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Furniture Manufacturer V Distributor

Date of Claim raised:25/09/2021
Date of Conciliation: 01/10/2021
Date of Settlement: 01/10/2021
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

This dispute occurred between a furniture manufacturer and a distributor, both based in the suburbs of Mumbai. The respondent, in this case, the distributor, was into the retail of handloom products and handicrafts and placed an order for handmade chairs and tables that he, in turn, planned to supply to a restaurant. The credit period agreed was 60 days. The delivery of products was accepted as 25 days from the date of order, and the total value of products sold was Rs. 1,58,726/-. The dispute occurred when the 60-day period had elapsed, and the commitments of payment were not honoured.

The Issue

The respondent had an incident of fire in his godown, and the same was only partially insured. In turn, he also could not supply the entire lot delivered to him by the claimant; thus, he could not fulfil his commitments. However, this was a cash loss for the claimant that needed closure. The claimant also had levied a penalty on the delay of payments with an interest of 21% p.a. The dispute was handed over to PrivateCourt for settlement.

The Process

The Mediator, once the claim was established, took up the issue with the respondent; after a few discussions, the Mediator understood that the respondent was strapped for cash flow and a single such payment would render him out of business. After a few further rounds of discussion, on humanitarian grounds, it was agreed that the penal interest would be waived off, and a deferred payment would be offered to the respondent.

The Settlement Agreement

The claimant agreed to pay the entire amount of Rs. 1,58, 726/- by paying Rs. 10,000/- on the 15th of every month starting October 2021 until the entire outstanding is cleared.

The Inference

Human considerations are often the better way to resolve issues and also ensure long business relations.