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Shirt Fabric Manufacturer V. Garment Wholesaler Retailer

Date of Claim raised: 29/04/2023
Date of Conciliation: 02/05/2023
Date of Settlement: 02/05/2023
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

In the bustling city of Mumbai, a dispute has arisen between the Claimant, an established supplier and trader of shirting fabrics, and the Respondent, a retailer and wholesaler of readymade garments. The Claimant, with over three decades of experience, prides itself on delivering high-quality products and service. The dispute revolves around the nonpayment of a significant amount of Rs. 1,02,473/- by the Respondent to the Claimant.

Despite repeated reminders and demands for payment, the Respondent has failed to fulfill its financial obligation. Frustrated by the lack of cooperation, the Claimant decides to seek resolution through alternative means. The case eventually finds its way to PrivateCourt, a renowned platform for Alternative Dispute Resolution (ADR).

The Issue:

The dispute between the Claimant and the Respondent arose due to the nonpayment of the disputed amount of Rs. 1,02,473/-. This nonpayment was rooted in various factors, leading to conflicting claims and contentions from both parties.

a) Breach of Agreement:

The Claimant firmly asserted that a binding agreement had been in place between the parties for the supply of shirting fabrics. According to the terms of the agreement, the Claimant was responsible for providing a bulk quantity of shirting fabrics to the Respondent. In return, the Respondent was obligated to make the payment for the goods within a specified timeframe. However, despite the Claimant fulfilling their part of the agreement by delivering the required fabrics, the Respondent failed to uphold their end by neglecting to make the agreed-upon payment.

The Claimant contended that the Respondent's failure to pay constituted a breach of the agreement, as it had caused significant financial strain and loss for the Claimant's business operations. The Claimant had made numerous attempts to contact the Respondent and resolve the matter amicably, but all their efforts were met with nonchalance and disregard.

b) Quality of Goods:

The Respondent, on the other hand, raised concerns regarding the quality of the shirting fabrics received from the Claimant. They claimed that the delivered fabrics did not meet the expected standards agreed upon in the initial agreement. According to the Respondent, the fabrics were subpar in terms of texture, durability, and overall aesthetic appeal.

This dispute over the quality of the goods further complicated the payment issue. The Respondent argued that they were reluctant to make the full payment as initially agreed upon due to the perceived deficiency in the fabric's quality. They believed that the Claimant should take responsibility for the inferior products and provide compensation or a discounted rate.

The Claimant, however, refuted these claims and maintained that the fabrics delivered were of the highest quality. They emphasised their long-standing reputation in the industry and their commitment to delivering superior products. The Claimant argued that the Respondent's allegations were unfounded and served as a mere pretext to avoid payment.

c) Financial Constraints:

The Respondent cited financial constraints as another reason for their failure to make the full payment. They claimed that they were currently facing financial difficulties, which hindered their ability to meet their financial obligations promptly. The Respondent argued that the economic downturn and other unforeseen circumstances had adversely affected their business, making it challenging to allocate funds for the disputed payment.

Recognising the Respondent's financial limitations, the Claimant acknowledged the importance of finding a mutually beneficial solution. However, they stressed that the Respondent should have communicated their financial constraints in a timely manner, allowing both parties to explore alternative payment arrangements or negotiate revised terms.

d) Communication Breakdown:

Both parties acknowledged a breakdown in communication, which exacerbated the tensions and delays in resolving the dispute. The Claimant expressed frustration over the Respondent's lack of responsiveness and unwillingness to engage in meaningful dialogue. They highlighted instances where emails and phone calls went unanswered, causing unnecessary delays in addressing the payment issue.

The Respondent, too, recognised the breakdown in communication and admitted that they could have been more proactive in seeking resolution. They acknowledged that clear and open lines of communication were vital for resolving disputes efficiently and preserving business relationships.

The PrivateCourt Proceedings:

PrivateCourt, renowned for its expertise in ADR, took charge of the case. They initiated the proceedings by sending a notice to both parties, requesting relevant documents and evidence to support their claims. The PrivateCourt team diligently vetted the submitted documents, ensuring a fair and unbiased evaluation.

Following the protocol, the learned Sole Conciliator from PrivateCourt scheduled a Conciliation via Zoom and audio conference, as stated in the Notice of Conciliation. However, before the scheduled conciliation, the Respondent informed PrivateCourt about a positive discussion they had with the Claimant regarding the amicable settlement of the dispute.

The Settlement Agreement:

In light of the positive discussions, a settlement agreement was drafted. The Respondent agreed to pay the disputed amount of Rs. 1,02,473/- in the following manner:

  • Rs. 5,000/- on or before 15th May 2023.
  • The remaining amount to be paid in instalments of Rs. 5,000/- every month for the next four months.

The settlement agreement specified that any future claims or disputes regarding the agreement will be resolved through e-arbitration, according to the rules of PrivateCourt.

The Inference:

Despite initial disagreements and financial constraints, both parties engaged in positive discussions and reached a settlement agreement. The agreement allows for a flexible payment plan, accommodating the Respondent's financial limitations. By opting for ADR, the parties were able to avoid a protracted and costly litigation process while maintaining a cordial business relationship.