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NBFC (Claimant) V T. Nadu Textile Manufacturer (Respondent)


This dispute case is between a textile manufacturer and an NBFC. The manufacturer of textiles from the southern state of Tamil Nadu had borrowed a bridge loan for business expansion from an NBFC. The textile company had a long-standing business and had been doing business locally. However, there was an opportunity for them to export shirts through a merchandiser, and they needed funds to supply their first order.

As this was their first venture, the banks were not very keen on furnishing their need. However, the NBFC allowed them a packing credit against LC with a 90-day window, which was a part of the agreement. The dispute occurred when the respondent could not complete the manufacturing process within the stipulated time period, and the order was canceled.


The respondent was unable to complete the orders and was not able to honour the deadline of the contract, and hence, lost the validity of the LC terms.

The problem he faced was an unforeseen power outage in the area of his business, which meant that he had to now rely on heavy generators which were suddenly in short supply. Though this situation lasted only for a week, the respondent was unable to make up for the lost time as he had already moved to work a rotational shift to ensure timely delivery.

The issue had now become critical as the NBFC had not mortgaged any collateral, and it was done at the discretion of the senior credit manager, considering the urgency of the transaction and the low turnaround time.

While the respondent had the stock in hand as completed work, he could not pay back the amount as he did not have orders to fulfill.

Our Philosophy

तस्मादसक्तः सततं कार्यं कर्म समाचर।

असक्तो ह्याचरन्कर्म परमाप्नोति पूरुषः॥ ३-१९

tasmādasaktaḥ satataṃ kāryaṃ karma samācara।

asakto hyācarankarma paramāpnoti pūruṣaḥ॥ 3-19

तुम अनासक्त होकर सदैव कर्तव्य कर्म का सम्यक आचरण करो क्योकि अनासक्त पुरुष कर्म करता हुआ परमात्मा को प्राप्त होता है।

Go on efficiently doing your duty at all times without attachment.

Doing work without attachment man attains the Supreme.

PrivateCourt Proceedings

PrivateCourt, who was now committed to coming up with a resolution, engaged the parties involved. After studying the entire transaction, no stone was left unturned to explore all options.

While litigation was a very obvious route, it would mean a lengthy legal battle and also run a risk of liquidation of business or attachment of assets for the respondent, who was very keen to not take the matter in that direction.

The negotiating team, in this case, decided to take a different route and invited the merchandiser who had placed the order in the first place for a discussion.

While the resolution team explained the predicament of the respondent to the merchandiser, he also (with the permission of the respondent) offered a 15% reduction of cost in case they could manage to carry out the order. The merchandiser agreed to have a quality audit done and respond in case they found the products good for delivery.

The Settlement Agreement

As the quality of the products was found satisfactory, the merchandiser agreed to take away the material in a week's time and magnanimously agreed to a 12% discount.

This meant that all parties involved would be benefited, and even after paying the late fees, the respondent would stand to make a small profit.