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Shirt Fabric Supplier V. Apparel 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, Maharashtra, India, a dispute arises between a prominent Manufacturer and Supplier of Cotton Fabrics, the Claimant, and a Manufacturer of Men Shirts and Denim Jeans, the Respondent, based in Edapalayam, Tirunelvili.

he root cause of the conflict revolves around the nonpayment of a significant amount of Rs. 9,66,765/-, owed by the Respondent to the Claimant. Despite repeated attempts by the Claimant to seek payment, the Respondent has failed to fulfill their financial obligation, leading to the escalation of the dispute.

The PrivateCourt team was approached for a fair and amicable settlement between the parties involved.

The Issue:

The dispute arises from a financial disagreement between the Claimant and the Respondent. The Claimant, a leading Manufacturer and Supplier of Cotton Fabrics, had supplied goods to the Respondent, a Manufacturer of Men Shirts and Denim Jeans. The agreed-upon transaction value amounted to Rs. 9,66,765/-.

However, despite the delivery of the goods, the Respondent failed to make the payment within the specified timeframe.

The Claimant argues that the Respondent's nonpayment has caused significant financial strain and loss of business opportunities. They assert that the agreed-upon amount is justly owed and should be paid promptly, as per the terms of their agreement. Furthermore, the Claimant contends that the nonpayment constitutes a breach of contract and seeks compensation for the resulting damages.

In addition to the reasons mentioned earlier, there are three more factors that contributed to the dispute between the Claimant and the Respondent:

Delivery Delays: The Claimant alleges that the Respondent caused significant delays in the payment by repeatedly requesting modifications to the delivery schedule. This resulted in a disruption of the Claimant's production and cash flow, causing financial strain. The Claimant argues that these delivery delays were not initially agreed upon and, therefore, should not be used as a justification for nonpayment.

Quality Disputes: The Respondent contends that the goods received from the Claimant did not meet the expected quality standards. They claim that the cotton fabrics supplied were of substandard quality, with various defects and deviations from the agreed specifications. The Respondent asserts that these quality issues led to additional costs for rework and affected the marketability of their final products. They argue that the nonpayment is a direct consequence of the Claimant's failure to deliver goods as per the agreed-upon quality standards.

Communication Breakdown: Both parties point to a breakdown in communication as a significant factor contributing to the dispute. The Claimant asserts that they made numerous attempts to address the Respondent's concerns regarding delivery schedules and quality issues but did not receive timely or satisfactory responses. They claim that this lack of communication hindered their ability to resolve the disputes promptly and amicably. Similarly, the Respondent argues that the Claimant failed to adequately address their grievances and provide a satisfactory resolution, leading to a loss of trust and an unwillingness to make payment without further negotiation.

On the other hand, the Respondent presents their side of the story, alleging that the goods received from the Claimant were of substandard quality and did not meet the agreed specifications. They argue that the discrepancies in the delivered products justified their withholding of payment. The Respondent claims that they have made efforts to resolve the quality issues directly with the Claimant but have not received a satisfactory response. Both parties hold steadfast to their positions, leading to an impasse and the decision to seek resolution through the intervention of PrivateCourt.

The PrivateCourt Proceedings:

Taking charge of the case, the PrivateCourt team initiated the proceedings by sending notices to both the Claimant and the Respondent, apprising them of their roles and responsibilities during the conciliation process. The parties are requested to submit any relevant documents to support their claims, which are then thoroughly reviewed and vetted by the PrivateCourt team for authenticity and relevance.

Following the established protocol, the Ld. Sole Conciliator from PrivateCourt schedules a Conciliation via Zoom and audio call conference, as per the Notice of Conciliation. However, before the scheduled conciliation, the Respondent reaches out to PrivateCourt, informing them of a positive discussion with the Claimant regarding the amicable settlement of the dispute. The Respondent expresses their intention to resolve the matter without further legal intervention, thereby setting a cooperative tone for the upcoming conciliation.

The Settlement Agreement:

In light of the positive discussions between the parties, a settlement agreement is drafted by the PrivateCourt team. The agreement stipulates that the Respondent agrees to pay the disputed amount of Rs. 9,66,765/- on or before 20th May, 2023, to the satisfaction of the Claimant.

It further states that any future claims or disputes arising from this settlement agreement shall be resolved through e-arbitration, following the rules and procedures of PrivateCourt.

The Inference:

The successful resolution of this case highlights the importance of alternative dispute resolution methods in resolving conflicts promptly, preserving business relationships, and minimizing the burden of litigation.