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Movie Studio V. Production House

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

The claimant in this case is a movie studio based in Mumbai offering services of private screening and post-production works like editing, sound recording, etc. The Respondent is a movie production house with quite a few successful productions under its belt. The Claimant approached PrivateCourt to mediate in this case. The base facts of the case are that the respondent had used the services of the claimant basis standard industry practice without an agreement in place. PrivateCourt took cognizance of this fact and offered to mediate as there could not be an Arbitration sans an agreement. The claimant had raised an invoice of Rs. 4,61,348/- on 30/05/2021, to which a dispute was raised by the respondent, who denied payment of the invoice amount.

The representatives of the claimant initially tried to negotiate and convince the respondent to accept the dues and make the payments and failed to do so. The respondent, on his part, argued that the calculation of dues wasn't based on the agreed terms. The reason for this was emails and other communications between individuals on both sides that were at times not centrally shared. The main challenge for PrivateCourt, in this case, was to consolidate all the communications and determine the accuracy of the claim. Once the authenticity was established and invoices matched the claimant's emails and approvals from the respondent, PrivateCourt initiated the Mediation process on 23/06/2021.

The Issue

Arbitrations happen based on Agreements entered between parties; the movie industry still seems to work generally on Purchase Orders and string mails. This case highlights how conciliation and negotiation can ensure both parties hold up to their side of the bargain even in scenarios with no formal agreement.

The claimant, in this case, calculated receivables basis on hourly rentals for the facility and man hours consumed for post-production works. Due to the lack of an agreement, these calculations were made and an invoice was raised based on trail mail exchanged between both parties. The Negotiator (Mr. Ankit Verma) here had to establish if the communication had been read and acknowledged by the respondent.

The dispute arose after the claimant raised the invoice worth Rs. 4,61,348 to the respondent. The respondent denied payment of the invoice citing issues with documentation and deliverables. The claimant requested PrivateCourt for Mediation and provided copies of purchase orders and email exchanges between the two parties.

In August of 2021, the claimant commenced the Conciliation proceedings which gave rise to this case.

The negotiator, in his capacity post examining the details submitted, determined whether the consent of activity on both parts was documented and clarified. Once the negotiation process was initiated the negotiator heard both sides and walked them through the communications as and when each issue was discussed. Several meetings were conducted over a 20-day period. The negotiator played a neutral role and managed to show the respondent how he was responsible to pay the invoice amount. With the claimant ready to waive off some part of the said invoice voluntarily (Rs. 60,000), the amount of liability to be settled was reached in the few first meetings.

(Documents submitted by the claimant: Ledger accounts, Outstanding invoices, Email conversation, Purchase order.)

The Settlement Agreement
    The consent terms agreed upon were as follows:
  • The respondent agreed to pay an amount of Rs. 4,00,000/- via bank transfer in 2 equal instalments.
  • The first instalment to be paid within 60 days of acceptance of terms and the second instalment within 120 days.
The Inference

Dispute resolution was achieved easily as both parties were made to understand their obligations under any contract even where there is no formal or absolute agreement signed. This judgement was completely based on natural justice and there was a realisation on both sides of the time and money expended in case of a long legal battle.