Choose the Right ADR Method: Different conflicts require different approaches. Whether it's mediation, arbitration, or negotiation, select the ADR method that aligns with the nature of your dispute. One size doesn’t fit all.
The Respondent, in this case, the proprietor of a pharmacy, had gotten a Rs. 3,75,000/- loan from the Claimant NBFC to grow his enterprise. He was, however, unable to pay back the loan on time for a number of reasons, which resulted in a disagreement between him and the Claimant NBFC. Both sides agreed to use a mediator to help them reach an agreement.
It was agreed by both parties that a neutral third party would be used to help mediate the conflict.
The PrivateCourt team was thus contacted to settle the dispute amicably.
The Respondent had gotten the financing to stock his pharmacy with more supplies and equipment. But soon after taking out the loan, he ran into a number of problems. Initially, the COVID-19 epidemic had a negative impact on his company and reduced revenues. Second, the emergence of online pharmacies had heightened competition, which further decreased sales. Finally, the Respondent had personal difficulties when his wife became ill and required pricey medical care.
These challenges made it difficult for the Respondent to make the loan repayment on schedule. He had asked the Claimant NBFC for a longer period of time to repay the debt, but the Claimant NBFC had rejected him and had already begun legal proceedings against him.
Both sides presented their cases to the PrivateCourt Negotiating team at the start of the mediation. The Respondent gave an explanation of his financial condition and the factors that prevented him from repaying the loan. In order to demonstrate the drop in his company's revenue and the increased costs brought on by his wife's illness, he also submitted financial figures.
The Claimant NBFC representative, on the other hand, outlined the loan agreement's details, including the interest rates and repayment timetable. The Claimant NBFC claimed that the Respondent had broken the terms of the loan by failing to make timely loan instalments as well as interest payments.
PrivateCourt protocol makes it mandatory to listen to both sides' arguments before considering potential solutions. The chief mediator urged the parties to reach a mutually beneficial agreement in good faith. The mediator pointed out that a settlement would conserve time, money, and resources for both sides.
The team then assisted the parties in finding areas of agreement to help them in their discussions. The proposed solution states that the Claimant NBFC should adjust the loan repayment schedule to take into account the financial situation of the Respondent, maybe by stretching the payback period or reducing the interest rate. The mediator further mentioned that in order to ensure loan repayment, the Respondent could provide the Claimant NBFC with some form of security or collateral.
After several rounds of negotiations, the parties reached an accord. The claimant NBFC agreed to change the loan's repayment plan, lengthening the period and lowering the interest rate. The Respondent agreed to provide a portion of the pharmacy's stock as collateral to the Claimant NBFC.
Both parties signed the settlement agreement. According to the terms of the arrangement, the Respondent would pay back the loan in instalments over the course of the following five years, with a decreased interest rate from 18% to 12%. The Claimant NBFC will receive monthly statements from the Respondent detailing the financial health of his company. The contract also said that if the Respondent failed to make his loan repayments, the Claimant NBFC would be permitted to sell the inventory he had provided.
Both sides were helped by the mediation process to reach a win-win agreement, saving them the time and money that would have been needed for a court battle. The mediator team facilitated the parties' discussions and helped them find areas of agreement. The settlement agreement benefited both parties because it allowed the Respondent to repay the debt without being put under excessive pressure and allowed the Claimant NBFC to recover the debt's principal plus interest.
In order to resolve disputes and reach agreeable settlements, it is essential to look for alternative dispute resolution techniques, as the mediation process made evident. It also showed how important it is to be flexible and willing to compromise in order to reach a win-win outcome.
