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The proprietor of a shoe store, the Respondent, in this case, had borrowed Rs. 2,00,000/- from a reputed NBFC (the Claimant) to grow his enterprise. After some time, he was unable to pay back the loan, which resulted in a disagreement between him and the Claimant NBFC. Both sides agreed to resolve the dispute using Alternate Dispute resolution means to help them reach an agreement.
PrivateCourt was thus approached to help the parties reach an amicable solution.
The shoe store proprietor requested a loan from the Claimant NBFC for Rs. 2,00,000/- to expand his shoe store. To improve his business, he intended to increase his inventory and hire more employees. Nonetheless, despite his best efforts, he failed to produce the anticipated earnings. Due to the fierce rivalry from the neighbouring shoe stores and the negative impacts of the COVID-19 epidemic, his sales were fewer than expected. Due to the lockdown, the respondent was forced to close his store for a few weeks, which had an even greater impact on his revenue.
The Respondent was unable to pay back the loan on time as a result, and the Claimant NBFC had already begun legal proceedings against him. But, after the Respondent described his predicament to the Claimant NBFC, they both decided to use mediation to settle their differences.
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Both sides presented their cases to the mediation party, in this case, PrivateCourt, at the start of the mediation process. The Respondent gave an explanation of his financial condition and the factors that prevented him from repaying the loan. The PrivateCourt team confirmed the financial statements he supplied, which showed the fall in his company's revenue.
The Claimant's 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 repayments as well as interest payments.
PrivateCourt mediator advised looking at solutions after listening to both parties' arguments. The mediating team urged the parties to come to an amicable agreement that would be advantageous to both parties. A settlement would save both parties time, money, and resources, they highlighted.
The mediating team then aided the parties in their negotiations by assisting them in identifying points of agreement. The chief mediator proposed that the Claimant NBFC modify the loan repayment schedule to take into account the Respondent's financial circumstances, such as by lengthening the payback time or lowering the interest rate. Further, the mediating team also recommended that the Respondent offer the Claimant NBFC some kind of security or collateral as a way to guarantee the repayment of the loan.
Following numerous rounds of discussions and brainstorming, the parties came to a settlement accord. The Claimant NBFC consented to alter the repayment schedule for the loan, extending the time frame and lowering the interest rate. The Respondent consented to offer the Claimant NBFC a piece of real estate he owned as security. Both parties and PrivateCourt all signed the settlement agreement.
According to the arrangement, the Respondent would pay back the loan in installments over the course of the following five years, with the interest rate dropping from 12% to 8%.
The Claimant NBFC will get monthly statements from the Respondent detailing the financial condition of his company. The agreement also specified that after the loan was fully repaid, the Claimant NBFC would release the collateral.
The mediation process assisted both parties in reaching a mutually beneficial settlement, sparing them the time and money that would have been required for a court battle. The PrivateCourt team guided discussions between the parties and assisted them in identifying points of agreement. Both sides benefited from the settlement agreement since The Respondent could repay the loan without being put under undue pressure and the Claimant NBFC would be able to recoup the amount with interest.