PRO TIP when you face a Business Conflict

Collaborate, Don't Confront: In ADR, success lies in collaboration, not confrontation. Embrace open communication, actively listen, and work together towards a solution that benefits all parties involved.

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Textile Manufacturer V. Wholesaler of Textile

Claim raised on: 22/06/2021
Conciliation Date: 06/08/2021
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement

Financial disputes need to be resolved as quickly as possible. The claimant (a Private Limited Company engaged in the manufacturing of Textile Business) claimed Rs. 1,01,478/- owed by the defendant (a wholesaler of Textiles) for failure to pay an outstanding invoice with respect to the textile materials supplied.

The defendant contended that the invoice was incorrect and that he was willing to pay a percentage of the bill, which he felt was valid. The defendant discerned that the remainder should be waived as he was given verbal assurance by the claimant that costs would be kept to a minimum contrary to which he was being billed for, a large amount he felt he could have gotten supplied at a discounted rate through another vendor.

The Issue/Dispute/Argument/Claim/Discourse/Disagreement/Scenario

Through the negotiations, both parties had a chance to put their points across. The claimant put forth that there was constant communication, though verbal, regarding the price changes of raw materials and the effect of the same on the cost of finished products. He also acclaimed that maybe a small percentage could have been reduced by alternate sourcing of goods. This, however, was not possible due to the short delivery time expected by the respondent. The respondent in turn came back with some alternate quotes received from other vendors at prices that were much lower than the ones given by the claimant.

The Negotiator, Mr. Ankit Verma, first carefully scrutinized details submitted by both parties, which included the following: Ledger accounts, Outstanding invoices, Email conversations, Purchase Orders, and Whatsapp chats. He then reviewed the price tabs of raw materials quoted at the time of the order being furnished and brought to the notice of the respondent that the same are not comparable as there was a steep fall in the prices later. The documentary evidence provided by the negotiator was a convincing explanation.

The Process/Undertaking/Action

The negotiator, in this case, had to listen to arguments from both sides, and the pain points of both sides were listed. Documentary evidence, including third-party quotes from other vendors, was examined to understand where the respondent's assessment of cost came from. The negotiator had to indulge in a bit of research to establish cost differences during the time elapsed between the order processing and this day.

The Settlement Agreement

The respondent agreed to the claim, and the case was settled on 06/02/2022.

The outstanding amount of Rs.1,01,478/- was to be transferred via a bank transfer to the Claimant’s bank account on or before February 2022.

    The schedule of payment is as below:
  • 30/08/2021- Rs.15,000/-
  • 30/09/2021- Rs.15,000/-
  • 30/10/2021- Rs.15,000/-
  • 30/11/2021- Rs.15,000/-
  • 30/12/2021- Rs.15,000/-
  • 30/01/2022- Rs.15,000/-
  • 28/02/2022- Rs.11,478/-
The Inference

Differences of opinion may occur due to certain misconstrued market information. Negotiation, in this case, helps by bringing perspective to the disconnect and, at times, explaining actions to either party.