispute. The Respondent claimed that the payment terms were unclear or subject to multiple interpretations, leading to confusion and disagreement regarding the amount and schedule of payments. In contrast, the Claimant asserted that the payment terms were explicitly stated and mutually agreed upon, emphasising that the Respondent's failure to adhere to the agreed payment terms constituted a breach of contract. The ambiguity surrounding the payment terms created a significant contention point and added to the overall dispute between the parties.

The Claimant, frustrated by the Respondent's refusal to fulfill their payment obligations, sought the intervention of PrivateCourt. Both parties presented their claims, with the Claimant asserting their right to the disputed amount and the Respondent disputing certain aspects of the agreement. The disagreement escalated, necessitating the involvement of PrivateCourt as the designated conciliator.

PrivateCourt Proceedings:

PrivateCourt, upon receiving the case, promptly initiated the proceedings. The Sole Conciliator from PrivateCourt meticulously followed the protocol, sending a notice to both the Respondent and the Claimant outlining the conciliation process.

The notice requested the submission of relevant documents and evidence to facilitate a fair evaluation of the dispute. Vetting the submissions received from both parties, PrivateCourt ensured that the process remained unbiased and impartial. The Sole Conciliator, leveraging the convenience of digital technology, scheduled a conciliation session via Zoom and audio conference calls as per the Notice of Conciliation. However, to the satisfaction of PrivateCourt, the Respondent and the Claimant engaged in a positive discussion over settling the dispute amicably.

The Respondent informed PrivateCourt of the mutually agreed settlement, indicating their commitment to fulfill their payment obligations to the Claimant. The Sole Conciliator, recognizing the willingness of both parties to resolve the matter outside the formal legal system, supported their decision and facilitated the drafting of a settlement agreement.

The Settlement Agreement:

Following the productive discussions between the Respondent and the Claimant, a settlement agreement was drafted to formalize their resolution. The terms of the agreement stipulated that the Respondent would make an initial payment of Rs. 50,000/- within seven days, on or before May 10, 2023. The remaining amount of Rs. 5,00,765/- was to be paid within six months, on or before November 2, 2023.

To ensure future dispute resolution, the settlement agreement mandated that any claims or disputes arising from the agreement would be resolved through e-arbitration, adhering to the rules and procedures of PrivateCourt. This provision aimed to provide a clear framework for addressing potential conflicts and maintaining the efficiency and neutrality of the resolution process.

The Inference:

By encouraging open communication and facilitating negotiations, PrivateCourt enabled the Respondent and the Claimant to reach a resolution that acknowledged the financial obligation while preserving their business relationship. The inclusion of a clear e-arbitration clause in the settlement agreement further ensures a structured approach to resolving any future disputes.